Eliminate Bottlenecks

Is this year going to be better than last year? I can already say yes, but can you?

The reason is the elimination of several bottlenecks in our business. It took most of last year, but two major issues holding us back were eliminated by process change. We estimated the changes would save us approximately 500 hours this year and about 10K in capital investments. More importantly, the changes help us focus more on clients. Already, the board and myself are seeing improvements in staff motivation and better understanding and service.

Too many businesses fly into the new year with great hope, but no direction. Management is clobbered with year-ending and beginning tasks, so it’s business as usual. What are 1 – 3 things that if you “fixed”, would help management, staff, and customers? Think strategically and if it is just one thing that has a significant positive impact, that is still huge.

We moved our Customer Relationship Management application that runs both our sales and support operations to cloud computing. We exported the data, customized a few forms and reports, and in full operations in less than 30 days. A bottleneck was removed for staff as all functions could now be done in one place. Our management team had one less thing to worry about off of our business continuity list. Finally, customers reap the biggest reward by some new features and more focus.

One of the major reasons you use a Virtual CIO is to eliminate those bottlenecks which become a win/win/win for all involved. Here are a few examples we’ve done for other clients:

  • Increased inventory turn double per month by integrating data collection for a large distributor
  • Increased product shipments 6,000 tires per day for a major manufacturer
  • Saved energy conglomerate $24 million annually in freight processing
  • Reduced IT costs $86,000 annually for local law firm
  • Lowered communication costs $225,000 for a municipality

Unfortunately, identifying the bottleneck and how to remove them are two different skill sets. If you’re tired of the status quo, inquire about our Virtual CIO service (918) 622-1167 Option 3.

10 Tips for LinkedIn Ranking

Most business lessons tend to smack you in the face. You get angry and your stomach is queasy. There is always some circumstance at home or other people to blame, but you eventually come to the realization that you should have seen it coming or a painful lesson just gave you experience that will never be forgotten.

So why is your Virtual CIO telling management and staff about LinkedIn? Because LinkedIn is not the business version of Facebook to post your resume, it’s a business search engine to be found. That means jobs, products, services, customers, and prospects. What kind of statement does your obscurity or apathy say versus your peers or competition – much less to customers and potential prospects? And if you’re thinking that all “I ever do is search for people or companies”, then type something like “payroll service” (or your line of business) and watch in amazement that people are displayed. Then be honest about how good you are about keeping up with your contacts. LinkedIn let’s you do that while your connections regularly update you too.

So now, your first reaction is to rip through the profile wizard in just a few minutes and go on to real work. Like most things in business, the most obvious approach is rarely the right one. While you congratulate yourself on a digital resume, your profile will be incredibly boring and minimally useful to anyone else. You’re supposed to add some personality and reasons for others to connect with you. Write dialog for people and use keywords of how you would like to be found. The following are a few tips from my own profile:

  1. Professional “Headline” is not your job title.  From CEO at Matrixforce to Managed Services and Cloud Computing Expert – which says more about me? More importantly, it’s the first place to add keywords of how I want to be found. Besides, your title is listed immediately below in Current and Past positions.
  2. You need a picture so people can actually see who you are. Use one of how you want to be perceived for business and not the Facebook casual Saturday or funny pet picture.
  3. Website links should not say Company Website or My Blog. You missed the boat too, if you were creative and changed the generic terms to your company name and a call to action like Read My Blog. Again, these links should be the anchor text of how you want these sites to be found in any search engine. In my case, Managed Services rather than the company name Matrixforce.
  4. Get a Twitter account. It’s another way to engage and if you’re lazy like me, I link Twitter to other services so one post hits LinkedIn and any other connected services without having to go to those sites. Post something when you have something useful or relevant to say – not a micro-blog of your mundane daily activities. Give three times before you ask or sell.
  5. Personalize your Profile link because it is more readable and shows that you get it:  http://www.linkedin.com/in/kevinfream
  6. Summary should be in first person rather than third. It should be brief and a call to action like e-mail or call is acceptable. Try not to brag about how big or how many, but rather what is in it for the reader who hopefully was looking for your keywords. Specialties should again have a handful of keyword phrases. My previous summary was some copy from a corporate website that in retrospect seemed either arrogant or historical.
  7. Move sections around to be different and put strengths or most useful content upfront. I moved my blog below the summary and will likely add an upcoming video above the summary.
  8. Uh oh. Now it’s time for Experience. Where is that old resume? Don’t even go there. Tell what the company does in a brief sentence. Then in first person, tell your role like a value proposition. Put a few bullets for accomplishments and (you guessed it) work in some of your keywords. Company name and title should link to those companies or people with similar titles. Don’t go crazy and add spam keywords to your company name or title. It looks absurd and is a general turn off for the reader.
  9. If you haven’t gotten the hint, the other part of social media is giving some information away. So why not add some applications to show a presentation or video, listings, portfolio of offerings, publications, or events. Give something valuable to the reader, but don’t give away the farm or arm competitors with anything that is not public information. For example, I automated cost comparisons and used them as landing pages for projects.
  10. You know those groups at the bottom? Well they should have your keywords and it’s great to understand your industry, but what if you participated in some customer groups?

