While at MS Convergence 2013 (#conv13), I drank a couple of Xanax martinis with a twist of Cymbalta and realized why I really do love my job.
1. The team: I love working as part of a high performing team. Watching Abby Moore and Sandra Dodge just KILL their first large public presentation at Convergence 2013 was a complete joy. Add in Frank Hamelly, Mark Polino (that’s right, two MVP’s), Clinton Weldon, Jon Byrd, EJ Reese and all the other members of the IBIS convergence team and you get an astonishingly great group of folks to admire.
2. The partners: Despite Microsoft’s continued and misguided efforts to accidentally erode the partner channel, it’s still a really solid group of smart, forward looking hardworking folks.
3. The customers: The reason we exist, the meaning in our work lives, the purpose behind the 40+ per week we spend together. #Conv13 reminded me of the tremendous relationships I’ve forged and friendships made over the years with the people who pay my salary. In general, they are awesome and building things to make them better at what they do is why we all get up in the morning.
Put all those together and its like driving a Ferrari on the Autobahn at high noon while the physicist supermodel next to you explains she’s actually a wealthy heiress and she’d like nothing better than to coddle you financially for the rest of your life.
Boo-ya. Loving my life,
If you read this blog, see me at a conference, follow me on Twitter or just talk to me, you’ll know I am a passionate believer in hiring fresh, new talent into this industry (read this for more detail). And as Microsoft partners, you always ask two questions:
1. Where do I find them? Answer: College campuses. Read my post for more detail.
2. How do I train them?
At IBIS, we’ve invested a huge effort for the last 5 years in creating a 12 month Associate Consultant program that develops our college hires into some of the best consultants in the industry. Now, at last, Microsoft, through the hard work of Sara Gjerdevig in Fargo, has helped by building the Dynamics AX FastTrAX Summer Institute (the link only works for those with access to Partnersource).
An outgrowth of the FastTrAX training program started last year (an 18 day Financials and Trade accelerated learning course), the Summer Institute is a 30 day program on the NDSU campus in Fargo. Covering Financials, Trade, MR, Accounting 101, Consulting 101 and very broad introductions to reporting, industry and verticals, the program is an ideal way to launch a new consultant. For this pilot session, the program started July 9th (ideal for recent college grads) and completed today.
27 attendees from about from about 8 companies (the company list read like the who’s who of the industry) lived, eat, drank and breathed AX and Microsoft for an entire month all for an incredibly reasonable price including significant rebates from MS for passed exams.
Folks, I gotta tell you, I think Sara and the team did a really good job. The instructional quality was great, the facilities were awesome and I really think the result will be more than worth the modest investment. So, if you want to hire the college crowd but need to outsource training, contact Sara Gjerdevig and get started.
At 28, I started my first company, focusing on SQL Server and Great Plains Software (specifically, Dynamics C/S+ for MS SQL Server). At the time, everyone around me was roughly 28-35. Today, I am 46. Everyone around me is roughly 46-53. Yet, the industry has grown, the deal sizes are larger, and the expectations for continued revenue growth is higher. So why is it I keep seeing the same familiar faces, the same resumes and the same “senior level” skill sets which are really just 5 years of experience repeated 4 times?
Its because we haven’t, as a group or industry, created an engine to deliver to us our next new hire. Law has law schools. Doctors have med school. CPA’s have university accounting programs. We have…well, nothing really. We sometimes take people out of our customers. We outsource some overseas. We sometimes hire someone that took the exams on their own. But, overall, we just hire senior people from other companies or watch larger companies absorb smaller ones and reduce the number of companies in our space. And, as a result, we are left with the following:
- Continued downward rate pressure from clients
- Continued upward salary costs from potential staff
- Sub par skill sets on available candidates as compared to their salary requirements (Over $100K for a GP Consultant with 10yrs experience who only knows Financials and Distribution and doesn’t hold any certs? The same price tag for an AX financials consultant with 3 years experience? Really? Pass.)
Why are we in this situation? Here are my thoughts:
- By and large, the majority of equity owners in this industry focus on results for today, not two years down the road. They either want to close a major deal then immediately hire the most senior staff they can find to work it OR grow EBITDA to hit a liquidation event. In either case, they are not investing in their future labor pool.
