Utilization - Is it a Valuable Metric to Measure?

I was talking to a member of the consulting community recently about how best to evaluate a consultant practice. This person provides consulting to consultants, and he indicated that he often tells his customers to stop measuring utilization. It did not become clear in our conversation what he thinks is wrong about the utilization metrics, but I've been giving it a lot of thought since then. So, I wanted to investigate the pros and cons of measuring utilization.

On the cons side, utilization does not reflect the value that has been delivered. It rewards the amount of work done and not the results of the work.  This reward system is in conflict with my post "Customers aren't paying you to work hard, they are paying you to add value and drive results" from December 2013.

I am a firm believer that one's compensation plan drives his behavior. Paying consultants a bonus based on utilization drives them to find ways to do as much billable work as possible. While this may drive revenue and ensure that consultants raise their hands for more work when they are rolling off a project, some of the work done to achieve a utilization target may or may not drive value and result in a positive change for the customer. It may also encourage individuals to pad their time sheet by rounding up or adding a few minutes here or an hour there, just to make sure that "this week's utilization target" is met and one stays off the manager's warning list.

On the pros side, the reality is that consultants and consulting teams have a finite amount of time to dedicate to billable work. In addition to delivering billable work, consultants need to conduct business development activities, skills development, thought leadership, and a list of administrative tasks that all must get done for the business to work. Setting utilization and hourly rate targets allow you to assess your capacity to drive revenue:

• Billable FTEs: 10
• Working Hours per Billable FTE per Year: 2080
• Target Utilization: 75%
• Target Bill Rate: $250

=((10 * 2080) * 75%) * $250 = $3,900,000

So if you managed a team of 10 billable consultants, each expected to deliver 75% utilization at $250/hour, you could manage a $3,900,000 practice. That equals 15,600 hours of consulting in a year at that hourly rate. If your management set a goal for $5,000,000, what can you do increase revenue.

There are really two ways I can think of to increase your revenue:

• Add more consultants (either as full-time employees or as contractors)
• Increase your rates. 

If you don't have the opportunity to increase rates, you must add people to deliver the additional 4,400 hours of consulting that you will be expected to deliver.

As you track utilization you can learn when you are over burdening your team and likely to have to delay start times on projects because of the lack of availability of your team. Most consulting practices maintain some form of acceptable backlog. (I have found that 4-6 weeks is a reasonable time for me as a manager to have visibility into what my team will be doing and revenue we will generate and still be reasonable for most clients to wait before we start their project. Longer than 6 weeks, though, I risk loosing the contract or frustrating an important customer too much.) As I monitor utilization and my forecast for the coming months, I can advocate for short-term or permanent increased (or decreases) to the size of my team to take on additional work and meet market demands.

I also use utilization to evaluate where we are spending our time. I measure utilization at the practice level, individual level, and resource-type level. This gives me another view into the state of my practice and potential changes that may be needed: Are we able to drive revenue and customer value with less experienced and expensive consultants, or do we need to depend more heavily on our more senior and expensive resources?

At the individual level, I look for individuals who consistently miss their utilization target. I don't worry about weekly anomalies, but if I see a consultant who is not meeting the target regularly, I work to determine why:

• Is the consultant lacking the skills required to do the work we are selling? Can we provide training to this person?
• Is there a behavior or cultural issue that makes it difficult to put this consultant on projects? (I have worked in organizations where the project managers or technical leads can proactively request specific resource to work on projects and even to NOT work on projects.)

Once I know why the individual's utilization is low, I can address it proactively.

I had a chance to attend a lunch and learn session with David A Fields last month.  David talked a lot about pricing based on value rather than time. He encouraged the consultants in the room to dig in with their clients to understand their pain and determine the measurable value of addressing the pain, then determine the value of the work you, as a consultant, will do to move the needle in the right direction. Once you understand that value equation, David says, you can price based on that, often times earning significantly hire rates than what you consider "list" price or "target bill rate."

While I agree completely with David's philosophy, the reality still remains that a consultant only has so much time and needs to understand when he (or his team) is taking on too much and won't be able to deliver what is promised. It is also important to measure the time spent on the project after it is completed to ensure that the amount of work required to deliver the value was in line with the practice economics. If, for instance, you determined that the value of the work that you will do is $20,000 but it takes you 200 hours to deliver that value, would you earn enough money to sustain your business? 200 hours delivered against a $20,000 invoice is $100/hour. Is that acceptable for your business? Should you take work like that on? Only you can decide.

Ignoring utilization completely is dangerous and will leave you exposed. However, relying on it too heavily can drive the wrong behavior from your team. Develop compensation plans with a combination of metrics and goals that drive the right behavior - with a focus on value creation, and use utilization as one data point to indicate the health of your practice.

I'd love to hear from you on how you use utilization in your practice.

Stop Hiding Behind PowerPoint

PowerPoint vs. No PowerPoint, that is the question...

I have a number of "Andrea-isms" that I share with my team, colleagues, and on this blog from time to time. One is "Blank Whiteboards Beget Blank Stares." I encourage the folks around me to come prepared to challenging discussions with a "straw man" idea for what is needed, giving the folks engaged in the discussion something to which they can react, critique, and evolve. It works...just this week I shared with a colleague the current wireframes for a new technology I am building. He was able to confirm many of the things I am planning for this technology, but in the process also expanded my thinking with ideas he had that would make the solution more valuable to him. Would I have been able to get such a reaction if I didn't show him anything and illustrate what I was planning. Maybe, but given that I have a hypothesis and proposed solution, of course I will show it to him and ask him to poke holes in it.

I didn't, however, come up with a 25-slide deck to run through with him, asking him to review and read each slide while I spoke to him about what each meant, and then asking him to think creatively as part of a dialog to evolve my thinking. If I had, he would have been sucked into the slides, trying to read each word and understand what I was trying to get across while also trying to the words I was throwing at him. I would have been more focused on presenting and "getting through all my slides" than I would have been in having an open discussion with him about how to make my solution better and more valuable to him.