It may take you a couple of hours to really fill out your profile completely. Note, that you should be able to raise your ranking significantly and possibly to the first page. However, unless you truly are the leader for an industry segment, you won’t be able to game the system. The best way to rank highest is to provide a large amount of high quality content for people who want to connect with you.

That leads to the next topic of connecting. Some of you will stop at a complete profile taking solace in the fact that you now make a positive impression and others will start connecting, posting, and discussing. Those that are marketing are doing more business. The next time you get another LinkedIn invitation and simply click accept, you better make sure your profile doesn’t make you look foolish and then start getting acquainted with this business tool.

Winter Ready

One day in late October, the day ended at 91 and then just like that the next morning it was freezing and the high was in the 50′s. Then the Northeast got dumped on and just like that it was flashback to ice storms of 2007 for Oklahoma – only this time the 5 inches of ice also had another two foot of snow. The state was gridlocked, but the world didn’t care. They were out of the polar blast zone and customers had needs and employees had to work to earn a living.

Fortunately, Edward had learned a lot since then and his company wouldn’t suffer through the following 2 weeks. In 2008, he hired a Virtual CIO that helped to reduce the amount of servers and IT cost with managed services. Accounting, CRM, e-mail, and standard documents had all been moved to cloud computing for better security and built-in business continuity at much less cost. The IT guy Bill was great, but we no longer needed him and fortunately the Virtual CIO was connected and landed him several other opportunities.

In 2009, Edward helped the economy and moved to another house where the power lines were buried. He’d also picked up some disaster recovery skills having an annual backup of SharePoint Online on an external drive, critical contact information, and extra battery backup at the house. Whether a disaster or sunny day, employees accessed the applications from anywhere there was Internet access. No costly failover to Houston or wherever or liability of having employees try to travel to a failover facility or underground bunker that was likely flooded and unreachable. Add a few cheap mifi’s and you’re good to go even if your cable or satellite goes out.

Most of Edward’s peers still wanted to “touch” their servers or had contracted with some local hosting company, that was either over-run with those fortunate to make it to those facilities or otherwise occupied with the misery of new prospects. All the while their employees were at risk for severe injury or death, the cost was overbearing, and even so business was at a standstill. Of course, Edward knew he was lucky as few technology companies understood the cloud or even the business processes of moving there. If the company hasn’t been around for more than 20 years with proven industry recognition, skip them and run not walk away from the “we’re gold, platinum, diamond” whatever pitch of the day.

The phones had been remotely forwarded. There was another order. Purchasing processed it and the sales people had even put a few opportunities into the pipeline. Accounting processed the invoices and payroll. Marketing had updated the website and was responding to followers via Twitter. All in all, employees had a couple of days working from home in pajamas by the fire and most importantly customers were impressed and knew the company was there for them when most of the rest of the industry was not.

Dead Zero

Here are two contrasting stories of network security for National Security Month. What follows, does not depict real events or persons.  In the business world, corporate data is protected by two separate, yet equally important groups:  the Information Technology staff, who maintain systems, and management that control budget and strategy. These are their stories:

Scenario 1

“Zeus, this is Striker”, the hacker said, like this was some cool military mission. “You were right about that IP address from the port scan and this should be easy”. The java injection for the just above consumer-grade Sonicwall got the hashed password. Let’s RDC to the mail server using the internal IP specified by the SMTP rule. Yep, same password for the domain administrator account. Score and owned!