- Most services managers and equity owners think the investment in anything other than a traditional senior hire is too expensive.
- We expect Microsoft to solve the problem for us at no additional cost to us. As evidence of this, harken back to the old GP Bootcamp days – that was cheap but it failed to lack of interest.
So, what’s the solution? There is more than one. My particular favorite is recruiting and training college hires. At my current employer, at the end of June of this year, we will have officially trained 15 shiny new college hires in the last 3 years. We take them onboard in June, do 90 days in the classroom, then put the onsite for 9 months under strict senior supervision. The first 6 mos of their total tenure is usually non-billable, but we get tons of valuable work out of them in terms of internal development (like keeping work papers up to date) or project work (meeting scribe, task do-er, etc). The last 6 months, we expect the revenue numbers to go up dramatically. In the 3 years we’ve done this, we have ALWAYS more than made back our investment in the first year. And, perhaps more telling, we have NEVER had a client give us anything but glowing reviews on our recruits.
I have other techniques, including remote services, near-shore consulting operations and career changer targeted hiring. I’ll probably write about them later, but the college hire initiative is by far the most fun and successful.
To get more information about how to start, try the following:
- Students to Business: http://www.microsoft.com/studentstobusiness/home/default.aspx
- Partnersource: They’ve added great content around staff development.
- Microsoft Dynamics Academic Alliance: http://www.microsoft.com/education/highered/faculty/curriculum/dynamicsaa/default.aspx
The last post in this series will focus on objectively measuring a consultants knowledge and contribution to the team.
Knowledge really has two facets: What you can immediately demonstrate and what you can really do.
Measuring the first is easy: certifications. These mean one and only one thing (and its the same thing that a bachelor’s degree means): you are sufficiently motivated to put yourself to some trouble to let other’s know that you potentially have a good skill set. Its kind of like taking a shower and dressing nice for a date – doesn’t mean you are going to knock ‘em dead, just that you were interested enough to go out of your way. Reporting is dead simple: put out a publicly viewable list of everyone’s certification and testing levels then advertise the heck out of the folks that are getting it done. Do a good summary by cert for the sales and marketing teams so they have a brag sheet. Then go onto other things (like meeting the new MPN requirements).
Its the second category that really causes the issues. Having a certification on Exchange is one thing; knowing how to deploy the SMTP Gateway is a whole other beast. Unfortunately, I haven’t come up with any silver bullets on this. However, I’ve been exploring some ideas as follows:
1. Create a self-assessment scorecard for everyone that is part of their periodic coaching or reviews. Let them fill it out and let their boss independently asses them. Meet quarterly to review and let the ensuing conversation unfold.
3. Do project implementation reviews/punch out assessments/lesson learned meetings at the close of each project including the business unit director, sales rep, PM and consulting team. If you have a culture that supports admitting and correcting mistakes, this will really help flesh out areas of improvement.
Most importantly, strive constantly to create an environment where folks can say “I could have done this better” without fear of penalty.
I looked last month at How Not to Annoy Your Consultants. This month I wanted to tackle one other issue mentioned in Scott Berkun’s book Making Things Happen, namely processes.
Scott defines a process as “any repeatable set of actions a team decides to perform on a regular basis to make sure that something is done in a certain way.”
Since poor processes are often a source of annoyance, this is something of an extension of last month’s post but it’s more than that. Processes are required in any business. Even the one man artist has a consistent approach to a project that is really a process. But processes are a lot like meat, they are fantastic when done right but they decay quickly. Simple processes that are given a lot of work up front have the longest shelf life. To go ahead and butcher this metaphor, think beef jerky. (The puns are free.)
By their very nature processes decay by:
• Increasing in complexity
• Not changing with the business
• Not changing with technology
Decaying processes are worse than decaying meat. Both can make you sick but meat at least warns you with that funny smell and odd color.
Every process needs a review at least annually. Every process…period.
