Software is Plural

A short piece of advice for everyone, client and consultant.

"Softwares” is not a word.  Software is a mass noun and, therefore, always takes a singular verb (“The software is installed” vs. “The software are installed” and never, ever “The softwares are installed”).  It serves as both a singular and plural depending on context.

When you say “softwares”, you look ignorant.  Stop using it.

Consulting Excellence: Objective Internal Measures

In a previous post, I briefly mention performance and promised more discussion around objective targets.  So, I am going to write a four part series on how to objectively measure the performance of individual team members in a consultancy.  The four areas I will cover are:

1. Financial Performance
2. Client Satisfaction
3. Knowledge
4. Contribution to the Team

In my opinion, no other valid, meaningful measures exist outside of the above, with valid and meaningful being defined as those that create value for the client or the organization.

Each posting will address the definition of the measure group; provide specific calculations and benchmarks; and discuss methods for collecting and reporting on the data. 

“I did my job” – “Yeah, but we suck”

It is inevitable that someone occupying my position is going to deal with escalated client issues from time to time.  To determine the root cause of the escalation, I spend a lot of time with staff, project management and their counterparts on the client’s side discussing what happened, when and why. I work very hard to be objective, non-threatening and non-defensive in these discussion.  But, what I notice is that I reach an inevitable stopping point where everyone gets to essentially the same comment, i.e.:  “I did my job”.  Maybe, but I’ve got a pissed off client who is not going to pay their bill.  Therefore, we didn’t get the job done and, therefore, we suck.

Here’s the most important things I think we can do to avoid this trap:

1. Relationship build:  As doctors can tell you, if your client likes you, you don’t get sued.  In our industry, having a strong personal relationship with a client almost guarantees a reduction in finger-pointing and a faster, quicker resolution to problems. At the end of the day, if you hit your targets (“I did my job”) but the client doesn’t like you, you’ll never see the client again (“You suck”).

2. Admit Mistakes, but Present Solutions:  Recently, I badly mis-scoped a BI project.  When it became apparent, I sat down with the two primary business owners for the project, admitted my mistake (“I suck”), told them how I was going to fix it, the financial ramification to them (in this case, none), and what I needed to help me hit the reset target.  Were they annoyed, yes.  Did we get the job done and are they a reference:  absolutely.  I didn’t say “Hey, I did my job”;  I admitted the mistake and told them how I’d fix it (“So we can suck less”).

2. The Scope, Only the Scope and Nothing But the Scope:  Immediately after taking over my current position, I had a conversation with two senior teammates about a significant client sat issue.  They told me that we had gone beyond the call of duty on multiple occasions to move the project along when the client wasn’t getting the work done. Therefore, we “did our job”.  Actually, what we did was enable continued poor delivery discipline for the client, spent their money in the form of project overruns without asking for permission, and stepped outside of our legal framework by delivering services for which they had not contracted (“We sucked”).  If you need to pick up a client’s slack, ALWAYS make certain you clearly advise them of the problem (“Your not getting things done”) and resolution (“I can do it for you for an extra $x”).

3. Don’t Hold the Grenade:  If you see something going wrong in a project, raise your hand.  If you are going to be late, let the team know.  If you don’t understand what you are doing, ask for help.   Whatever you do, don’t stay silent, burrow in or plow through since everyone around will assume everything is okay when its not.  Put simply, communicate, communicate, communicate.

4. Mistakes Don’t Mean You’re Bad, Just Human:  This is tough.  If the client is an ass, or your company’s culture doesn’t support learning from mistakes, admitting you made one can drop a world of hurt on your shoulders.  In the long run, acknowledging the mistake (or better, finding it and surfacing it yourself) then learning how not to make it in the future will increase your future performance (“10% less sucking this week and every week”).

5.  Lastly, Remember Why We Got Hired:  At the end of the day, the client doesn’t hire us because we know the technology.  The client hires us because they believe we will make their business life easier and more productive since they won’t need to worry about doing this project by themselves.  If, as consultants, we don’t constantly reinforce that feeling (and this is really what “Doing our job” means), then we will always suck.