Unfortunately, I think many of us rely too much on tools like PowerPoint when we feel we have important points we want to get across, limited time to do so, and a large and/or challenging audience that we may or may not know. The end result is a presentation during which you impart all of your wisdom and learn little or nothing from the audience or meeting participants.

I had the pleasure of attending a workshop with David A. Fields, a consultant to the consulting community and an expert in connecting the right consultant to his business customers, enabling a higher ROI on services rendered. David hosted a session with the Crimson Consulting Collaborative, of which I am part, and discussed ways consultants fail to properly sell their value and drive revenue. It was great. David reminded many of us of key best practices that are easily forgotten or not trusted when in the field, and he did so without a single PowerPoint.

As a participant, David's session felt very much like an ad hoc discussion with like-minded people, he as the facilitator. The reality is, though, that David had a well-planned and practiced presentation in which he planned to take us through a journey of "ah ha" moments. He's done this session before, and he will do it again - almost the same way each time. The questions may vary from session to session, but they all tie back to the journey he wants to take us on, and he knows how to respond to each and make sure we get the lessons learned he set out to impart on us. Each one of us left the one-and-a-half hour sessions with a key lesson learned and a desire to purchase his book, talk to our colleagues, or hire David for more one-on-one assistance...not a single PowerPoint.

I realized in this session that PowerPoint is a great tool, but I often hide behind it. While I know I can use PowerPoint to build my story boards for the discussion I want or have been asked to facilitated, but I don't have to show them. Although, I almost always to. (David had notes or slides on his iPad, which never far from site.) By choosing to keep the slides to himself, David quickly connected with his audience and invite Q&A a long the way. If you have a deck, you expect and are expected to present the deck. This puts you in the role of "speaker." As a consultant or a consultant who sells, though, the more you are talking, the less you are listening and learning, and less likely you are to assist this customer in asking and answering their own questions (from Peter Block).

David could have shared his slides with us, talked through them, and before moving on to the next slide, asked "are there any questions." Having taken that approach time and time again in my career, I suspect it would have been a much less dynamic conversation and the "ah ha" moments may not have happened so quickly.

Be prepared for the meetings you facilitate, for sure, but try stepping out of your comfort zone, closing your laptop, and have a conversation. If you need to jump up to white board a concept or an example...go for it. (I keep a set of dry erase markers in my work bag for just those occasions.) If you know there are certain topics that warrant a visual, practice your "impromptu" white board often so you can get it right and appear as though you are thinking on your feet (which you are, since you will only jump to the white board when the conversation lends itself to you doing so).

10 Things You Can Do to Be More Effective In Getting What You Need Internally

Two weeks ago, I wrote about ways in which I have worked with sales to build stronger relationships and effectively protect my business, team, and clients. In so doing, we had fewer projects that we couldn't support and a stronger ability to plan resource needs. It wasn't perfect, but it was better than the Wild West scenario that I described toward the end of the post.

As promised (although a week late), I want to share 10 things I have done in the past to ensure I had or was able to get the resources I needed when I needed them. With that said, there is no silver bullet. Your ability to get what you needs is dependent on a lot of outside factors. Things like:

• Economic Environment: The Services business may be killing it, but sales overall may be down; Management may impose a hiring freeze across the board, and you have to get it done with less.
• Product Development Cycles: You may have a need for a member of the Engineering team, but they have a critical release and can't step away. You have to figure it out on your own or delay your client.
• Corporate Philosophy: Let's face it, not all departments are created equal, and if you work in an organization that pays lip service to the value Services provides, you will have a difficult time getting what you need, no matter what you do. (I've been there!)
• Perceived Role of Services: If Services is perceived first and foremost as a profit center, almost every decision will be made based on the impact it has on margin, regardless of the impact elsewhere. That is not to say you can't get what you need, but you need to understand this fact and position your business case in this context.

So, here are 10 things I have done in the past to get the resources I need when I need then.