Scott goes on to present a simple formula for evaluating the Return on Investment for a new process along with guidelines for creating better processes . Business owners and executives should pick up Making Things Happen and zip through chapter 10. Go do that now. This means you Dwight. Don’t worry, you can expense it per Mark.Go on.
Ok. Now that the executives have gone we can talk about real process issues. Sometimes there are processes that you can’t change. For managers in the middle this requires a lot of finesse. An example would be a practice manager, department head or even project manager trying to deal with processes that conflict with their employees ability to get work done.
What kind of processes keep people from getting work done? Maybe it’s a stupid process that doesn’t permit the scheduling of sick time. So surgery doesn’t count as sick time or do you not want be warned when employees will be out for surgery? Stupid. It could be a legitimate process poorly implemented. Expense reporting is a legitimate process but with a few crappy forms and complex approval processes it’s possible to increase the difficulty to near homicidal levels.
Well meaning executives can still create stupid processes and sometimes it takes a while to get them to change their mind. What should managers do with poor processes in the mean time? Well Scott tackles that as well and the three options are:
• Shield your team from the process
• Bet against the process
• Ignore the process
Shielding the team from the process may mean taking on extra paperwork or creatively interpreting the rules. The best consulting managers I’ve ever had are experts at this. The problem is that stupid processes, even if poorly enforced, are a drag on morale. The success of betting against the process depends on the organization.
In other companies I’ve bet my Dynamics GP career against Siebel, Solomon and Navision initiatives over the years and come out better every time. Open revolt is not recommended, feet dragging and passive/aggressive behavior works better. It also helps a lot if you are really good at what you do.
Finally, just ignoring the process can sometimes work. Ignoring the process also works well for processes that are not highly visible, grossly unrealistic or physically impossible. For example, if a process requires time to be submitted by Friday at 5pm but in the history of the company no one has ever processed that time before Monday morning, feel free to push the limits.
There is one other thing I would add for stupid processes. Consider the consequences. If the CEO declares that not following the process will result in termination. Follow the process. Wait it out and keep trying to change the CEO’s mind. If the penalty is a slap on the wrist, maybe, sort of, if you get caught. Don’t get wound up about it.
Now you’re asking, does I.B.I.S. have stupid processes? Yep, we’ve got a couple. In fairness it’s fewer than some companies I’ve worked for and only a few of them are Dwight’s fault. Every so often one of us gets worked up about it and sometimes the issue gets fixed. Sometimes it doesn’t. Draw your own conclusions about how the consultants deal with that.
Apropos of nothing other than as a counterpoint to Mark’s post, allow me to present behaviors consultants should avoid so as not to annoy their managers and teammates:
Assume Every Decision Management Makes is Stupid
The managers’ of a firm often have a different perspective on a situation because they often have more or different information than the consulting team. So, if a manager decides to give away some time to an unhappy customer, it may not be because they are spineless – they may know of a pending software sale, reference requirement or renewal enhancement that you don’t know about.
Complain and Not Offer A Solution
Consultants of all stripes like to grouse. Like our enlisted counterparts in the military, complaining about management, clients, work, etc is just part of the “over a beer” conversation at the end of the day. But, if you have a real complaint, don’t complain – instead, make a positive, thoughtful suggestion on how to improve the process. Don’t forget to include some thought on cost\benefit, i.e.: how will it benefit the firm and its clients.
Perfect Clarity is Impossible – Live with It
Sometimes, not everything is black and white and perfectly clear cut. You will be asked to go onsite for a day because there’s a problem, but its not well scoped and defined. You will work projects where the scope has to change or isn’t perfectly clear. You will work with clients that don’t perfectly understand how to work with IT consultants. Accept it and understand that you got assigned by your team to these situations because they trust your skills – take the assignment and do your best.
Manage Your Career
The company exists to provide the best possible service to clients and to make money for the investors by doing so. Helping you develop your career is part of what a good firm should do, but the managers WILL AND SHOULD always do it in the context of the firm’s mission not your best interests. You are responsible for taking the initiative to learn new skills, new modules and developing yourself professionally. If you haven’t spent anytime in the last year to learn something new, don’t complain that no one told you what to learn – this is your failing and will result in you being marginalized in your firm.
