Think of 2014 as the year the margin died.
Although margin on maintenance and services resold from ERP publishers hasn’t gone completely away – I’ve little doubt that it will. And soon – meaning within 5 years. Popular third party vendors are already signaling their intent to the channel. That’s why I recommend that the only direction a consulting firm should take is one which enables them to develop their own sources of recurring revenues. These can be self-created support plans, enhancements or niche services that are difficult for competitors to duplicate.
Let 2014 be the year you completely disallow hourly billing or any type of per call “break fix” support. You’ll be happy you got an early start when the margin you rely on now dies off in five years as I predict.
The new lead reality is that customers don’t know what they want except they would like …
- A free assessment
- Free consulting to help figure out what they want
- Free consulting to test the solution being considered
- Free workflow or business process planning or suggestions
- Free recommendations about alternative options
- Free demo
- Absolutely no obligation to purchase or to communicate ever again with the consultant once a free proposal has been delivered
My observation is that virtually all new ERP leads are in verticals where there is a highly specialized unique need – often unmatched by any type of realistic budget or any true understanding of the complexity of the ERP required to solve the business problem(s).
And like lemings off a cliff there’s a material number of partners who chase these leads – right off the cliff.
According to a post on Bob Scott’s Insights – Sage partners Accordant and Oasis Solutions have both signed on with SaaS ERP provider Netsuite to resell and consult with their online product.
Bob’s site describes the two firms as:
Accordant, which was a Top Five Sage reseller for 2010 and 2011, has become the latest major Sage VAR to enlist to carry NetSuite. NetSuite also signed Louisville, Ky.-based Oasis Computer Solutions. Oasis has a more wide-ranging product line and handles Dynamics GP and QuickBooks Enterprise Solutions, along with Sage 100.
Bob Scotts Insights
This morning I received an email from a friend in the consulting business. His question is one that I’ve received before – and one that seems to come up at every conference that I’ve attended in the last two years.
The core of the question is:
Do you make money marketing online?
Is Social Media worth the time investment?
Does it help to sell new sales or mainly attract existing users?
Is the time and effort worth it?
Here’s my answer that I emailed just a few minutes ago.
Continue reading “Does online marketing work for ERP? How well? How do you deal with quick questions?”
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
Fixed fee pricing is something that I’ve been implementing for the last six months. Instead of offering a client an hourly rate — which they keep paying until a solution is reached — I’ve started to offer a fixed price to provide a well defined service.
The client approves the price in advance. The work begins.
At least that’s the theory.
Most of the time the fixed fee works great. There’s no more rushing to get off-site because if I stay longer the bill will increase. I’m free to return as often as I like until the issue is fixed — and the client no longer has to worry how big the bill is going to be — because it’s all been agreed upon in advance.
Like with any change – there are speed bumps along the way. I’ve run into a few which I’ll list here in no random order.
The major lesson that I’ve learned? Continue reading “Random Lessons Learned About Fixed Fee Pricing”
Whenever I go out onsite for a client upgrade or implementation I think how much easier life would be if I had a standard checklist in electronic format.
Isn’t that something we all promise ourselves that we’ll do – someday? Create that master checklist that guides us through routine tasks such as upgrades.
There are numerous paper checklists publishers provide – however the items are often tediously redundant and it seems so 1980’s to be flipping through 15 pages of photocopied instructions.
Today I’m off to upgrade a straightforward MAS 200 system and I’ll be trying Google Tasks as my checklist generator.
Google Tasks is free – and located in your Gmail account listed on the left side as “tasks”. It’s a decidedly bare bones way to keep a list of items you need to complete.
Before I leave I’ve created a Google Tasks list on my desktop computer. Using software for the iPhone I synchronize the tasks in real time so that I can use them while on site with the client.
If I find that I need more items in my task list — I can add those on my iPhone and they’ll be synchronized back to my desktop list of tasks.
What I hope is that with a little tweaking that I can soon have a set of tasks that become my master implementation guide that also travels with me wherever I have my IPhone or access to the web.
You can easily drag, drop and add items just about anywhere on your Google Task list.
There are also Apps you can download to your iPhone – such as GeeTasks (shown above) which will synchronize your tasks so you can use your list deep within a server room that gets no cell reception.
Last week my car had an unfortunate meeting with the back of a car carrier.
It’s probably one of the only times I’ll ever be hit in the front end while I’m frantically steering my car in reverse.
Seems that a local trucking school undergraduate forgot to read the part in “Trucking 101 for Dummies” that says it’s not recommended to stop in the middle of a road and shift suddenly to reverse – without looking behind you.
I’ve heard some good comes from every situation. In this case the “good” is a simply brilliant phrase that I’m eager to incorporate (with slightly different wording) into my proposals and engagement letters.
This phrase covers much of the challenge that I’ve been having with fixed fee pricing – especially when applied to upgrades with many different unknown variables – data integrity being the biggest.
While traversing the fun world of auto insurance claims, and body repair shops I was introduced to this phrase. I’m claiming for my own use. Continue reading “Not Responsible For Hidden Damage”
Intacct, a market and technology leader in on-demand financial management and accounting applications for businesses and CPA firms, today announced that Taylor Macdonald joins the company as VP of Channels.
Taylor takes over the position from Jerry Jalaba who left Intacct in July 2009 after about a year in the position of VP Channel Sales.
Intacct is a Saas (Software As A Service) provider noted for their Salesforce.com integration capabilities, complete set of financial accounting modules and strong revenue recognition capabilities.
Most consultants first took notice of Intacct in April 2009 when Intacct, the AICPA and CPA2BIZ announced an alliance that resulted in their being named the preferred provider of financial applications. CPA2Biz was also named the preferred distributor of Intacct to the CPA profession. At the time the alliance covered over 350,000 individual CPAs and 45,000 firms governed by the AICPA.
Intacct described the relationship as ” The alliance will help CPA firms and small and mid-sized businesses adopt “cloud computing” to improve their financial performance, take better advantage of financial advice and make better and faster business decisions. Intacct and CPA2Biz will also co-develop a new version of Intacct’s on-demand financial management and accounting applications specifically for CPA firms and their clients that includes unique content from the AICPA“.
Because Intacct is privately held it’s difficult to get an exact measure of their partner channel – or their revenues. Continue reading “Taylor Macdonald Joins SaaS Provider Intacct as VP Channels”
Nobody likes surprise bills – especially not our clients.
In an effort to keep surprise bills out of sight of their clients – consulting firms often engage in what’s known as “eating time”.
That’s when they’ve told a client that a task will cost $ x when it actually costs $ x time two.
The problem is the task usually does only cost $X. But they’ve unwittingly caused it to expand in cost by widening the menu of items (aka scope) that they’re fixing without informing the client (who probably would have gladly paid for the extra service).
I liken this to bringing your car into the mechanic for an oil change – and the mechanic fine tuning the brakes or transmission (at no cost) while your car is up on the lift.
This little action costs the garage nothing and it builds goodwill. Or does it? Continue reading “When Your Client Asks For An Oil Change – Don’t Tune The Brakes For Free”