1. Working with Sales to Manage What Is Sold and Understand Your Pipeline: I discussed this first action in depth in my last post. In the end, you need to be perceived as part of the sales team, helping to close deals, but you also need to clearly articulate your constraints and the impact of bad projects on the clients and the business. Its a relationship play - start now.
2. Effective Project Estimation to Understand Your Pipeline and Backlog Better: How many of us really feel confident in the estimates we put forth? Do we really have the information we need from the client? Do we understand all the risks, and have we mitigated them effectively through contingency? Have we taken the time to assess past projects "like this one" to ensure that we have historical information that supports this estimate? If you miss the estimate by any significant margin, your capacity planning will be wrong and you may not have the resources you need when you need them. In one role, my team and I developed a five-day "jumpstart" engagement. We sold it for $12,500 as a standard offering. We assumed five days of effort for pre-engagement planning, execution, and post-engagement wrap up. We sold more than I can ever guess in this model. We eventually went back and evaluated the time sheets of these engagements and found that no engagement was actually completed in five days. For every day of client-facing work, there was at least 1/2 day of non-client-facing work we needed to do. Our five-day engagement was really eight days. We adjusted our time estimate and our pricing. In so doing, we increased revenue, improved our margin, and had more effective capacity planning. We had the resources we needed when we needed them.
3. Using Earned Value Analysis (EVA) to Assess Project Trajectory:  I feel like I am aging myself with the EVA reference...does anyone use EVA any more? Well even it if it is not used formally in this agile development world, I think the concept still holds true. At the most basic level, EVA is an assessment of the likelihood a project will complete on time on budget based on what has been completed to date. Are you 50% complete with the work but have consumed 60% of the budget? If yes, your EVA would indicate a cost/time over run. Likewise, if you are 50% complete with the work but have consumed 40% of the budget, the EVA would indicate on-time, on-budget (or ahead of schedule) delivery. Now, we all know that past performance is not a promise of future performance, but it is an indicator you can use to determine if resources are likely rolling off projects when initially planned. You can then start to think about whether you have a scheduling conflict with another project for which you need the same resources or if you will be able to start a future project sooner or crash a schedule by adding additional resources since they may be available.
4. Setting Project Managers' Expectations on the Importance of Project Plan Updates for Effective Backlog Burn Rates:  I have seen too many times a PM running to a resource manager in a panic because he didn't communicate that he needed "this" resources for two more weeks, and the resource just casually mentioned that she will be in Tuscan next week starting her next gig. Like it or not, the PMs hold the keys to ensure that the right information is communicated early and often so that adjustments can be made earlier to avoid strain in the system. As project managers (PM) are assessing a project's status, using EVA and other tools, they should be expected to make updates to project and resource plans in what every system you use (PSA, Spreadsheets, Staff Meetings, etc.) to effectively communicate to management capacity needs on a project. Without the input from the PMs, resource managers will be in the dark about what resources are needed when. Setting PMs expectations on what happens when they do or don't communicate schedule changes is key to making it happen. 
5. Use Monthly Capacity Planning Reports and Meetings with Finance: Similarly to the post on working with Sales, Finance holds a big key as to whether you get what you need or not. The more they understand your business and trust your models, the more confidence they will have in the business cases you put forth and, barring any external factors, the more likely they will be to go to bat for you if you need something out of plan. I have found that providing regular reports to finance on revenue, margin, and capacity (existing vs. planned) ensures that the right level of regular communication is happening and provides a forum when you need it to ask for more. Again, there is no silver bullet, but if you have a regular mode of communication and a relationship with Finance, they are more willing to listen when you need their help.
6. Managing "Product Quality Issues" Internally: Embedded Services Organizations often find themselves doing work to overcome a bug in the product they support rather than doing the consulting work they were hired to do. In some cases, the level of product quality issues (PQI) is fairly benign. In other cases, services is working with a difficult product with a lot of bugs and issues. In one organization that I managed, the amount of time we were spending addressing product issues in our projects was having a dramatic impact on our ability to complete work on time, which affected customer satisfaction, practice revenues and margins, and our ability to manage our resources and project schedules. The solution? We added a "PQI" task to all projects, set some ground rules for how/when to use it (including some governance to avoid abuse), and reported this time regularly to our Product Management and Engineering partners, as well as to Finance. This allowed us to 1) more easily get the engineering resources we needed on projects where PQI was an issue, 2) include enough contingency on projects where we expected to have significant PQI time based on historical projects - allowing better resource planning,  and 3) improve employee satisfaction since we gave utilization credit to the consultants for this time. Product management also had more visibility into the issues that were causing the most pain for Services, our partners, and our customers and could prioritize their sustaining efforts accordingly.
7. Measuring and Managing Goodwill Work: Similar to PQI, Services is often called upon by Sales or Executive Leadership to deliver what I call Goodwill Work (free consulting or significantly discounted consulting) to make up for a misstep by sales, support, marketing, or a product issue or to ensure we get that "big deal we really need to make our number this quarter." These requests are often unplanned and urgent, which is a huge problem when we are fully utilized with a 6-8 backlog of work to get done. It is important to track the amount of Goodwill Work you and your team are delivering and reporting that back to management. I have even gone so far as to use historical numbers to budget a certain percent of my teams billable time to Goodwill Work and to develop a model with Sales and Executive Leadership on how it can/should be used, what approvals are needed, and what happens where the budget is fully consumed. Reporting on Goodwill Work gives you a leg to stand on when you need more resources to support a project. Planning and budgeting for it makes the issue transparent and forces the organization to make difficult decisions about when to use it and when not.
8. Mantra: Services Can't Outpace Product: In some cases, I believe that custom services can be used as "paid R&D" where a customer wants a new product feature, it is not on the roadmap, and services has the capability to build it for a fee for the customer. The conversation can go like this, "That feature is scheduled for Q2 next year. You can either wait until then, or we can develop a custom SOW and have our Services organization build it for you now. It will cost you $500,000 (or what ever), and will be made available to all customers as soon as it is fully tested." Some customers will feel it is worth the money to get the feature now. Others will simply decide to wait. In some organizations, the Services team does not have the skills to take on such an effort, and the mantra must be "Services cannot outpace product." In other words, sales cannot sell custom development of any kind without knowing that Product Management and Engineering, not Services, is prepared to support the effort - for a fee or not. (Please see last week's post on working with Sales to get what you need.) Assuming this mantra is communicated and well understood, and the right Services Engagement processes have been defined and are followed, surprise custom engagements should be few and far between.
9. Marketing and Sales Can Influence But Cannot Define What Services Will Deliver: Years ago, I worked for a small, but fast growing product company. We came out with a new product and Marketing, in a vacuum, developed a "packaged offering" that includes five days of Professional Services. Every time a sales rep sold this new product, Services was attached. Awesome...? On one hand, I was very pleased that Marketing and Sales understood the need and value of Services and included us in the package. On the other hand, I was scared to death when the Sales team was educated on this new package and I had never been brought into the discussion - what exactly are we expected to do in five days? As I dug in, my biggest fear was confirmed. Marketing designed a five-day engagement that could never, ever be delivered in five days. Their number one concern was developing a packaged offering that met a price point that Sales could sell, but they built something that could not be delivered in the time they committed. My margin would be impacted, I'd need to adjust my pipeline/backlog model to include a multiplier to ensure we captured the right resource needs for scheduling and capacity planning, and customers would be very disappointed when the work took 10-15 days and their deadlines were missed. A few failed projects and unhappy customers later, and Marketing learned why they needed to engage with Services when defining new offerings. From then on out, no Services offerings were defined without input and approval from Services.
10. The Role of Services Must Be Understood Across the Organization: Are we a profit center? If yes, no PQI, no Goodwill, no discounts...period. Every decision is made based on our ability to drive revenue and margin. Alternatively, Are we an engine to drive product adoption and satisfaction? If yes, we need ground rules for all the items listed above, but we focus less on driving margin and more on the overall contribution Services makes to the corporation. The challenge comes in when Finance sees Services as margin business first, and Sales/Marketing wants and needs us to drive adoption and growth within our customer base. My philosophy is that Services Organizations in product companies have to understand that we are a product company and everything we do should be to drive adoption of the product. I believe that Services should be profitable, don't get me wrong, but you won't get 40-60% profit margins AND address PQI and Goodwill on a regular basis. 15-25% is much more likely.