Vertical focus only makes sense for Microsoft

Author:  Curtis Beebe

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Microsoft’s “verticalization” of their Dynamics channel makes all the sense in the world from a Microsoft channel management perspective.    The designation of vertical specialties gives Microsoft an objective approach to resolving channel conflict, assigning leads, and providing sales & marketing support.    At first glance, this is one of those “blinding flashes of the obvious” that will enable partners to sell better, reduce sales cycle time, reduce the cost of sales, and stay focused in a specific area of expertise.

 The problem is that it doesn’t work.  The first issue is that the Dynamics products, just like all of the Microsoft products, are horizontal by nature and design.  Sure there are some ISV’s that provide a bit of industry specialization, but ERP and CRM solutions are inherently NOT vertical solutions.  They are designed to provide processes and functionality across a range of business types.

 That brings us to the second problem.  Because they’ve been selling horizontal products, most partners have grown their businesses horizontally.   Some of the savvy partners have developed industry specific knowledge and terminology to help them sell, but the solutions remain fundamentally horizontal.   As a result of the horizontal approach, partners tend to look at their customer’s businesses based upon the business process groups that are being automated: process manufacturing, discrete manufacturing, professional services, wholesale distribution, depot management, etc.   

The big disconnect is that Microsoft is trying to define the customer’s business based upon SIC codes.   The SIC codes are focused on the type of product being manufactured, sold, or distributed, rather than the general business process group:  one business process could map to dozens of different SIC codes.  The result is that partners are trying to manipulate the lead distribution system by selecting all of the hot, unassigned SIC codes within their geographies rather than truly focusing their business.

This effort is doomed to become just lip service that partners pay to Microsoft in order to ensure they get their share of distributed leads.

Evaluation of Consulting Staff

The cornerstone of consulting excellence is the quality of the consulting staff.  So how do you make the decision on who is high quality and who isn’t?

Two factors come into play:  performance and cultural fit.

Performance is easily measured by utilization, realization, client satisfaction and revenue generation.  If you don’t already objectively target and measure the above, start.  More postings on this later.  A high performer will be at 100% of targets in almost any give 12 month rolling period.

Cultural fit assumes you have a culture to which being a fit is rewarding.  If you don’t place any effort on cultural excellence inside your firm, you should – see my previous post on mission as a foundation to culture.  I’ll write more on cultural excellence in later posts.  In the meantime, use observed teamwork, client sat and general “does this person get along well with others” as a proxy.

Using the above, everyone will fall into one of four categories, listed below by ease of corrective action.

High Performer, Gets the Culture

This is the easy one.  Do what you must to keep these people on the team and pay them plenty of attention.  The majority of your personnel management time should be focused on this group of people.

Low Performer, Doesn’t Get the Culture

Fire them.  They may have room for improvement, but you don’t have time to do it.  After you are done, review your hiring procedures to find out why they even got a job with you in the first place. 

Low Performer, Gets the Culture

This is a little harder.  This person will fit in extremely well with their teammates, do well with clients (at least in terms of personality) and be generally a good fit for all the cultural elements of the firm.  However, period over period, their performance will be below their peer group, their work will be substandard and you’ll find yourself always accepting or making up making up reasons for their poor performance.

Get them on a 90 day plan that specifically addresses the performance shortcomings.  Invest the time to make sure they have a more than fair chance.  The extra effort you invest, if they improve, will be more than paid off in loyalty, a strengthened corporate culture and improved performance.  If they don’t improve, you must fire them.  A consultancy is a meritocracy, not a remedial education program – consistent low performers have no long term role on the team.

High Performer, Doesn’t Get the Culture

This is the hardest category to manage.  Top performance on a consistent basis makes these people very valuable to the firm.  Poor cultural fit makes them very hard to work with.  So, you’ll find them to be top revenue producers, but will often find they work poorly on project teams, care little about the impact of their behaviors on those around them and on occasion will cause client satisfaction issues. 

What to do?  Counsel, counsel and more counsel – this is the group that should consume the second biggest amount of your personnel management time.   During performance management reviews, you’ll have to spend your time consistently coaching them on better behavior and matters of emotional intelligence.  Change will be slow – their cultural fit will only improve to the extent you can show them how it will make their lives easier or increase their personal performance.  Ultimately, this group is like Dennis Rodman – a top performer whose high-maintenance personality only makes them employable as long as the performance stays high.  When the performance slips, they give you no reason to continue their maintenance.