Blame Everyone Else
If something goes wrong, and you had a hand in it, acknowledge the problem swiftly, take responsibility immediately, and ask for help REALLY fast if you don’t know how to fix it. Don’t avoid, don’t blame and don’t hold the grenade. A clear objective explanation of a problem, a suggestion to fix it, and a request for help gets things solved with less drama, less cost and more respect for you than hiding, avoiding and blaming.
A final point. Mark is one of the five finest consultants with whom I have ever worked and does nothing of the above. Well, except for assuming I am stupid. However, he shares that assumption with my daughters, so I can’t blame him for that.
I just finished Scott Berkun’s project management book titled Making Things Happen. The book is highly recommended for PM’s and managers alike. One of the more unusual areas was chapter 10, How not to Annoy People. At the beginning Berkun covers the kinds of things that annoy people and I found that every item on the list applies to consultants.
It is impossible to run a successful Dynamics GP practice of any size without consultants. Good Dynamics GP consultants are always in demand, even more so as the economy starts to improve. They are also expensive. So why do companies still do things to annoy their consultants? I’m going to assume it’s just ignorance and we’ll see if we can get better together.
How do partners annoy consultants?
Assume a consultant is an idiot
Consultants were hired to implement Dynamics GP. When consultants are treated as if they can’t do that, it annoys them. A 20 step procedure, daily evaluation, rulebook or any other process that implies that a consultant is not competent is annoying. Certainly the company needs standards but until the consultant proves their incompetence they should be treated as if they can do what they were hired to do.
Don’t trust a consultant
When consultants are expected to check in, double check, triple check and report on decisions that are well within their range of responsibilities, it’s annoying. When consultants have to confirm everything with someone else, they aren’t really consultants, they are robots. If a consultant has demonstrated a reason not to be trusted then management should provide a defined path back to trust or cut them loose.
Waste a consultant’s time
A consultant’s time is precious, they know exactly what it’s worth. It appears on a bill every week. Most consultants I know only have two types of time, billable and family. Anything that wastes either of those is really annoying. When consultants have to over document because management is over protective, it’s annoying. When there are flip flops on important decisions its annoying. When poor management decisions lead to rework and wasted time, it’s annoying. When consultants have their time wasted in unnecessary meetings, it’s annoying.
Manage Consultants without respect
When a project is grossly underestimated and the burden put on the consultant to fix it, it’s annoying. When consultants are given assignments that have no basis in reality it’s disrespectful…and annoying. When a consultant is asked to pick up a book and learn enough Sharepoint to teach an advanced class on it tomorrow, it’s really annoying. A consultant should be supported by management not abandoned by them. Stupid processes fall in here somewhere too but that is a whole other post.
Make consultants listen to or read stupid things
For Dynamics GP consultants this includes asking them to learn stupid things. In my career I’ve been to classes for Siebel, Solomon, CRM and Sharepoint. None of them have advanced my career as a GP consultant. Consultants are asked to read, attend webinars, sit in on meetings, listen in on conference calls. Easily half are annoying. Work hard to identify the half and cut them out. Cut out too much. Good consultants will ask to get back in.
Before anyone tries to read too much into this, I have worked for a number of different partners organizations. I don’t find I.B.I.S. to be very annoying. This not true of some other partners I have worked for. Andy and the folks at I.B.I.S. always treated me with respect and been willing address annoyances when I bring them up. Can your firm say the same thing about your consultants?
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I’m starting this series with financial metrics under the theory that financial statistics are the easiest, most objective things to track and report. Financial performance metrics address the entire suite of measures related to consulting activities as measured by hours, revenue, billings and cost. The focus for this discussion is using these metrics to judge individual consultant performance, not overall practice health – we’ll discuss the broader picture of practice health at another time. Also, this is not intended to be an exhaustive list – I picked the measures that I consider MOST important to evaluate.
When considering financial metrics, three things are important – what do you measure and what do you do with the measurement?
What to Measure?
