IBN: Defining Excellence in Electronic Recruiting

interbiznet.com

Electronic Recruiting
News

Our Rate Card

 

 





Please Click On Our Sponsors


Please Click On Our Sponsors


Recruiting News for the Human Resource Professional


Please Click On Our Sponsors


Please Click On Our Sponsors



Please Click On Our Sponsors


Please Click On Our Sponsors




 

 

 

Click On Our Sponsors



Click On Our Sponsors





 

 

 

 







Please Click On Our Sponsors


Please Click On Our Sponsors


Recruiting News for the Human Resource Professional


Please Click On Our Sponsors


Please Click On Our Sponsors



Please Click On Our Sponsors


Please Click On Our Sponsors




 

 

 

Click On Our Sponsors



Click On Our Sponsors





 

 

 

 

 

 


Find out more
About IBN


Got a news tip?
Tell us at
news@
interbiznet.com


Our Rate Card

Articles

Presentations

Trends Reports

Archives


Suggestions?



It is better
to not be on
the web than
to be on and
not know why

John Sumser

Reality
is more
complex
than
it seems.
John Gall


It's better to
do a few things
really well than
than to do
a lot of things
badly.
If you can't
make the necessary
commitments of
time and energy
to your
electronic
marketing
efforts
scale back
your plan.
John Sumser





OUR HOME

Click On Our Sponsors The Electronic Recruiting News is a Free Daily Newsletter For Recruiters, HR Managers, Advertising Agencies and Clasified Advertising Operations

Click OK to subscribe to our free print and email Newsletters

  • 2002 Electronic Recruiting Index. Order Today!
  • 2002 ERI ATS Buyers' Survey Executive Summary (requires Acrobat),
  • Read the interbiznet Bugler or sign-up now and have it delivered to your mailbox.
  • Interested in Advertising? Contact Us


    Life Cycle Cost


    (March 13, 2002) You may remember the Defense Department pricing scandals of the late 1980s. Toilet seats sold for $800; screwdrivers could fetch $1,500. We had a ringside seat.

    The problem was simple. DoD had extremely limited acquisition budgets during the early 1980s. To acquire the business, vendors underpriced their initial deliveries and planned to make up their money on the back end. In context, expensive spare parts prices made sense when you understood the deep discounts on the original purchase.

    Although the business practice was sound and is time honored, it typically fails what we call "the Mike Wallace test". In other words, pricing initial acquisition low and making up the difference on the back end will always get you in trouble if someone just looks at the back end. Like credit pricing for those who can't get good credit, the approach lifts the overall cost but makes purchasing easy. Credit laws don't typically protect against consumer stupidity and, in fact, this scheme can be viewed as altruism of sorts.

    In the early days of enterprise software delivery, this pricing approach was heavily used to speed the market's acceptance of a new product. Initial installations were priced low while the money was made up on customization charges and out-year transactions. While the Life Cycle Cost of the system went through the ceiling, initial acquisition became affordable.

    Some of the players in the "we wannabe an enterprise company" Applicant Tracking Systems marketplace (including some notable existing enterprise firms) are starting to adopt this pricing method. Like the overpriced toilet seats and screwdrivers in the DoD, the risk is that it will be perceived as a license to print money.

    Here's how it works.

    Imagine an RFQ for Applicant Tracking that gets three responses. Each, of course, represents the unique approach of the vendors. One emphasizes relationships, one emphasizes data quality, one emphasizes total solution. The prices cluster in two places: around $1.3M and $700K. The $700K price includes the processing of system email at a fixed cost per piece of mail (or resume or job). (We've seen one response that billed each email between the system and candidates at $1.75!!).

    It really doesn't take long for a system to accumulate a lot of mail, particularly if it acknowledges the receipt of a resume. Over the course of a reasonable life, we'd estimate the real prices to be more like $4M for the cheap one and $2.5 for those that clustered at $1.3M. In other words, the cheap solution (as is always the case) is really the most expensive.

    Ultimately, the military began soliciting bids that defined both the initial acquisition cost and a guarantee of total Life Cycle Cost. While it didn't solve the whole problem, it did introduce a contractual method to police abuse. The big risk in signing off on a low ball acquisition price is that you lose control of the back end.

    We recommend that you do not make an acquisition without a careful examination of the total price of the relationship.

    - John Sumser © TwoColorHat. All Rights Reserved.

    ****************************************************************

    Be Intelligent. Be Knowledgeable. Be Ready.

    SonicRecruit!

    Powers your recruitment process….

    Complete resume management….

    Skill matching..…

    Build relationships….

    Arrange a FREE online SonicRecruit demo today!!!

    Call 1-888-817-9698 Today!

    Contacting Us:
    Call, fax, write, email. We'd love to consult with you about your project.

    Copyright © 2013 interbiznet. All rights reserved.
    Materials written by John Sumser © TwoColorHat. All Rights Reserved.
    Mill Valley, CA 94941
    415.377.2255
    Send comments to colleen@interbiznet.com

  • Electronic Recruiting News
      


         FEATURES:

  • interbiznet Listings
  • interbiznet Trends
  • interbiznet Bookclub (New)
  • EMAIL NEWSLETTERS:
         - Bugler
           (Sign-up)
           Daily Industry News

         - ERNIE
           (Sign-up)
           ERN in Email

         ANNUAL REPORTS:      

  • Electronic Recruiting
         Index (ERI)
         - 2002 ERI
         - 2001 ERI
         - 2000 ERI
         - 1999 ERI
         - 1997 ERI
         - 1996 ERI
         - Report Pricing

         RESOURCES:

  • Integrated Employment
          Branding Presentation
  • 2003 Trends Whitepaper
  • interbiznet Listings
  • interbiznet Trends
  • interbiznet Bookclub
  • Top 100 E-Recruiters
  • Presentations
         - Recruiting Then/Now
  • Recruiter's Toolkit
  • Seminar In A Box
  • ERN Archives
  • 1st Steps In The Hunt

         ADVERTISING:

  • Our Rate Card
  • Demographics


         RECENT ARTICLES:

    Recent Articles:

  • Market Potential
  • The Talent Lifecycle
  • Complexity
  • Elements of Recruiting
  • Cost of e-recruiting
  • Bobos
  • Bill Warren
  • Confirmation
  • Vu Jade

         ERN Archives



    Stocks We Watch:
    Public Companies
    in Electronic Recruiting


     


         © 2013 interbiznet.
         All Rights Reserved.

         Materials written
         by John Sumser
         © TwoColorHat.
         All Rights Reserved.