Whining, Complaining and Grousing

Its been a little over 4 months since my last post, mostly due to a) the birth of the newest member of the Specht clan and b) the management team and I practicing what I preached in the last three posts.  I can report, with great happiness, that our efforts (home and work) are paying off – my newest child is wonderful and our clients continue to be generous with work, even beyond my fondest hopes.

The stresses of the economy still exist. In both my own company and many for whom I consult, I’m hearing frequent and ongoing complaints about clients (who are cheap because they won’t buy), sales team (who are lazy because they can’t close business), consultants (who are prima donnas that don’t appreciate how hard it is to close business), managers (who are morons because they need to [fill in the blank] faster, better, more often etc.), and employees (who are ungrateful because they don’t appreciate how hard it is to make payroll and health insurance payments).  Put another way, everyone seems to be complaining about everyone else.   So, for those modest few that care about my opinion, I offer this:

First, everyone take a deep breath, relax and develop a sense of empathy.  Those around you are doing their best in tough times, just like you.  Our clients are afraid for their jobs and trying to save money when they can.  Our sales teams are hearing disheartening “no-s” more often then enthusiastic “yes-s”.  Out consultants feel extraordinary realization and utilization pressure AND get the onsite impact of the client’s fear. Our managers, god bless ‘em, are trying to do the best they can with short staff, short budgets and long hours.  And every employee in every consultancy is wondering when a layoff is going to take their job away. 

Second, strap on a pair and man up.  This is a hard business played out on a complex field of complex products, high expectations and difficult business problems.  If you can’t deal with that, get out and send your clients and best staff to us and I’ll see they are welcomed and well cared for. Until then, see the preceding paragraph.

Lastly, of my relatively small group of close friends, I am the only one still employed.  I see the effect of layoffs in a very direct and personal fashion.  Among my professional network, close to 1/3 are looking for new jobs.  As a result, I spend significant time doing referrals, networking and writing letters of recommendation.  So, if anyone reading this is looking for truly awesome Microsoft technology professionals almost anywhere in the country, please drop me a note with what skills you need and I’ll be happy to make introductions.

Managing in a Downturn – Part III – New Revenue Sources

If you followed this series of posts (Part I and Part II), you’ve read my opinions on creating better client attachment through a consistent client sales plan and creating a more cost efficient organization.  In this post, I want to address how to create new revenue sources from your existing intellectual capital and product mix.

Every day that I am selling to our clients, I see them do the same thing:  they take their scarce investment dollars and place them in the projects that create the most immediate impact on their revenue stream or cost reduction strategy.  Not the largest impact, not the most systemic impact, but the fastest, most immediate impact.  The philosophy seems to be “I need it now because I may not be here next month”.  As confirmation, recent discussions with Microsoft sales team members told of large projects getting iced, medium sized placed “under consideration” and smaller are getting done, but it takes more effort.  While fishing with some friends earlier late last week, a senior sales rep specializing on monster ERP deals said that he’s back to cold calling and talking to customers “that I wouldn’t have picked up the phone for” this time last year.

What do you need to do to meet this kind of customer demand?  Take a look at your core business and client base for new ways to deliver your services or new complementary products that add value quickly to the customer.  Some guidelines:

1. No New “Bet The Farm” Products Offerings:  This isn’t the time to bet the farm on something completely new that has no complementary value to your core business.  So, if you are a network security shop, don’t start selling CRM.  If you are a CRM shop, don’t suddenly start doing web site and content creation. I know the temptation will be to jump to a new market (“Hey, everyone’s doing MOSS well, we should do that”) but the folks that will survive that new market are the ones already there and already doing the work.
2. Make Your Services Bite Sized: If you can’t sell a complete network re-architecture engagement because the client is nervous about committing the funds, how about just focusing on moving them to Exchange 2007 to take advantage of its more robust mobile access functionality and higher performance from its native 64bit design?
3. Package Your Services:  Rather than creating a scenario where you have to discuss their needs, develop a custom quote, negotiate rate, etc instead use your experience in your customer base and the knowledge you glean from talking (often) with your customers and come up with packaged sets of services that are modestly priced, pre-quoted, and with ready to sign contracts for when they say yes.  At my current company, we defined an entry level BI solution (that includes significant internally developed IP coming from our years of experience in CRM and ERP) that we sell as a fixed price project to customers needing better information on their selling and financial activities.  Its priced for less than $10K, is delivered in 3 – 5 days, and has a clear, immediate value prop.
4. Expand into Complementary Services: This is the time to find better and different ways to serve your customers AND leverage existing organizational knowledge.  But, you have to do this incrementally, not by attacking a whole new product segment.  So, if you are a .Net dev shop, take a look at MOSS as a workflow automation platform so you can provide such functionality in your existing apps.  If you are a CRM or ERP shop, find ways (like BI)  to unlock years of accumulated data so your clients can better understand their businesses.  If you are a network integration shop, add better remote access systems and lower cost security appliances so hard working and time constrained remote staff can more easily get at corporate data. 