Now add an account to the firewall with a special rule and port for backdoor access just in case – it’s takes four steps and as many places to find so it’s not likely to be discovered. Hide another admin account in AD and bury the hacking utilities some three folders down in Windows.

Time for the good stuff – make sure there is full access to all mailboxes and as usual administrator has full permission to all files. Find the HR, Accounting, and Management folders and copy anything that looks promising. Whoops, there’s that password spreadsheet. [Grin] Bingo, in the accounting system and that account number list will help quite nicely.

That should be some good commission. Charlie, I mean Whiplash,  has the employee list to get a decent return on stolen identities. Crackers can do the bank transactions and order spurious stuff from suppliers using the accounting data. And finally, Ohura can use Outlook Anywhere and copy or monitor anyone’s mailbox using the website or LinkedIn to target the big-wigs first.

Scenario 2

“Zeus, this is Striker”, the hacker said like this was some cool military mission. “Why are we looking at this one again?”

The firewall was enterprise server grade. Worse the MX record showed that e-mail was hosted at Microsoft. Further, there was a CNAME for SharePoint that likely housed all the critical data, that was also at Microsoft. Ohura was dating a salesman there who was brain-dead and had no scruples about giving away company secrets, but his account only had access to his mailbox and some public sales literature.  Even if it was the IT guy, his account wouldn’t have access to all the SharePoint data and mailboxes in the cloud.

I could spend a couple of nights hammering on this firewall, but what is there to go after? For sure, I don’t want to start going after Microsoft and have SWAT busting down the door the next day. “Zeus, let’s go after something with a payday.”

Washing Machine Syndrome

At some point in your life, it happens. The washing machine stops spinning out or simply dies. What a major inconvenience to have wet and soapy clothes. You may have to go buy some underwear for the next couple of days or try to find a laundromat. It costs as much to repair as it does to buy a replacement. If you’re fortunate, you whip out the credit card on the weekend and try not to get sucked into your favorite color or cool front loader with the matching new dryer. Depending upon your stage in life, you may be forced to hit the garage sales and get a friend with a truck to pick one up.

Regardless, the old washing machine is removed and the new one plugged in and screwed to the hot and cold water. You’re back in business and wash away without another thought until it happens again in another 6-8 years. The problem is that many companies take the same approach with their servers and it’s not as simple as replacing the washing machine.

Anyone in business can tell you, there is significant risk and lots of small and massive failures. Owners have a lot of moving pieces to understand and must have the courage to make decisions like that old Kenny Rogers song – count your money, be ready for the cards you are dealt,  and know when to walk away or run. These same people wouldn’t dare try to not pay payroll tax for a couple of months (which can never be escaped), but regularly risk it all to run 12 – 36 months out of warranty on servers running the business.

You see I have a unique ability to tell the future about when a server will die. Well, actually it’s simple. Servers are generally warranted for  3 years with some limited options for upfront 4 or 5 years. That means there are no parts or extremely limited spare refurbished parts throughout the world at warranty end – thank you lean manufacturing. So that means if you have only one power supply that shorts out, it’s 5-10 business days to have a new server shipped plus emergency recovery because complex hardware and software just isn’t like plugging in a new washing machine. Bad RAM, that old type is probably not available. If you have RAID and one drive dies and the machine is still running, try 5 times the cost of a new one with 5 times the capacity wasted to replace.

I’ve heard it all: “That’s the best server we ever bought” or “We just got that server in 2005″. This is generally begun or ended with some explicative or irrational statement about so much was spent, it should last for 20 years. Then, wait for it, the new equipment won’t run any of the old software and the new software requires other new software.

Treating your infrastructure like a washing machine just costs the business half to a full month’s expenses and revenues, plus lost goodwill with employees, customers, and suppliers – along with bad press and loss of new potential sales. But its IT or that support firm’s fault right? We’ll just fire those bastards. After all, IT has no budget authority and those consultants were crazy and the recruiter of the day with PC Magazine says anybody can do this stuff.

