Commitment, loyalty and long term relationships… not your usual article about technology! What sort of service contract commitment is reasonable?

Below is an excerpt… to read the whole thing a click on through and don’t forget to say hello to our very good friends at the Business Examiner. Thank you.

“Loyalty Has Its Limits” – Business Examiner (May 28, 2012)

Commitment.

For some people that word sets them to quivering like an overwrought pony let loose in a barn full of marbles — while for others, the response is more akin to Wiley E. Coyote diving into the nearest canyon.

Why is it then that people of both persuasions completely ignore their inner voice and proceed to make commitments that outlive their usefulness?

At some point I would expect genetics, Darwinism or … ahem … Intelligent Design to kick in and allow us to harness the inner instinct that says, “Don’t sign the contract!”

When it comes to technology services, though, the inner instinct is prone to failure. Let’s run through some examples and see if we can’t keep you and your business out of some of the more obvious potholes.

Unless your business is centered around manufacturing globes that show a flat earth, it’s highly likely that you have an Internet Service Provider. Depending on what vendors are available in your neighborhood, you might have something as fast as 1,000 miles-per-hour or as slow as 1.5 miles-per-hour. Your costs might range from $2,500 down to $30 per month.  And you likely have a contract that lasts for two to three years.

Ah, there’s the dreaded but necessary commitment, but let’s look at the duration.  If you were to consult your crystal ball, do you expect the number of ISPs with service in your building to increase or decrease?  Do you expect their prices to increase or decrease?

Yes, exactly. There will more companies servicing your building, which translates to a decreasing price, which calls into question your motivations for signing a long-term contract with your current ISP.

This is a place where a partial commitment is the right call.  Whip out the calculator and assume a 15 percent per year reduction in pricing for equivalent service, compare that to the installation costs and figure out how long your contract should last so that you cross the break-even point right at the contract’s end date.

Commit only as it makes sense for you. Also, beware of the stealth re-commitment clauses, sometimes referred to as evergreens, where the contract auto-renews unless you provide advance notice for it not to.

Application software is another source of unrequited commitments…

…read the rest on the Business Examiner website