When to call it - Sunk Cost Fallacy
Many New Zealand businesses are quietly held back by one simple idea: “We’ve already spent so much on this system… we can’t change now.”
That thinking has a name – the sunk cost fallacy – and it shows up in the digital landscape every day.
What is the sunk cost fallacy?
The sunk cost fallacy is when we keep investing time or money into something because of what we’ve already spent, rather than because it still makes sense for the future.
For small to medium businesses, it often looks like this:
You bought a custom-built system five years ago. It was expensive. Staff have battled with it, workarounds have multiplied and updates are slow. Newer cloud-based tools could now do the same job better, faster and cheaper, but every time someone suggests change, the response is:
“We can’t walk away; we’ve spent too much on this.”
The result?
You keep paying for:
Extra admin time
Manual spreadsheets on the side
Licence fees or support costs
Lost opportunities because the system cannot integrate or scale
All to “protect” an investment that is already gone.
Good digital decisions are about future value, not past spend.
How we help businesses reset their digital thinking
Our consultancy works with small to medium organisations across Aotearoa to answer two core questions:
What does your digital landscape really look like today?
What do you actually need for the next 3–5 years?
We come in as an independent partner – with no products to sell and no hidden agenda – to help you separate sunk costs from smart investments.
1. We map your current landscape
We start by building a clear picture of your digital environment:
Systems and applications you are using
Where data is stored and how it flows
Manual workarounds and “shadow systems” (spreadsheets, side tools)
Integration gaps and risks
Often, this step alone makes the sunk cost issue visible: people can finally see where the old system is holding everything else back.
2. We connect technology to your business goals
Instead of asking “What system should we buy next?”, we start with:
What growth you are aiming for
What your customers and staff actually need
Where compliance, security and data requirements are heading (including NZ data residency and local regulations)
From there, we identify the capabilities you really need – automation, reporting, integrations, self-service, or improved customer experience – and only then do we talk about tools.
3. We highlight where to stop investing
A big part of overcoming the sunk cost fallacy is giving you a safe, evidence-based way to say:
“This system has served us, but it is no longer fit for where we are going.”
We provide:
Simple decision frameworks for retire, replace, or retain
Cost/benefit views that include staff time and risk
Options to transition in stages rather than all at once
This makes it easier to reduce spend on low-value systems and redirect that budget to technology that will support your future.
4. We design a practical, staged roadmap
Most small and medium businesses do not need a “big bang” digital transformation.
Instead, we create a step-by-step roadmap that might include:
Quick wins (e.g. small automation, better reporting, or simple integrations)
Medium-term moves (e.g. replacing one core system, consolidating platforms)
Longer-term foundations (e.g. data strategy, architecture, and governance)
Each step is sized to your budget, capacity and risk appetite, so change is manageable and measurable.
Why this matters now for NZ businesses
Digital tools are no longer “nice to have” – they shape how you serve customers, how your team works, and how efficiently you can grow. Hanging on to systems purely because of what you paid for them can slowly erode:
Profit margins
Staff morale
Customer experience
Your ability to innovate
By facing the sunk cost fallacy head-on, you give yourself permission to ask a better question:
“Knowing what we know today, is this still the right tool for our future?”
If the answer is no, we help you plan what comes next – in a way that respects your past investments but is not trapped by them.
If you’d like an independent view of your current digital landscape and a practical roadmap for what you really need next, get in touch. We can review where you are today, highlight where sunk costs are holding you back, and work with you to design a future-focused, right-sized digital environment for your business in Aotearoa.
