By R. Christopher Haines, Executive VP and Chief Operating Officer

How many times have we seen this?

A company needs help. Help isn’t free. You quote a price, being as fair as you can; and the company says it can’t afford it: The work will get done in-house. A few months later, you find out the project blew up. Go-live dates were missed, revised, and missed again. The company’s now in production, but it’s plagued with problems.

Maybe they needed policy admin testing but decided to have their underwriters test rating, underwriting, and interfaces. Maybe they assigned claims-system testing to adjusters. Maybe they assigned billing-system testing to accountants. Even if those folks have testing experience (not likely), they also have other jobs to do and policyholders to satisfy. Does anybody do the math?

What’s the cost of lost time? What are the costs of implementation delays? What are the costs of missed production dates? What are the costs of overdue rate increases? What are the costs of incorrect premiums? What’s the cost of agent and policyholder dissatisfaction from malfunctioning portals? What’s the cost of re-assigning employees for three months when three months become six … or nine? What’s the cost of opportunity lost, regardless of how it’s measured? And even if we could put numbers on all those costs, what value do we place on the company’s reputation?

It’s tempting to think stories of dysfunction like this are rare. They’re not. They happen over and over. But nothing seems to change. A sobering number of companies fall into the same trap every year.

As a vendor, it’s hard for us to comprehend how the cost of our services can be seen as more expensive than the cost of all of those issues. But if Company A is trying to sell something to Company B, Company A’s experience — and the cost/benefit of its services — are often discredited.

We grant that it might seem as if keeping projects in-house will save money. But in the final tally, you really have to wonder: How much money did Company B lose by not spending some to hire Company A?

The money you save can be perilously expensive.