So I’m searching for a new BI\Dashboard software company that offers a very narrow list of features, to wit:
- Primarily driven by dashboard creation that integrates with MOSS
- Provides for mobile dashboards accessible from iPhone\iPad, Droid and Windows Mobile
- Pre-built MS SSAS cubes for Dynamics AX
- I didn’t care if it provided ETL creation or cube creation capabilities as I’m pretty comfortable inside BIDS and with SSIS and SSAS.
- I did a Google search (sorry, Bing search) using terms meaningful to me and filtered down the first 5 pages of returns to get a list of potential companies. I know almost all of them already, but hadn’t spent much time on their websites before. So, that was my first stop. All I wanted to know was what products they had, a quick synopsis on what each does, if they integrated to AX and MOSS, did they have a mobile solutions and what the basic pricing was like.
Instead, I had to weed through pages that talked about business value, solutions, the importance of analytics, their management team, their mission, the customer lists, synergy, recorded demos, dense graphics, customer testimonials, news listings etc. AAAAAAAAAAAAAAAAAHHHHHHHHHHHHHHHH!!!!!!!!!!!!
In essence, I wanted to know 5 simple things and had about 10 minutes total to learn them. Instead, I wasted all 10 minutes just trying to figure out how to find what I needed. In essence, their sites weren’t letting me buy – they were forcing me to be sold.
Go take a look at your company’s website – what do you see?
As a consulting manager, you’ve got three ways you can approach your job: be a sales partner and drive business, be a talent manager and hire/retain/train the best consultants, or be an operator and focus on process, measurement and delivery tasks. Most of us, in any job, do all three (sometimes in a single day) but most of us are usually best at one and tend to play to that strength. At times we have to prioritize one of these areas over the others because of some combination of external factors.
In my current job, the guys that report to me are really, really good in the sales cycle and pretty good operators so I spend a significant amount of time on talent recruiting, performance metrics and internal projects to improve productivity, efficiency and quality. In fact, I think its fair to say that I’ve spent the majority of my time in the last 2 years in this area. And, as a result, I’ve discovered something pretty important……none of it matters.
Don’t get me wrong – process and and a continual drive to improve are one of the hallmarks of excellence for a consulting team. But, despite that, three things are far more important:
Leads, sits and sales.
Let’s face it, folks: if you don’t sell, you don’t have anything to which your excellent processes can be applied. And, you can’t sell if you don’t get sits with a prospect. Of course, you don’t get sits if you don’t get leads that generate that sit. Ergo sequitur, the most important thing to a consultancy is leads, sits and sales.
So, if you have leads, sits and sales, keep on your approach. If not, drop everything and get deals closed. Pretty easy, no?
I’ve just spend the last two weeks of my life, weeks that I will never, ever get back, negotiating service agreements, statements of work and support contracts for four really huge deals. We’ll close all of them, of course, but it got me to thinking about all the time I’ve spent in my career dealing with contract negotiations and how much I love technology and people and how much I dislike contract negotiation.
Let me make it clear that I don’t hate lawyers or contracts. A friend of mine, an ex-judge on the Texas State Circuit Court and now a SWAT team litigator for a prestigious Dallas law firm, once took me to task for belittling the contract process and the attorneys involved in it. His insights, to this day, shape my attitudes and outlook on this process.
I believe contracts serve two purposes. First, they confirm the terms under which two parties want to form a close and often deeply intimate relationship. By being clear in these terms, they eliminate doubt, set expectations and clear the air in advance of work being done. This frees the creative juices of the parties to do the actual work they both believe will lead them to greater degrees of success. Second, they memorialize that understanding so the benefit of the agreement accrues to future or successive participants despite the absence of the originators. Again, this frees the new players from uncertainty and debate and allows them to more freely go about their business. Lawyers, to the extent they help the parties gain clarity, align in agreement and make clear their positions are doing some of the most important and admirable work in capitalist society. Not quite as important as those individuals who take significant personal and capital risk to build new companies, fund new ideas and create new jobs, but right up there.
When I negotiate with clients over these valuable little jewels of understanding, I run into three basic types of attorneys:
- The Business Guy: This is the attorney who is closely aligned with the commercial concerns of the business, understands those commercial concerns, and seeks diligently to reflect those concerns in the legal context and language of the contract. These guys are really easy to work because they only focus on clear understanding and alignment with the commercial concerns. I treat them like a trusted partner, am completely open and transparent in my dealings with them, and generally get deals done very quickly with them.
- The Rewrite Guy: This is the attorney that rewrites every aspect of your documents because they are not the way he would have written them. Their mindset and perspective may be protectionist of the commercial side of the transaction, but they end up changing everything. With these folks, if they are genuinely trying to act like “the business guy” you’ll just have to work through it. If they are acting like the next category (see below), you may have a challenge. I generally just bluntly talk to them about the issue, to wit: “These agreements may not be perfect, but they’re pretty good. Can we just focus on the commercial issue most important to you?”