This is a labor efficiency metric showing the total number of hours you billed as a percentage of the total available to be billed. Three total available hour calculations are available to you:
Full Year: Easy, its 2080 hrs per year (52 weeks * 40 hours). However, using this as the denominator means that some people are okay at 88% ute (like consultants) and some are okay at 30% (like directors). Hence, I don’t use this.
Net Planned NC: This is 2080 – PTO – Study/Admin – Sick. If each of those components is 80 hours, that leaves you about 1840 hrs available time or about 88% of the fully loaded hours. I’d expect a consultant to bill this, but a PM engaged in selling or a director would not be able to.
1600 Rule: This is a good thumbnail for a low intensity practice. Basically, everyone is expected to charge 32 hours, 50 weeks per year and spend a little less than one day per week making contributions to the the company knowledge base, recruiting and doing administrative work. Practically speaking, if you factor in sick time, you’d need to bill about 33 or 34 hours per week to stay in range.
I keep the use of the above pretty simple: “Total Available” for consulting staff (sole contributors) is based on Net Planned NC (1840). For PM’s, I use the 1600 rule. Directors, and other team contributors in similar capacity, are at 10-20% of the Net Planned NC target. Don’t forget to adjust the denominator for the Hire Date if the person was hired inside the year being measured.
The target goal for Ute, in my opinion, is always 100% of an individually set number of totally available hours. 95% is bad, 100% is good, over 100% is best.
This is a revenue efficiency metric showing the total revenue captured out of the total available to be captured, expressed as a percentage (Revenue Billed / Total Available Revenue expressed as a percentage). Like ute, the denominator in the Realization calculation is critical. Generally, it is Total Available Hours x Budget Rate By Position. The last two words are critical – like ute, you want to target 100% as the performance standard, so the rate by which you multiply the hours should be the rate at which that position is intended to bill. Associates may bill at $140; Directors at $210. Both would use these individual rates to rack up the total available revenue number. Its up to you if you want to measure realization using budget rates or avg rates for a prior period – I prefer budget, but I actually look at both.
And, like ute, don’t forget to take into account hire date for employees hired inside the year under analysis.
3. Gross Mark Up:
This is the ratio of total earnings to total revenue. The calculation is pretty easy: take the total YTD salary + total YTD bonuses and incentive payments / total YTD revenue billed. The resulting ratio shows you the the gross markup on the consultant cost. In general, a practice needs to be above 2.5 as a group (including mgt), so the gross markup at an individual level should probably be higher.
With that said, the markup is going to be different for different levels of skill set. Someone 1 or 2 years out of school, being used as a sole contributor should be close to 5. Someone 15 years in the business, who does significant selling work, helps mentor, adds significantly to the ability of the firm to excel, etc may be at or just slightly above breakeven.
How do you use the measures?
First, don’t manage these metrics in isolation. Managing solely to ute gets you high billed hours but not necessarily good collectible hours or high realization (as an old co-worker of mine once explained to the VC run board of my then current employer: “Hell, if ya’ll want ute I’ll sell our time on eBay at $1 an hour”).
Second, always look at all of this for the billing week, then MTD, QTD and YTD. Make certain you isolate the trend (up, down, stable) rather than making decisions on a single billing period. It doesn’t hurt to look at a rolling 6 week average to flatten a bad week.
Third, always look at ute and realization together. I don’t have high ute. However, I usually bill at or above $200 / hr. So, I don’t need a ton of billed time to nail my realization target.
Fourth, review Gross Markup monthly or quarterly and always look at YTD numbers. Any period shorter than a month starts to get misleading. If you don’t pay incentives monthly or quarterly, you probably need to start building in accruals to the analysis or your numbers will be too low.
Finally, don’t make any decisions about people based on the above. Read the next few posts in the series and make decisions based on both financial and cultural perspectives.
And, lastly, how do you accumulate all this detail information? Business Intelligence tools like SSAS really help, especially when combined with ERP time billing systems. I’ll do another post a little later detailing how my company does it today because I can fill pages about techniques for doing this right. However, don’t let a desire to automate stop the measurement process – if you system isn’t perfect, its still better than nothing.
Next post: Objective Measures – Client Satisfaction
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:
- Financial Performance
- Client Satisfaction
- 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.