You will know much better than I what will work best for your consultancy and your customers.  Just make certain that its an incremental move with high-value to your customers and takes maximum advantage of your own intellectual capital.

Microsoft Changes BI Strategy

On January 23rd, Microsoft announced a change to its BI roadmap through discontinuing portions of Performance Point Server and downgrading other functionality into MOSS Enterprise.  Read my post on this subject at the IBIS ERP Blog.

Managing in a Downturn – Part II – Staff Turnover

So, because you recognize my astonishing genius, you’ve taken my advice and developed an effective client management program that increased your revenue pull from existing clients and lowered your cost of sales.  However, its still not enough to meet your profitability targets.  So what do you do next?  As I mentioned in my introductory post to this series, consulting is very simple:  if you manage your opex, its either about top line revenue or personnel costs.  In this post, we are going to look at the cost issue. 

Why look at cutting personnel costs before finding new revenue sources?  After all, firing people exposes you to legal risk, emotional angst and long term reputation risk (I’ll discuss these in detail in another post).  Three reasons exist for looking at this first:

1. Its faster:  You can reduce personnel faster than convincing clients to buy new services from you.
2. Cost has to be productive:  If you are not getting revenue production out of your investment in staff, now is the time to make the hard decisions.
3. Earn your salary: You should have a system that measures and evaluates performance as part of running a PSO. If you haven’t shame on you.  Get it done now.

So, how do you do this:

1. Establish your targets and your plan
2. Go after management first
3. Communicate clearly and often

Establish Targets

Before you do anything, understand (based on your revenue forecast) what your personnel cost has to be to hit your target margins.  Assume you have a $1M revenue forecast with target gross margin of 45%.  That means, you need personnel costs (don’t forget to load it with taxes, insurance, 401K, non-billable travel, salaries, etc – all the direct costs of having someone working for you) of no more than $550K ($1M *(1-.45)).  If current costs are $700K, you need to cut $150,000 in costs.  If the average cost of an employee (fully loaded with direct costs) is $125K, you’ll need to layoff at least one, perhaps two people. 

However, before you consider layoffs, think about some other ideas.  Is your team sufficiently tight knit that everyone would consider reducing the variable comp to save the $125K rather than seeing someone leave?  Could you get savings from canceling non-bill travel activities?  Can you reduce salaries but still keep everyone together?  This subject was pretty well covered in a New York Times article so I won’t cover the same ground.

Once letting someone go is the option, what to do next?

Go After Management First

I’m in management, so don’t take this as a call for proletariat revolt.  My rational is pretty straightforward: 

1. Management runs the company and gets a premium for doing so.  If they weren’t able to position the company correctly, they should be penalized by losing their jobs first.
2. Management jobs cost you more.  You can get bigger economic gains from getting rid of fewer managers.
3. Consulting staff has the knowledge of your products and customers.  They will lead you out of the downturn because they’ll be there to do the work as clients need it done.  They can survive without a manager; you can’t survive without them.

Any reduction in staff is painful, so how to you keep everyone positive?

Act Fast/Communicate Clearly, Early and Often

Once a decision is made to layoff staff (regardless of level), make the decision, then execute.  Don’t wait days or weeks – do it quickly.  The longer you wait, the more likely everyone will begin to find out.  Don’t delay because someone is key to a sales cycle or project – if they really are key, you shouldn’t be letting them go.  Just get it done.  This subject (how to conduct a layoff) is covered in a bunch of different forums.  One I liked recently can be found here.

Once you execute,  give the remaining team lots of well targeted information as early, and as often, as possible including how you made the layoff decision and who got let go.  Good communication is especially important in troubled economic times as, in the absence of clear information, people will make up their own stories (always negative) of what’s really going on.