At the end of the day, and as I mentioned above, there is no silver bullet, you can do all this and more and still not get what you need if the value of Services is not understood or appreciated or if the overall health of the business is failing. Regular communication on items such as those above put you in a better position, for sure. You will often need to create strong business cases based on actual data to ultimately get what you need, but if you find that getting what you need is not typical, you should strive to understand if there is a disconnect between what you think the team's role is and what others think it is. 

You should also find allies across the company to help you make your case. Will Sales, Marketing, Product Management, and/or Engineering go to bat for you? If you strive to build the right relationships across the organization, I believe, you will find allies. Sales will want you to be able to deliver what they sell. Product Management and Engineering will want you to be able to take care of issues without the use of their team members. If you don't have strong relationships with the leaders of those groups, you will have a harder time getting what you need.

Its not going to be easy...good luck!

Getting What You Need Internally - Start with Partnering with Sales

In a lot of ways, it is harder to get what you need internally than to manage a client effectively, particularly in a growth business with a separate sales team. First, with a separate sales team, you have less control over what is sold. It is not unheard of to be handed an SOW with a custom scope that is not supported by your product (in an embedded services organization) or your domain experience and consulting expertise (in either an embedded services organization or stand-alone services business). Even when the situation isn’t that egregious, you still may end up with a project budget that will not cover your margin needs or, potentially, even your costs,  or commitments to the client for start dates you are not prepared to support. Worst case - all of the above!

Second, I have often said that the better problem to have is one when I have more work than I have people compared to more people than I have work. Neither feels good, but at least in the former, I can make an argument to expand my team and not be pressured to reduce the size of my team. The reality is, though, that not having the resources when you need them can cause a lot of stress in the system. Clients typically want to start when they are ready to start - not when you are. Sales professionals feel a strong commitment to the clients and will push for things that feel unnatural to you to ensure they can save face and be the hero. In some cases, the client may decide that waiting isn’t an option and go with another provider. Still, the argument to get more resources or get access to those you need is not easily made leaving you holding the bag.

So, how do you ensure that you have what you need when you need it. Man, that’s a hard question. Let’s start with the sales side of the equation this week. We will talk about other internal pressures next week.

There will always be some kind of tension between sales and services. Sales wants to sell as much as they can as quickly as they can. Its how they are compensated; its what’s expected of them. Services, on the other hand, needs to control scope and expectations, deliver on-time and on-budget, and ensure the client realizes the value they expected when they signed the contract. While it is possible to meet the needs of sales and services (and the client), tension will always be there.

In my attempt to reduce that tension, I have started with forging strong relationships with the sales executives and directors. It is important that they know that you support their mission to close business, but it is also important that they understand the implications to them, their clients, and the business overall if they don’t work in partnership with you to ensure that what is being sold can be delivered. It helps to give a little, but I firmly believe that there needs to be a “give get.” “I can give in on this point for you to help you close the deal, but it is really critical that I get this other point to go my way if we are to have a happy client in the end.”

Individual sales reps will push the boundary set by you and your sales-leadership counterparts, for sure. One Sales VP with whom I recently worked referred to Sales Reps as “children” and the Sales and Services Leadership as the “adults.” As children, sales reps will behave badly: They will exclude you from key calls, they will agree to things they do not have authority to agree, and they will leave you to work miracles to hide the challenges from the client.

Now, I am not saying I agree with the “Sales as Children” philosophy. I have worked with some amazing sales people who, while driven to close business quickly, do not want to close bad business and know it takes a team to satisfy the needs of the client. With that said, even the best sales reps will push the boundaries from time to time. Having relationships with Sales Leadership will be key to having the right checks and balances when it occurs.

Once I have formed the right partnership with sales leadership, I do all that I can to have strong relationships with the reps themselves. This happens in a variety of ways:

1. All those “dumb sales meetings” you have to attend - use them to your advantage. Don’t run off between sessions to call home, check emails, or schedule meetings with your own team. Use that time to meet each and every sales rep. Show an interest in what they are doing. Ask about their business (what’s working and not working). Ask about their families and interests - make it personal. Find out what you can specifically do to help them meet quota faster and then go do that.
2. Educate the sales team on the offerings: The value they provide and the best way for them to engage with services. A few years ago, I was building a services practice from scratch within a software company. Initially, there were two of us - I worked with sales to sell services and co-delivered those services with my one and only consultant. For the first two years, as I built the practice and hired the team, I touched every services sales deal. It was not scalable, and it caused a lot of frustration when people had to wait a couple of days to get on my calendar. As I grew the team, the offerings, and the tools that supported the offerings, I educated the sales team to, first and foremost, carry the ball down the field on their own a little farther. I gave them the case studies and anecdotes they needed to position the value. I gave them the questionnaires and checklists they needed to qualify the customer. Giving them more information about success and failures and the tools to optimize the former and minimize the latter helped to both build deeper relationships, but also empower them to do the right thing.
3. Next, I worked with Sales and Finance leadership to ensure that only I, or someone on my team, could write an SOW, and that I had signing authority, which meant no contract was signed without my review and approval. As my team grew, more were trained to work with sales to scope an engagement, write the proposal, and draft the SOW. I was no longer tied to every deal. We had scale, and I had the confidence that my team was properly trained and would address the needs of the client, services, and sales. I also had a check point before the proposal and/or SOW went to the client to be sure that nothing really difficult would fall through the cracks.  
4. Standardize offerings, with standard proposals, SOWs, and other sales and marketing tools also help. Sales knows what they can sell; we know what we need to deliver. Clients will certainly ask for something different, something tailored or custom, from time to time. When a salesperson can recognize these custom requests and has been trained on how to deal with them (call your regional services manager for help), things start to come together.

