Don’t Say “Yes”...Yet (or “No” for That Matter)

One of the hardest things to do with a customer is to deliver bad news, and saying that you can’t do something for which they have asked, at least not in the current scope of work,  is often viewed as a form of delivering bad news.

The pressure to be seen as working on behalf of the customer, to recognize their needs and help them address them quickly and with precision, often sends consultants down a path of scope creep that, in the end, causes more harm than good. Learning how to strike the right balance takes experience, and a few missteps, to get right.

It is natural to want to be viewed as helpful and as an expert who can ease the pain. All too often, though, we say "yes" before we really understand the need or requirements. The result is a premature commitment and the customer may have one view of what was committed, whhile we have another. We may, for instance think that what is needed is a few minutes of work that we can simply slip in. After we jump in - already having made the commitment, we find out that this commitment is a major engineering effort that will take months and multiple resources and teams to pull off. While pushing back initially may have been a little painful, pushing back now is virtually impossible.

Years ago, I was working for a SaaS company running consulting services. By design, the Services team did not implement software and we did not have developers on staff. We had technical consultants and analysts, but not developers. While visiting one of our largest clients, our CEO agreed to having Services build a “custom report” at no cost to the customer. His motivation was logical - we had a large expansion contract on the table, and he wanted them to sign quickly. He felt he could use this custom report request as a “give/get” - give them their custom report, get the large contracted we needed to make our numbers.

The problem was, as smart as our CEO was - one of the best with whom I have ever had the chance to work - he did not really understand the requirements. As services dug in, we quickly learned that the request was not a customer report (think 2 dimensional), it was a custom application (think 3 dimensional). As an experience project manager in the software development world, it took me one, one-hour meeting with the client to know that the customer was not looking for a report that we could implement in a couple of days, but rather an application that would require months to develop and that we did not have a team with the skills to do the work.

At that point, though, the train had left the station, and we had to figure it out. It took us 4 months with 1.5 FTEs. Since the customer was promised something in a couple of weeks, they were not at all happy with the delays, and in the end, what we delivered was only a portion of what they needed.

We can’t always protect ourselves against situations where sales or executives make ill-informed promises on our behalf, and we have to pick up the pieces. It happens and will happen in every organization. We can, however, protect ourselves against doing the very same thing to ourselves. So what do you do when a customer asks for something that is not in scope or is otherwise unique, big, hard, unclear, or has never been done before?

First, you make sure that you understand in detail the pain the customer is trying to solve. Without knowing the pain - the problem - you are not going to be able to assess the requirements’ ability to meet the customer need and, potentially, provide alternative solutions. You won’t be able to look, for instance, at the long list of existing requests for enhancements (RFEs) in the product management/engineering queue to see if there is something similar that will address the pain, even if it is not precisely what the customer is requesting.

I don’t at all mean to be disrespectful to my clients, but sometimes what they ask for initially and what they really want or need are not the same. Understanding the "why" behind the request is a critical first step.

Next, capture as much of the requirements (the what) as you can. This allows you to 1) understand how the client thinks about solving the problem and 2) ensure that your client feels listened to. Document the requirements and send to the client for review and confirmation...include the problem statement in the requirements.

Lastly, avoid brainstorming on options at this time and do not, and I mean not ever, commit to doing the work in the initial discussions. Don’t say no either. Its too soon. Brainstorming too soon can lead to a perceived commitment without intention or may set expectations that you have to change - painfully - down the road. At the end of the day, anything is possible. It depends on how much time and money you have, but anything is possible. Your job initially is to collect information and confirm with the client that you understand both in terms of the request and the reason behind the request.

Now what - the client needs help and wants an answer now, right?

Its simple, let the customer know that there are a few folks with whom you need to review the requirements to understand what options we have, what is feasible, and how to proceed. Don’t commit to anything (yeah or nah) other than when you will get back to them and with what. Once you are off the call or out of the meeting, you then need to engage with the right people and departments to assess the request, determine what is feasible, and develop options for the client to consider. For instance:

1. Is there an existing RFE that meets most of the highest priority requirements? Is the client willing to go with that solution knowing they may have to wait a bit, it may not address all of their requirements, but it won’t cost them any additional money?
2. Is there a smaller custom solution that we can implement now at little or no cost, maybe to earn back some good will, that they can accept?
3. Is there a larger, custom piece of services work required that will cost them some additional money but meets all of their requirements?

Remember, your job is not to be a “yes man” (or woman) and you don’t want to be perceived as simply saying “no.” Your job is to understand the pain/need and present a number of options for the customer for them to consider, involving them in the final decision but helping them see the pros and cons of each option. Digging into options before you know what is feasible can create pain, so focus first on understanding the problem, then come back to them a few hours or days later to discuss alternatives.

I'm Back!

I have been feeling a little less than inspired in the last couple of years. Well, that isn't really a true statement. In reality, I took on a new role with a new company in the fall of 2012. So, as you can imagine, I have been drinking by the fire hydrant getting familiar with a new company, team, industry, and customer base.