With respect communicating to staff, I have two ways I like to see this covered:

1. When times are clearly worsening, do a comprehensive meeting, email, etc that discusses:

• Current company financial state:  Cover the good and bad. Be clear about your forecasts and the conditions on which they are based
• Discuss the alternatives you are considering
• Talk about what you’ve already done
• Talk about the timeline for the next set of changes

Update this periodically in a similarly comprehensive fashion by comparing what was predicted, what you promised you’d do and what you actually did.

Then, periodically, send updates on:

1. Sales pipe
2. Staff performance (UTE, Realization, Goal) at the individual, group and corporate level. Include sales team progress against quota.
3. Progress against overall goals

Remember:  you can’t over communicate.  Use email, blogs, text or whatever technology works best for you to get the message out frequently.  If you can, do company-wide meetings or phone calls as often as is feasible.  Also, don’t forget that a couple of lunch meetings a month with staff, where you connect personally, goes a long way to helping the message you want take hold in the way you want it to.

In my next post, we’ll take a look at finding new revenue sources to vector revenue up rather than down in a bad economy.

Managing in a Downturn – Part I – Existing Client Management

A company for whom I used to work spent, in one year, an average of $40,000 per customer acquisition.  Assume labor margins run 45% (on the higher side in our space when you factor in management salaries), and you quickly see that the first deal with a new client has to be about $89K in services just to break even.  Whereas, the next deal with that same client will cost…anyone?…Buehler? 

Well, not quite $0 but certainly less than the fully loaded cost.  And, before anyone gets up in arms about $40K being excessive, do this math:  Take the total cost of all sales salaries/taxes/benefits/401k Match (including sales operations), add to it commissions, add to that marketing and advertising (including any SEO, click through, site maintenance costs, etc.).  Add to that all direct selling expenses (meals, airline, mileage, social events, football tickets, etc).  If you are owner operated, don’t forget to allocate a portion of your compensation based on time spent in selling and marketing activities.  In essence, total all costs spent to bring your company to the attention of a new client.  Divide that total by the number of new clients acquired in the year.  Do it for the last three years.  Prepare to be shocked. 

With that point made, its clear your best source of new, higher margin, revenue is existing clients.  And, in theory, you’ve served them well in the past so you should have a leg up in selling them additional services in the future.  The question becomes, how do you do it?  Here are my suggestions, based on the assumption that the services team will own this effort rather than having the luxury of an existing client sales force.

1. Rank your Clients:  Identify your top X (10, 20, 100, etc.) clients based on a combination of past revenue production, client size (gross revenue, employees, desktops, etc), and your best guess on the total opportunity size in the next 12 months.  You’ll have to determine the best way to weigh the components in the ranking scheme (and how you rank them), but you must get it to a simple A (“we need to talk to them right now”), B (“we need talk to them this year”), or C (“we’ll talk to them when we’re done with everyone else”) scheme. 
2. Assign Account Owners:  Assign someone to own the call plan on each A account.  For B’s, discuss them only after you have started execution of a call plan around the A accounts.  The people you assign should be senior project managers, directors or the equivalent.  More importantly, they should be capable of talking about the client’s business, understand your value prop, and have the requisite knowledge and experience to pace through the following steps.
3. Develop a Q1 Contact Plan:  In Q1, meet every A client.  Ask to meet you primary contact, but also ask to meet with related business owners (esp. if your focus is CRM, ERP or any other business related app).  In the meetings, don’t sell, listen.  Ask them about what challenges the coming year will bring, ask about the current business plan, ask them about what they fear in the current economy.   
4. Meeting Follow-Up:  After the meeting, deliver a brief document that both outlines the meeting discussions, but also presents 3 things you can do to help them with the business challenges they have in the coming year.  Meet with the same team to present the follow-up plan.

The point behind this is simple: target your services to their business challenges rather than just trying to sell them “stuff you do”. 

In my current company, we actually have the benefit of an existing client sales team.  One person in particular, is VERY good at getting client meetings where she simply asks “How are we doing, how can we do better and how can we help you?”. She almost always takes a PM, Director or Senior Executive with her so as to have a technical resource with her to add immediate value in the discussion.   When combined with disciplined follow-up, its amazing how well she does at mining new opportunities our of her current account list rather than having to chase down new, expensive accounts.