I once worked at a software company that didn’t believe in SOWs and believed that minimal project description was the way to sell services: Reduce the barriers in the conversation, shorten the sale cycle, get the deal, and services will figure it out later. There was a lack of partnerships between sales and services resulting, in some cases, in significant animosity between individuals and teams. It also resulted in an unmanageable services organization in which every project was different, there were high switching costs for consultants between projects, we had to significantly over investment in delivery (we did everything the client asked us to do, regardless of what they were paying us, because the client and we had no boundaries), and we had high turnover within the consulting team, which lead to customer satisfaction issues and more animosity with sales. That example is the perfect example of what not to do. We lacked strong relationships at the VP and Director levels between sales and services, no expectations or time to work one-on-one with sales (getting to know them and working in partnership for the best alternative), and no meaningful offering definition and sales training to ensure consistency in sales and, in turn, delivery.   

Fortunately for me, other than that one example, I find that most sales teams truly want to do the right thing. They do not want to sell the wrong engagement to the client, and while they have little tolerance for anyone slowing down their deal, once you get a few successes under your belt, they will trust the system and work with you.

The Best Consultants are The Pied Piper - They Lead and Pull, and Don’t Push

In my last role before starting Sophity, I managed a team of program managers who are responsible for working with clients to evolve and mature their programs that leveraged our companies products. While my team of program managers were not sales people in the traditional sense, they were in a role, that if executed effectively, would likely lead to an increase in our company’s product sales. They were aware of this impact and were compensated for it. Needless to say, there was a lot of pressure on the team to contribute and to ensure all of their clients renewed their SaaS subscription (product) and even grew their spend on the SaaS product year after year.

As their manager, I would often probe to understand what risks they saw and how they were going to mitigate those risks. I’d also looked to understand how each program manager was going to ensure renewals and drive growth within the account.

Unfortunately, many of the program managers didn’t quite understand their role as the Pied Piper in this dynamic. Many thought they needed to push their customers to take certain actions: “I know what they need to do, and I have told them, but they just aren’t doing it. I am pushing as hard as I can.”

What’s wrong with this approach? I can see a few issues:

• First, power begets power. If you push someone, they are going to push you back. Our clients, as inexperienced or ignorant on the subject they may be, don’t always see themselves that way (and, frankly, many of them are not - they know as much or more than you), and will take offense when you push them to do something before they feel you really understand their world, their constraints, the political environment, or anything else that will affect the path forward.
• Second, the best way to get someone to do something is to have them come up with it on their own and buy into it as the right thing to do. Pushing your ideas and agenda on your client flies directly in the face of that philosophy, and it is rare that it will succeed. You need to, in the words of Peter Block (I use this quote often), “help your customer ask and answer their own questions,” not give them the answer to the question you just asked or think they should be asking.
• Third, you run the risk of alienating your client because “you don’t understand our situation; we aren’t like all of your other clients.” Let’s face it, as consultants, we often see different clients making the same mistakes as others with whom we have worked. Its easy to assume that “this client” is “just like the last client” and simply prescribe the same solution. Could you imagine your doctor doing that? The thing is, though, there is always something different with this client than the last. It maybe a subtle nuance that, ultimately, has very little to do with your recommended solution, or it could be quite significant and game changing. Its your job to figure that out in the process of consulting. (Patrick Lencioni wrote Getting Naked on this very topic, and it is worth the read.)

So what do you do? You start by understanding as much as you can about your client. The first things you are likely to learn are the symptoms of the problem (framed as the problem) from the customer’s perspective. Dig deeper to learn the root cause of the problem and anything else you can.

As you learn more about the client’s situation, you can draw on previous experiences and offer up potential solutions. You should not simply share the one you think is best, share those that you think are the most viable and talk with your client about the pros and cons of each - which will succeed and which will fail at this organization and why. (Knowing “why” is critical as you work with your client to find the best solution.) Use your powers of influence to help the client see the value and risks associated with each option you presented, and be open to the client suggesting other options based on what they have learned from you. At the end of the day, your job is to facilitate a solution and help the client commit to solving it. As Patrick Lencioni says in Getting Naked, “don’t fall in love with your work and ideas and push your clients to do it your way.” Be the Pied Piper - lead them through a process and help them buy in to a solution that will work best for them. You will win their respect and credibility in the process, allowing you to expand your relationship with them over time.

Effective Consulting and Project Management Requires a Strong Sense of Urgency

I recently had the “pleasure,” for the first time in my career, to be the customer rather than the vendor. It was an interesting role for me, and a challenging one for my service provider. Why? Because I hold myself and my team to a certain standard when it comes to communications, project management, and consulting. One of the hardest thing to do when you are a service provider is to “out service the service provider” you are servicing, and I have to say, I was not out serviced at all.

I hired the PS team of a leading PSA provider to assist me in configuring their solution. The project was to take 8 weeks - end to end from requirements to go live. It required a one-person team from the vendor’s side and 5 people on my side, including me. In reality, it took 6 months of painful interactions with their project manager (PM) and multiple calls into the account manager and PS director raising concerns that, ultimately, were never addressed.

So where did my service provider go wrong? First of all, the PSO’s delivery model is fundamentally flawed and shows a lack of knowledge and awareness of how to effectively roll out a software solution. Requirements were gathered but not documented, meeting notes were never captured or distributed, and UAT was scheduled to begin before any stub or real data was in the system - there was nothing to test. Additionally, the solution had no documentation to train us on how to use it, and the sample UAT test plan we were provided was based on an older version of the user interface and couldn’t be followed.