I have been in the role for about 15-16 months, and I am feeling inspired now. My focus is a bit different than my previous focus. I wrote a lot about building and running an effective PSO in 2011 and 2012. While that is still a very interesting topic for me, one about which I am passionate, my current focus is helping those around me to be the best consultants they can be. So over the coming months, I plan to post some "Andrea-isms," what they mean to me and how an up-and-coming consultant should think about developing as a world-class consultant.

I hope you will find this series helpful, and I look forward to your comments. My first post in this serious is on its way.

World-class PSO: Governance

PSO governance is a hot topic in my world these days. As more reps are getting involved in selling PS and we build out packages and offerings designed to give the sales reps the ability to sell PS without direct involvement from a consultant who sells, how do we ensure that expectations are set properly and that projects can be delivered to ensure a high-level of customer satisfaction AND on-time/on-budget deliver (ie, a profitable PS practice)?

The evolution of a PSO in this direction means implementing standards and processes for governing the practice and ensuring that goals are met, projects are consistently sold and delivered, and customers are getting what they need . This is "PSO Governance."

So what does governance mean for a PSO, anyway? A quick Google search produced a number of results with regard to "IT Governance", but little was found on governance for a World-class PSO. In a lot of ways, its not that different. A PSO, like any business or business unit, needs:

• A defined set of KPIs and SLAs that are measured regularly and on an ongoing basis
• A clear set of goals toward which to work
• A set of processes, tools, and templates to use to ensure success
  

While the leadership team is responsible for defining the strategy and the requirements for governance, all members must provide input, and be held accountable to the KPIs, goals, and their roles in achieving a successful outcome.

In the coming weeks, I will investigate PSO Governance throughout all components of a PSO (sales, marketing, delivery, etc.). As always, I welcome our stories, ideas, and experiences.

World Class PSO: Daily Thought

I'm back!!!! I hope you had a great week. I sure did. The skiiing at Squaw Valley was great. Visits with family and friends were also great.

While I was away, I was able to watch the movie "Waiting for Superman." (Thanks American Airlines for showing it on the flight!!) This movie was very eye-opening for me. I don't have children in the public school system, and, therefore, don't have current, first-hand experiences. This documentary had very strong views on why our public schools are failing. If 1/2 of what they said are true...we should all be outraged!!

You may be wondering why I am bringing this up...it doesn't really have anything do to with World-class PSO stuff...You're right. (If I had my laptop with me on this trip (yes, I go on vacation without my laptop most of the time), I would have blogged on the subject last week.). Since I have a bit of a captive audience, I wanted a chance to encourage all of you to watch this film and get involved in what is happening in our public schools. Here are a few piece of data that were shared:

• According to the film, there are schools in CA with 75% drop-out rates - teachers and administrators know that only 25% of all incoming freshman will graduate. There are schools all over the US just like these schools; they are a called "drop out factories."
• The city of New York spends $100 million per year on a "rubber room" program for suspended teachers. Teachers under investigate show up to "work" each day, reading the newspaper, books, playing cards, sleeping, and surfing the web, getting paid full salaries and collecting full benefits...even earning pension vesting. It takes 3.5 years for a teacher to complete the process.
• Philadelphia (or was it Pittsburg) spends more per capita on a 4 year prison sentence than for four years of schooling for a student.
• One school system (can't remember which) in the Mid-Atlantic states spends enough time moving bad teachers from school to school that they have given the process a name: The Dance of The Lemons. The hope is that the principle of school A will replace his worst teacher with some "less worst" since he knows he is getting someone else's worst teacher.
• The US is ranked 28th out of the top 30 developed nations in the world for public education. We are following behind!!

Now the tie back to what we do...for a PSO to be truly World-class, it needs to put the needs and interest of its customers first. (This is the first statement in our PS Values or Gomez PS.) That does not mean ignoring the needs of the practice, by any stretch...its a balancing act for sure. I firmly believe that, while the best and even the good teachers work tirelessly for their students, aka their customers, there are all too many bad, or not so good, teachers, bureaucrats, and politicians who put the objectives of the unions and the individual teachers ahead of our students and, therefore, the future of our country. The United States cannot have world-class students, schools, or workforce if we continue to de-prioritize the needs of the students over the needs. We will not have a world-class future.

I am officially stepping off my sandbox and will return to regularly scheduled World-class PSO programming tomorrow. As always, I look forward to your comments.

World Class PSO: Daily Thought

We've started to move to a "Packaged Offering" model, which is designed to allow the Sales team to sell PS - at least to some degree - without the help of the PS team. This means that we on the PS team will have less control of expectation setting both in terms of the offering and schedules. The PS team will need to work harder at the beginning and throughout each project to ensure that the customer is aware of the details of the project, what is expected of them, and what they can expect from us.

