I Believe

Salespeople and free demos are the leading causes of ERP implementation failures. Therefore I employ neither.

Customers have the right to know the positive and negative about software solutions before making investments.

Hourly billing is the root of most ERP problems not caused by salespeople or free demos.

 

Schulz Consulting Beliefs

Sage’s Firm Of The Future Symposium – My Two Cents

Sage is extending their Firm of the Future Symposium sessions with a newly scheduled event happening in August 2011 in San Francisco, CA. I attended one of the first sessions in Atlanta as part of the ITA Conference in Atlanta.

The session that I attended was sold out – with 32 firms announced as a attending. The essential message of the Symposium:

Billing by the hour is counterproductive. The use of ranges of hours (or estimates) when quoting jobs sets up and adversarial (and some would say unethical) relationship where the client is thinking that they’ll pay the lower end of the estimated range and the consultant knows that the bill will be in the higher end — PLUS 10% (or more).

A key takeaway from the Symposium for me has been the use of options. Rather than competitively bidding on projects with smaller budgets we’ve learned to provide options to prospects. These options range from the prospect doing most of the work (least costly) to we do all the work (most costly).

Using options also removes most of the incentive for a prospect to ask for a discount. Instead of a lower price they can be offered a lower value option. It’s the prospects choice.

The concepts in this course are solid, make lots of sense – and for some reason seem difficult for most consulting firms to accept and fully implement. Which is exactly why you should go.

Most consulting firms don’t make the up front effort to fully implement these concepts and instead put their efforts into “why they can’t implement them”.

Here’s more of my experiences from attending the early May 2011 session – as well as a success story that happened immediately upon returning from the Symposium. Continue reading “Sage’s Firm Of The Future Symposium – My Two Cents”

Why IT Projects Fail – Again and Again and Again

Here’s a great post that I spotted this morning that describes why IT Contracts fail. Though it seems to center around legal aspects – I believe that the true reasons go deeper.

Most IT project failure  leads back to  fully thinking and understand the scope of the project. In the race to get the (free) quote and the (free) assessment from the IT providers the customer forgets to analyze whether they’re making a sound long term decision.

I see this all the time. People (admittedly on a much smaller scale) think they can email a request to dozens of vendors with a request to “give them a price” for a certain project.

In my world it’s usually an upgrade of their MAS90 accounting software. However occasionally it is for a new software implementation. In each instance I’m incredibly nervous that the person making the email request has incorrectly assessed their needs.

As VARS we are left with two choices:

A. Go out and do a free paid analysis (which invariably gets used to solicit bids from a preferred provider)

B. Guess at a number (and hope that if it’s approved that the project doesn’t have any hidden “gotchas”)

The core issue is that customers unwilling to developer a project definition are looking for a Chevy price when in fact they realistically need the current year’s Rolls Royce because they often don’t have the internal understanding of what’s desired/needed and think that the software magically cures the issue.

While this example specifically relates to software I believe it accurately depicts most complex projects where the customer wants a one price bid to fix something they don’t understand.

Sadly the IT world still largely operates under a model where pre-sales consultations are assumed to be completely free and the customer assumes that they’ve correctly identified both current and future technical and business issues (or that they can use a free quote to do so).

 

When It Comes To Enterprise Software – It’s The Contract Stupid image via

Here’s How We Roll

I just received an inquiry from a fellow Sage Business Partner who I’d met last year at Sage Insights (the annual partner conference).  The request he has mirrors one that another partner asked last week.

In the interest of time — and figuring if two people have the same question then probably more do as well — I will share my answer to the following:

Hi Wayne
We are a MAS90 partner in _____. I have met you at Insights in the past but I am sure you meet a million partners.

Have a question about what you use to track your time and invoice your customers? We have used TimeKeeper with ______ for a long time but have some problems and so thought maybe if there is a better option we might consider it. We still have not moved to Ed’s value pricing so rely on tracking time and invoicing it. Any thoughts you have on this topic would be great.

As luck would have it — I do have some quick thoughts. Here’s how we roll… Continue reading “Here’s How We Roll”

14 Ways To Avoid Being Screwed On A Fixed Cost Project

Yesterday we had a great conference call with Ed Kless. He facilitated a discussion centered around one of my hot topic goals for 2010 which is using fixed pricing instead of hourly billing.

I like fixed pricing for all sorts of  reasons. Mostly I think it’s fairer to the customer who no longer feels a need to track the time you spend at their office – or raise an objection that they’re being billed while you take an emergency call from another client.