I have worked for enough early-staged software companies to know that documentation is always an after thought, but this company has been around since the 1990s. They aren’t “early-stage.” And the product team can't be blamed for the sample test plan.

That said, one thing a PS team can do is “prop up” the product and hide some of the worts. Let’s face it, no product is perfect and even later-stage companies are trying to change the tires on the car as they drive 75 MPH down the highway, The PS team we were working with, however, only made things worse.

We should be talking, however, about the importance of displaying a strong sense of urgency on your projects. While not all of my complaints about the experience I had with this specific customer are the fault of the PSO, I expected a stronger PS presence to help us through our issues, keep us on track, and assist us in dealing with some pretty obvious product constraints that they knew all to well.

I will be the first to admit that we were not a model customer. My company had a very meeting intensive culture, and finding time on all stakeholders’ calendars for important meetings with our vendor was very difficult. Additionally, many of the stakeholders, myself included, had intense travel schedules (I was physically in the office for 3 out of 12 weeks in the middle of the project), and we never named an “administrator” for deeper product training before we started requirements and implementation.

With that said, the PM downplayed the need for the administrator when I explained that we had to hire for the role. He said we could easily get started...it wouldn’t be a problem. However, when I started to complain about progress, he pulled out the “you haven’t assigned an administrator yet” card as the reason for the delays. He was right, actually, but my response to him was that he should have pushed me harder and made me perfectly clear of the risk I was taking on without assigning the administrator upfront. He showed no sense of urgency on the need for the administrator, so I did not address it urgently.

Additionally, he would send email that wouldn’t be seen due to travel schedules and conduct no follow up. Weeks would go by, and I would become aware of lack of progress. I would reach out to him, and he would simply send me the email he had sent to me 3 weeks earlier.

When I questioned him, he would simply say that he was waiting for my response. When I questioned his boss, his boss pointed the finger back at me for not replying. In my organization, the program and project managers knew not to sit back and wait. If you need something from the client and you aren’t getting the response you need, try other communication channels, stakeholders, and/or escalation paths. Don’t sit around and wait.

While it feels good to vent about the mess that was our PSA configuration, I am not writing about it to make me feel better. Rather, I am writing about it to illustrate the effect the PM and consulting team’s sense of urgency, or lack there of can have on a project. As you start your next project, keep these points in mind:

1. Your job is to help customers get value, not the other way around. If the client isn’t doing what is needed, you need to call them out and make them aware of the implications.
2. You need to recognize that if the client could do it themselves, they wouldn’t need you. The inability to “DIY” depends on a lot of factors. Some customers will have the skills and expertise, but lack the time. Others will have the time, but lack the skills and expertise, and still others will lack skills, expertise, and time. Understanding which constraints exist is important to your ability to understand how to approach your customer.
3. The worst thing you can do is sit back and wait for your customer. if you don’t get the response you need in a reasonable amount of time, reach out again. Try a different method: If you sent an email, reach out via the phone; if you called, follow up with an email. If all else fails, escalate. Reach out to your boss or your client’s boss to get the attention you need.
4. Find out up front the best methods of communication for each person and what constraints they see coming that will impact the project. Develop plans to mitigate the impact of these issues.
5. Send regular status reports and notes to ensure everyone understands where you are in the plan, where you are falling behind, what is on the critical path, and what is needed to get back or stay on track.

I can assure you that if our vendor’s PM did any of these things on our project, it would have been more successful. Instead, the cost overruns for them and the lack of value for us equalled a number I certainly don’t want to calculate, but I am sure it is significant, and I, for one, am not likely to look at their solution in the future.

Using S.M.A.R.T Goals to Add Value Every Day

In an earlier post, I discussed the importance of not just working hard but adding value. The lesson of the roofing contractor mistaking hard work with value and assuming he earned the right to his fee simply because he worked hard is one with revisiting. As I mentioned in that post, work every day to ensure you are adding value to yourself, your firm, and your customers. Otherwise, you will fall short of your goals and have a hard time extending your relationships with your customers over time.

So how do you do that? In my experience, a good place to start is to set measurable goals for the initiatives on your plate. As a consultant, it is your job to ensure you know what the goals are for “this” project. It is also my experience, though, that many people struggle to set truly measurable goals that meet the need and deliver value. You need to develop your goal setting skills so that you can drive that discussion and assist your clients in defining measurable goals you can all get behind.

So what is a measurable goal? Personally, I like the S.M.A.R.T model for goal definition:

S = Specific
M = Measurable
A = Achievable
R = Realistic
T = Timely

If you do a Google Search for the term “SMART Goals”, you will see that there are approximately 35 million items returned in the search results. So I suspect I am not alone in my preference to use the S.M.A.R.T. Goals model.

So what does this mean? Well, the worst example if a goal I have seen lately was a goal that a Sales Rep defined with a client. The client was working to build an application security program, and we were working with individual contributors and managers who knew the importance of application security. They needed executive support to truly build and evolve a program, though, since doing so required access to human and capital resources.

The goal that was presented to me in my first meeting with this client was “CIO Awareness.” That’s it...nothing more. In reaction to this, I somewhat apologetically asked, “How do I know when I am done?” The folks in the room, including the Sales Rep who worked with the client to define the goal, all just sat there staring blankly at me. So I cut to the chase. “Guys, with all due respect,” I said, “this isn’t a goal, its a theme. I agree that making your executives aware is important for the success of the program, but aware of what?  How will we do that, and by when. Really, how do we know we have successfully informed the CIO of what we need to inform him to drive the desired results of getting more headcount and budget for the program? Also, how do we know how much headcount and budget we need so that we can make the right business case to the CIO. This goal needs work.”

