Monday, March 5, 2012

Spend Now, Save Later

It was announced recently that Housing New Zealand would be closing their offices relying instead on an 0800 number. Further to this, further cut backs are being done including stopping a scheme that helped people people into a private rentals.

This just smells of a massive failure to me. It's cost cutting without understanding their audience. Who are they trying to help? What are they actually saving?

Relating this to my own experience, I don't think I would have half as many issues with IRD as I do if I could go to an office, meet with someone and actually sort out my finances. Instead, I get a letter in the mail every couple of months telling me how much I owe. Give 'em a call and you get someone completely unhelpful on the phone.

That's me. I'm probably fairly patient compared to a lot of those dealing with Housing New Zealand. When you're talking about a home, they're probably right to be horribly frustrated.

In the long run, I believe these cost cutting measures to be misguided at best. Likely to cost a great deal at worse.

A housing project I heard of removed a property manager after the National government got in. They were not happy paying for this person. The thing is, having that person living on the premises meant that any disputes and problems were dealt with quickly. The housing project has since been considered a failure. The cost of maintenance on that property has gone up.

A couple of days ago I was laughing at the "Buy this crap and save $20" line that we're so often given. The funny bit is that a lot of the purchases I make I see as saving me money in some form or another. I want to buy a bread maker (and hopefully swap some of that bread for other food items). I buy fountain pens. I want to buy an ice cream maker. I'm thinking about brewing my own beer (which requires me to buy a tank to brew in and bottling equipment etc).

And of course, I've always known of this phenomenon. The best comparison in the computing world is a printer. Save on the printer, spend big on the consumables. Inversely, spend a lot on the printer, and the consumables are very likely going to be cheaper.

I've seen this in other places in the computing world. I was horrified when upon changing a power supply I was told to leave the old faulty power supply where it was as it might be okay in another computer. The power supply in question definitely isn't the sort of power supply I would chose. It just smelt of being cheap. Tip - avoid this sort of thing:
 And go for this sort of thing:
The larger fan means it can run slower to get the same air throughput. Less chance of it getting clogged up with dust, quieter and, generally speaking, better designed for air flow meaning it deteriorates over a longer period of time.

This is another place where the extra money (in this case, probably around $5-10) saves you money in the long run. Think about the time taken in diagnosing and replacing power supplies. That's a switching cost of, assuming $40 / hour for a technician, 30 minutes to actually diagnose the issue, 10 minutes to replace the power supply and 5 more minutes testing - that's $30 plus the cost of the new power supply (another $30-40). These costs soon add up.

Apply that to housing...

So we're not unfamiliar with the concept - that to spend money (in the right places) leads to savings further down the road. We can assume that the powers that be aren't idiots. So we've got to ask ourselves - what are they up to? Is this just a cheap shot to save money and leave a problem for someone else? I've always assumed that Housing New Zealand existed to help people. Perhaps they need to be looking at their core values and asking themselves whether they're meeting that expectation.

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