The most important thing I’ve learned about fixed pricing is that the process takes much more effort than the old method of quoting a rate.

Under the old hourly pricing model the conversation goes like this:

CLIENT: So what’s your rate

CONSULTANT: $180

CLIENT: So how long should this project take

CONSULTANT: Oh, (shuffle feet) probably 40 to 60 hours — but if it’s less we’ll bill you less – and if it’s more we’ll bill you more.

See any potential problems with the old method?

There are two major issues. First, the hourly rate is not predictive of the value that the customer gets. Secondly, as Ed pointed out, who goes to the store to pick up milk and would be agreeable to a price that’s ‘between $3 and $5 – could be more could be less’.

This year we’ve been doing fixed pricing almost exclusively. There have been a lot of lessons learned. And I’ve compiled a list of my top 14 mistakes  – I call them tips but in reality they are all mistakes I made this year and worked to develop a policy to make sure they didn’t happen again.

Continue reading “14 Ways To Avoid Being Screwed On A Fixed Cost Project”

My WOW Moments For IT Alliance Fall 2010 Meeting

This morning I awoke to an email from Jo Ann Benzer who is the Executive Director of The IT Alliance. This is a group of IT Professionals who have a general meeting twice a year to compare notes on best practices in IT, hear from interesting speakers and share a nice dinner and bottle of wine or 15.

Jo Ann’s email requested a list of top WOW moments for 2010. These are items that you have found worked well in business and can be practice tips, marketing advice or cool technology that you’ve used.

One of my top WOW tips is to never write a lengthy general purpose email to someone without also re-purposing it as a blog post. These items which if sent via email can go to waste or reach only one or two people. Whereas if you post the item on your blog you share with the world.

Therefore, in the spirit of sharing – here are my top WOW moments for 2010!

Continue reading “My WOW Moments For IT Alliance Fall 2010 Meeting”

How To Turn $150 An Hour Into $50 (And Back Again)

In the consulting world there’s no shortage of people claiming to bill $150, $175 or $225 per hour. To talk with them you’d think they were invoicing an average of 40 hours  every week with no slack in their schedule.

What I’ve found is that one portion of the story is true – they have no slack in their schedule.

They probably don’t sleep much either.

That’s because they’re working 120 hours – and billing for 40.

Are they really collecting $150 an hour (or pick your favorite rate) for EVERY hour that they work?

No.

There’s one big part of the story that you’re never told though. Their average rate is somewhat closer to $50 (or less per hour). Why?

Continue reading “How To Turn $150 An Hour Into $50 (And Back Again)”

Why My New Rate is $400 Per Hour

There are two ugly trends in the world of consulting. I’m counteracting them today by more than doubling my “rack” rate to $400 per hour.

I think you should too.

The two trends ?:

  1. Customers searching the web compiling spreadsheets of what random consultants charge per hour  -with little apparent regard for whether the consultant is good,  has the capability to solve the problem or even has recent relevant experience with similar companies.

    Think I’m kidding? On an average day we’re receiving two calls that are nothing more than companies (or IT consultants who work for them) checking on our rates and “how many hours would it take” to [fill in random project here].

  2. Consultants who,  desperate for work, have slashed rates to an unsustainable $125 per hour (billed in quarter hour increments) and below.

And if word-of-mouth is to be believed those eye-popping rates of $125 are appearing in large cities like New York and Boston.

We bill our time for support and consulting as a fixed guaranteed fee.

So  for me –  quoting an hourly rate is meaningless. It does nothing but lower my perceived value to the same – or less –  of the consulting morons firms who are underbidding,  under-serving (and ultimately losing)  their customers.

Some other thoughts.

Continue reading “Why My New Rate is $400 Per Hour”

Lies VARS Believe: Unlimited Support Means People Call More

I’m 100% certain that in the ERP support business that phone support agreements are the way to go.

I don’t run into all the problems people say that you’re supposed to with an agreement. In other words I’m not constantly on the phone with specific customers, they’re not calling every minute of the day, etc.

Yes, it does result in an increase in call volume. It also results in an increase in customer loyalty — and recurring revenue.

I’ve not had to staff any extra people to meet the call volume – though I hear that other VARS do.

We also don’t specifically designate someone to “sit in a chair and wait for a call” (most other VARS don’t either though some consultants are permanently assigned to office work/projects).

I think if you’re talking any more than 150 customers on a phone support plan that you probably would have to (we have about half that number). Continue reading “Lies VARS Believe: Unlimited Support Means People Call More”