Fortunately for me, everyone in the room agreed, and we set out to craft truly S.M.A.R.T. goals.

So what does a S.M.A.R.T. goal look like? In the example above, do you think that “CIO Awareness” is specific? Measurable? Achievable? Realistic? Timely? I think not. What if the goal was something like this:

“Deliver Quarterly Business Reviews (QBRs) to our CIO starting next quarter in which we focus on educating the CIO on the outcomes of the current program in terms of risk identified through scanning our applications, risk reduction through educating the development teams, and remaining risk to be addressed. Provide estimates of headcount and budget to further reduce risk to meet with corporate Application Security Policy, and gain approval of additional headcount and budget spending by the end of the year.”

In this example, we have clearly indicated what information we need to share with the CIO to make him aware of the current program, risk inherent in the corporation, and what is needed to reduce risk to an acceptable level. We have specified the forum in which we will communicate this information, and we have also defined the specific outcome (gaining approval for more headcount and funding) that we are striving to achieve and a timeline (by the end of the year) in which we must achieve the approval.

I think we have covered S-Specific, M-Measurable, and T-Timely.

What about A-Achievable and R-Realistic? Well, that is up to the team defining the goal to determine. One approach to assessing whether the goal is achievable is to brainstorm on all the things that could go wrong that would affect your ability to achieve the goal. Then assess the likelihood of those things happening. For instance, you may realize that the CIO is known for not showing up for meetings called by his subordinates' subordinates. So, can you increase the chances of the CIO showing up by having your boss set up and attend the meetings? Is there a better forum other than a meeting to communicate what is needed and get his feedback? Can his assistant help ensure he shows up? What can you do to ensure the goal is achievable?

Likewise, look that the time component - is it realistic to gain the CIOs approval for additional headcount and budget by the end of the year, or is more time needed? How many QBRs will you hold with the CIO before the end of the year? Will you have collected enough data to present a sound business case in that timeframe? Will you have enough touch points with the CIO to make your case effectively? When are budgets approved - what are the chances you have missed your opportunity if you wait until that end of the year? It may very well be that the goal is achievable but not realistic in the time you have given yourself...so be realistic about what you can really do.

Setting S.M.A.R.T. goals and developing a plan to achieve the goal allows you to evaluate each day if you have taken steps that bring you closer to achieving the goals that deliver the value necessary. You can take this step with your customers (as described above), with your manager (setting a goal around a promotion and knowing what you need to do to get there), and with yourself (developing a new skill, finding work/life balance, losing weight, etc.)

Focus on developing goal setting skills and significantly increase your ability to deliver value.

Top Consulting Skills: Ability to Understand, in Detail, the Current State

Things are not always what they seem, and the best consultants assume that many things are not at all as they seem. The current state is often a matter of perception. To complicate things further, each stakeholder often has a completely different perception from one another.

Often times, a consultant is brought on board by a senior manager or executive who has determined that there is a challenge that needs to be addressed that can’t be addressed internally. The business may lack the time, the expertise, or both, to solve the issue. So here you are.

The first thing most consultants will do is to speak with the executive to understand why they were brought on board. What is the problem from the executive’s perspective? What has she done to try to address the problem? What has work? Has not worked? Why?

While the executive may be a wealth of information and she will often speak with authority on the problem, simply listening to the executive and then driving to a solution would be a mistake. In all relationships, somewhere between “my truth” and “your truth” is “the truth.” This means that the consultant needs to talk to many stakeholders to get different perspectives. He must learn where there is alignment and misalignment. Where is there agreement and disagreement?

So, first, the consultant must find out who the most affected stakeholders are and talk to each of them in detail. As he speaks with each stakeholder, he should ask “who else will be affected by whatever decision we make on this matter?” The answer will present an additional list of stakeholders with whom the consultant should speak. In other words, don’t get a list of interview candidates from your sponsor, meet them, and call it a day. Look for additional perceptions that may be critical to formulating the right assessment of the current state.

The consultant needs to learn from multiple stakeholders at different levels in the organization:

1. What are the motivations of each stakeholder? How do those motivations shape the stakeholder’s point of view?
2. What is believed to be the problem? How is each affected by the problem?
3. What symptoms are presenting themselves in support of the problem statement?
4. What have they tried to solve the problem? What has worked? Not worked?

Individuals can be motivated in a lot of different ways. Some will be motivated by a successful outcome - finding the best way to resolve the issue and drive forward successfully. Others are motivated by fear. “If I talk to these guys, will I loose my job or sense of autonomy or ownership of the solution?” Knowing how one is motivated allows you to frame questions in a way that allows the stakeholder to be the most receptive and to apply judgement to the information you are gathering.

Additionally, many of us will often confuse the symptom with the problem. Is the problem that we have too many meetings making it hard to get work done, or is the crazy meeting schedule a symptom of some other problem, such as a lack of clear direction, lack of clear decision making ground rules, or lack of sufficient resources.

Getting to the heart of the current state is a critical first step in the consultative process. Do not get consumed with solving the problem at this point. Just stay focused on understanding what’s going on. You will get to problem resolution later.

Consultants ARE sales people

While I did work in a stand-alone, boutique consulting firm for a time, most of my career has been in embedded services organizations within software companies. In these organizations, the companies typically have a dedicated, product sales team who is also expected and compensated to sell professional services (PS). The Services Practice Manager and some senior consultants often support the Product Salesperson to sell PS. Let’s face it, selling product and selling services are different, even for a “consultative” salesperson. Products have features and functionality that can be more easily compared to competitive solutions. Products can be demonstrated, they can be touched, and the value can be illustrated visually in the sale process. OK, its not quite that simple, but the fact is, when you buy PS, you are buying access to people. You can’t illustrate the value of PS by demoing a person. Or can you?