Additionally, the PS team needs to be prepared for those occasions when the packaged offering doesn't truly meet all of the needs the client has. The consultants will have to have confidence in the scope of work and the Change Request process to manage through those potentially difficult situations.

I am heading out on vacation..."see" you the week of February 28!!

Managing Non-Billable Work Effectively, Part 5 of 5

I reached out to my colleagues at PS Village last year and reviewed a number of posts on the LinkedIn group, and SaaS Professional Services Executive Forum to inquire about how others deal with give-away work. It seems that many respondents experience the same challenges. The trend across all of the proposed approaches to dealing with this situation is that the solution will work if, and only if, executive management places value on the work of the PS team and on the importance of managing projects properly.

Here, then, is a summary of some of the best suggestions that came across the PSVillage and Linked In Discussion Boards:

1. Manage non-billable, client projects like a billable project by involving PS resources in the discovery and scoping discussions early and using the SOW and CR process to manage the agreement and work effort.
2. Tracking non-billable work in a number of categories. For instance, one may consider tracking and reporting the percentage of PS time spent on
   
   a. Non-billable commitments made by management (PS, Sales, and Executives)
   b. Project overruns due to missed estimates on fixed-bid projects
   c. Project Management approved no-cost CRs.
   
   
3. Charge back systems can be used to highlight the amount of non-billable work delivered (and on behalf of whom). For instance, if a sales manager commits to including five days of PS work at no additional cost in order to close a larger product deal, the Sales budget pays for the PS time. PS reports the booking and revenue like any other, but Sales takes a hit on its budget. In this model, Sales would be very aware of the value of the no-charge work and would understand the deal size that would need to be closed to make the goodwill PS work worthwhile.
4. Financial Reporting can be used to highlight the amount of non-billable PS work delivered to customers. One member of the PSVillage worked directly with the head of finance to change the way non-billable PS work is reported on the company’s financial statements. With this change, the financial statements reported both the “Gross PS Revenue,” the discount rate for the period, and the Actual PS Revenue. Gross PS Revenue equaled all time spent by PS on client projects at the normal billing rate (whether billable or not). The discount rate represented the value of the lost revenue of the hours that were discounted or given away. The Actual PS revenue is the difference between the two. This type of reporting put a spotlight on the value of the no-charge PS work that was being delivered.
5. A formal approval process ensures that all parties are aware of the need for and agrees to the no-charge work before the commitment is made to the customer. This approval should include the CFO, VP of PSO, and VP of Sales. The process should be well defined, and all parties in a position to give away PS work should be required to follow it. I would say that approval should be required before any agreements on schedules and work effort are verbalized to the customer and should require an initial discovery by a qualified PS consultant or manager.
6. VSOE, or Vendor Specific Object Evidence, is what determines how a business can recognize the revenue associated with a deliverable or work effort based on the fair market value of that work effort when sold as a stand-alone item. Some members of the Discussion Groups suggested that VSOE can be used as a baseline to which discounts are compared. Any discounts that bring the deal size below the VSOE would be flagged for review by finance before there is a contractual agreement between your company and your customer.
7. Where the primary contributor to non-billable customer work is the Sales department (and assuming reps are paid a higher rate on product sales than PS sales), some suggested that the value of the discount come out of the license cost, in turn reducing the commission to the rep. It is thought that if the rep. feels the loss in his commission check, he will think twice about making the promise in the future. This often happens when VSOE is in place.
8. In most cases, participants in the discussions felt that executive-level support and structuring the PSO as a profit center are the two primary drivers for reducing the pain associated with unmanaged “give away” commitments. With both in place PS managers can reduce the number and frequency of those commitments and ensuring that proper project management processes are followed in the pre- and post-sales efforts. Additionally, many thought that determining a budget for non-billable client work was important to ensure that these opportunities were scrutinized appropriately during the review and approval process.

Conclusion

PSO managers need to expect that non-billable work is a nature of the business in an embedded PSO. Personally, I am OK with goodwill work, as long as the customer understands that they are being granted a one-time discount for a specific reason and the business model for the company and PSO support some amount of goodwill work. Getting agreement from the top with regard to how and when work will be given away is critical. Showing executive and sales management how unplanned, non-billable work - without PS involvement - disrupts the apple cart, including short-term and long-term effects, is critical. Solutions for managing non-billable work exist, but they work best when supported by the executives.

World Class PSO: Daily Thought

Happy Valentine's Day!!!

(I know it's a Hallmark holiday...but it's a fun day just the same.)

As you move through the day, I am sure that you, too, have many meetings and things to do that require you to interact with others. Be sure to take stock of all of your relationships. We tend to focus today on our relationship with our significant other (I hate that term, BTW), but what the heck, why not use today to practice building relationships in other parts of your life.

Today, I am committed to thinking about the relationships across my life, focusing first on what the other person (whoever that is) needs from me, and trying to have conversations and interactions that improves and builds relationships.