- The Persecutor: This is the attorney who attacks you on everything, never gives an inch, and belittles every attempt to compromise. You have only three choices with this guy. If you need the deal, hard negotiate. It will take a ton of time and you have to be very patient. If you don’t need the deal, walk away and advise the prospect that their attorney is not being reasonable. Lastly, the approach I normally take, is to engage our executive sponsor, explain the situation and ask them to participate in the discussions in attempt to mediate. If they will, expect to spend a lot of time on the phone – sometimes days or months (one deal in Chicago took 6 months just on legal). If they won’t, I walk.
In closing, a big thank you to James Stanton (my buddy from Dallas) for his influence on my thoughts and to Betsy Tucker and Gregg Lallier who are two attorneys I recently had the pleasure to work with on deals and who were great partners in making the deals better for everyone.
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.
Maurilio Amorim has an interesting new post on Red Flags Your Business Relationship is in Trouble. The lessons in the post apply well to Dynamics partners. The first two items, Communication Blackout and Justification Inquisition should be common sense to anyone who has spent any time with another human being. If the client is not communicating or requesting considerably more information and documentation than normal, you have a problem.
The next two items, dealing with the Internal Teamer and More for Less, are both very applicable to Dynamics partners. We’ve all seen cases where a client hires someone internally hoping to reduce consulting fees. Maurilio’s advice is “Play Nice”. Often the client doesn’t get the savings or efficiency they were looking for. I would add, make the internal hire your friend. Frequently the expectations placed on the internal hire are unrealistic. They are being tasked with replacing a team of consultants and find themselves desperately looking for help. You have the opportunity to turn the Internal Teamer into and advocate for your firm.
More for Less is the critical lesson we all need to internalize. Lowering fees and increasing output devalues your work, especially when you do that to save a client. Read Maurillo’s whole post for the details.
I think that the Dynamics community as a whole has a lot of room for improvement in conducting any kind of formal post project review and I think that there are a number of reasons why. Specifically:
- Despite the Sure Step process of “releasing the implementation team” the reality is that often much of an implementation team trickles off incrementally as part of post implementation support. Rarely (never?) is there a close the project meeting where everyone goes off to new projects.
- Team members may be move on and off projects for specific tasks that go live at different times.
- Its expensive in terms of unbilled hours and possible travel to pull together a team for a post project debrief.
I still maintain that an effective post project debrief would got a long way to improving future implementations, spreading institutional knowledge and building better teams but those are soft items and they bump up against the lost billable hours required for a review.
I don’t have any great answers for this problem. I’m hoping that the addition of the Sure Step Project Review Document will help facilitate this process both at the end of a project and at major milestones. I also think that the project review needs to be done with only partner personnel, not shared with the client. A separate review with the client may be appropriate but In many cases the discussion can center around how to better deal with certain types of clients. That candor is critical and won’t happen in a mixed environment.
So here is my call for improvement.
- Do you conduct consistent formal project reviews?
- How we turn off the cuff reviews like “that project went well” or “that project was a mess” into something actionable on future projects?
- What suggestions do you have to encourage more post project reviews?
Post your comments here or email me at firstname.lastname@example.org
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 came down hard on consultants who hide behind the phrase “I did my job” when, at the end of the day, we have a seriously damaged client relationship. But, in that post, I ignored one precious and important fact of life:
Some people are assholes. And some of them are your clients.
We all know the signs and behaviors. They never do anything wrong; its always your fault. They never deliver anything of poor quality; you just didn’t explain it right. They are never late on deadlines; you just weren’t clear on when you needed it. They don’t think your training was worth anything, but they didn’t pay attention in class. They second guess every recommendation you make, but never have any useful input. The cancel meetings at the last minute, but won’t sign the change request to approve the cost overruns that causes. They sign a contract with you, but then don’t abide by the terms. They always want something for free. They don’t pay bills on time, abuse you and your staff and generally make your work life a misery.
Well, here’s how you fix that problem:
That’s right, fire them. This is about the only time you’ll see me give advice that doesn’t entail some degree of “the consultant needs to up their game and do better”. You can’t fix these people. They have some kind of deep rooted need to make you feel like crap and, if you drill down on it, they probably do it to everyone else they work with. Most likely, they have empty and lonely lives and leave work only to be greeted by a houseful of neurotic, asthmatic cats. But, whatever the cause, you can’t fix them and life is too short to continue working with them NO MATTER what they generate in revenue.
So, give yourself a break, get rid of them, and spend your newly free, relaxing time finding someone who really gets the value you provide and who will be a good partner.
Author: Curtis Beebe
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.
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:
- 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.
- 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?
- 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.
- 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.