I believe that while consultants are not salespeople in the traditional manner - they don’t carry a bag and are not paid on a commission basis, they are salespeople. (I am not speaking about partners in stand-alone consulting practices, by the way.) The way we sell as consultants is through being a solid consultant and demonstrating what we know and our approach to the consultative process..

Whether its in a pre-sales capacity, supporting the product sales team, or in post-sales delivery, consultants need to sell the prospect or customer on the fact that she knows the space and has the expertise needed by the customer to meet their needs and objectives. One way we do this is by joining the product sales team in pre-sales meetings to understand the customer’s pain, learn about their success criteria, and start discussing a model that can be used to ease that customer’s pain and drive to full attainment of their success criteria. We build credibility during pre-sales that should drive the deal and set up a successful engagement. What we do in pre-sales is very similar to what we do in post sales: We ask insightful questions, listening (a lot), and provide some amount of consulting throughout the conversations, giving the customer a strong impression that we can help.

We, essentially, provide a demonstration of our model and approach as well as highlighting the specific skills of our consultants through this process. The customer is most likely speaking to multiple organizations and will determine which consulting team is best equipped to help them meet their objectives through their people, process, and technology.

Inevitably, potential customers do not view the consultant who sells as a salesperson. This works to our favor, of course. For right or wrong, there are often negative connotations of “salespeople” and, even though the consultant is on the call to help scope and close a deal, we are viewed as subject matter experts, not salespeople. If we play our cards right, we will foster a strong, trusting relationship with the the customer, and the customer will be willing to share concerns, pain, and needs with us in a way they won’t with someone in a traditional selling role.

“Selling” doesn’t end when the ink is dry on the contract, though. Once we start a project, we will get introduced to new stakeholders - folks who were not part of the pre-sales process, who don’t know us. We need to convince them that we can do the job, that we can help them meet their objectives - we are back to "selling." Then the consulting begins. Throughout the engagement, we learn, we listen, and we advise. In the words of Peter Block, we “help our customers ask and answer their own questions,” and we show the customer a vision for a better and less painful future. Throughout the engagement you will, at a minimum, be selling your ideas and your vision for their future.

As a consultant becomes more senior, she is expected to help drive follow-on PS and product sales. Again, we are not “the” salesperson, but we are trusted advisors who work with our customers more closely than a salesperson ever really could. We have the ability to not only ensure “this pain” is addressed, we have the ability to learn about other pain the customer has that “we are able to address” through our products or services.

A colleague of mine, who once worked for a Big 4 consultancy, shared with me that his previous firm offered a training program they called something like, “Helping Your Customers Buy.” Notice that the word “sell” is no where in the title of this class. This is because, for many consultants, being perceived as a salesperson is seen as a negative. The message of this training, though, is that if you knew your customer has pain that you can address, why would you not talk with them about that, even if it means they have to sign another Product Order Form or Statement of Work?

Think about it, when you are not feeling well, and you go to see your doctor, the doctor works to diagnose the source of the pain you are feeling. If he identifies another health issue while investigating the pain you had when you came in, he doesn’t refrain from saying something simply because the new issue is not the pain you came in to discuss and/or because it could cost more money to get the health issue resolved. Rather your doctor speaks with you about what he found, the concern and/or risk, and what next steps he recommends. You, of course, have the right to a second opinion, or to ignore the problem, but knowledge is power - the doctor knows this - and you now have new information to help you improve your overall health.

So how do you “sell” without “selling”? It is actually easier than it seems in my opinion and experience. Years ago, one of my company’s customers was struggling. They were using all aspects of the product they purchased - 100% utilization, but they did not feel like they were really getting value from their spend with us. They were questioning whether they should renew the contract. (Think of the guy at the gym who goes faithfully but is not losing the weight he wants to lose.)

The Account Manager (salesperson) suggested that they meet with Professional Services to see if there was anything we could do to help them get value. They knew they should be getting value, and they were open to talking with us. The Rep asked me to join a call with the customer. We had a preliminary conversation about what they were doing and why they thought they weren’t able to get value. I asked a lot of questions and learned a lot. I felt strongly that if one of my consultants could work with them for 2-3 weeks, we could develop a "path to value" for them. They agreed, and we got started with  a three-week, billable services engagement designed to find that path.

In the first few days, the consultant realized that many of the things they were doing with our product were redundant and not adding value. Her first recommendation was to turn off a slew of things they were doing with us - a scary thought for a SaaS company that makes money on consumption of the product. Still, she knew it was the right thing to do. The customer complied, consumption went down, and the customer instantly trusted the consultant to do right by them.

Over the next week or two, the consultant identified a number of things they weren’t doing with our product that they really should do. She made recommendations and help them set up those things. Unfortunately, they didn’t buy enough of our stuff to do everything that she was recommending. The end result was that the customer called their Rep and bought more of our stuff - more than doubling their spend with us. The consultant was not in “selling” mode at any point in her work. She was acting as a highly-skilled consultant, understanding what they needed, and advising them of how to meet their needs. Success!!

So, worry less about whether you are “selling” and worry more about listening to your customers, understand where they have pain you can address, and help them buy when that is the right thing for them to reduce their pain.

Reminder: So, Why Do You Hate Submitting Your Time Sheets - A Survey

World-Class PSO is an organization that is passionate about building World-Class Professional Services Organizations. We believe that time tracking and professional services automation (PSA) are critical components of building such organizations, but we recognize that the current tools on the market fall short of meeting the needs of busy, often traveling, consultants and hourly contractors. This impacts the quality of data and the ability for practice managers to make data driven business decisions. 

We are conducting a survey to better understand why consultants and hourly contractors struggle to get their time sheets submitted on time and/or accurately. If you are one who is required to submit time sheets as part of your job, your response would be appreciated. 

This 21-question survey will take less than 10 minutes to complete (it took us 4), and all respondents who complete the survey will receive a $10 iTunes Gift Certificate through email. 

Click here to take survey

Thanks in advance for your participation! 
The Team at World-Class PSO