Ding. Ding. School is in. While it may feel good to fire someone in this situation, how about trying to prevent it in the future? Fact: your equipment is only as good as the warranty. Often it’s only like $200 – $400 more to get that 4 hour 4 year warranty part replacement from Dell. Then a hardware problem is fixed quickly versus doing everything by hand, waiting 10 business days for a new server and weeks to workout restoration with the waterfall effect of upgraded software.

Back in the day like 10 years ago, the answer was to buy two of each server or a spare parts kit for each server. The cost was exorbitant and the software configuration overly complex and rarely worked. Today, you stop repeating the washing machine syndrome by:

1) Cloud Computing - Get rid of most of your servers. Escape the cost of hardware, software, maintenance, and upgrades. Along with less cost, a big chunk of your disaster recovery is also resolved.

2) Virtualization – What servers are left should be virtual with reduced equipment cost and the side benefit of running on older versions of software on the virtual servers longer.

3) Managed Services – You’ve outsourced everything from the coffee service to payroll because those services do it better and for less cost. Why not shrink or eliminate your IT staff for the same benefits? The good ones manage cloud computing and virtualization, as well as keeping you current for anything on-premise.

Microsoft Endures

You can almost feel the pendulum swinging back from so, so far left – whether it is politics or religion and definitely technology. I often wonder where we would be today if the government hadn’t forced Microsoft to unbundle the browser and open the door to also be bludgeoned by the European Union. How better off would the economy be and how many more jobs would have been created? Better yet, why or to be fair when are Apple and Google put under similar shackles?

I’ve used Microsoft products since 1985 and have been a Microsoft Certified Professional and part of the Microsoft Partner Program since 1994. Some have accused me of being “too Microsoft” in the past, but the reality is I was generally using or supporting another product and had to follow the market on any changes during the various technology wars over the years. Although I’m product agnostic, Microsoft is usually the main ingredient for a host of hardware and software.

It’s easy to forget history. Microsoft Basic was one of the first languages for a programming thought process with much more functionality than COBOL. IBM learned the hard lesson that software drives hardware with the Personal Computer. Some of the first versions of Word were like Lotus 1-2-3 with quick menu shortcuts using slash and dot - and it was bye-bye Wordstar my first editor. Apple sprung from the IIe to a Mac with graphical computing, but never became more than a novelty as Microsoft adjusted with Windows. Lotus was winning at the spreadsheet, but Excel took off in Europe capturing larger worldwide market and then got bundled with Word. Not only did Lotus lose at its core offering, but the industry learned another important point that several disparate products cannot compete as a bundle versus applications built to work together – ditto for Corel and WordPerfect. Windows for Workgroups was an evolution that doomed Lantastic for small networks. Novell was flat-out a tremendous file and print server that I cut my teeth on until it had to run any back-end application which would cause a daily crash. Windows NT Server was graphical, ran back-end applications, and did file and print – enough said Utah Orangemen. Who can win a technology war without caffeine anyway?

AOL at one point was the Internet and Navigator caught Microsoft behind. Internet Explorer got bundled in for free and was predatory when today Google regularly gives services away free versus established media competitors using the mantra do no evil. Somewhere in there it’s also been lost that Microsoft started Exchange when there were only a few hodge-podge e-mail clients on the market – it’s still the dominant mail server and maybe that was innovation? And how about SQL Serer versus Oracle becoming the defacto standard for databases?

Remember the buzz and midnight release of Windows 95 and 98 and how Apple Computer nearly went out of business, if it wasn’t for Microsoft propping them up with cash? It’s amazing how removing “Computer” from your name to become a proprietary media company with MP3, Smartphone, TVs, and tablet devices is somehow the greatest thing ever. Since they no longer make servers and Macs make up a small portion of revenue, it will be interesting to see what Apple will be or do post Steve Jobs.  Though a surprise to many, Microsoft did not miss a step after Bill Gates began his humanitarian non-profit several years ago.

While Xbox came from nowhere to be a top contender in gaming, Google swooped in during the dark days of the Internet and indexed sites with no idea of how to make money. Despite the SPAM,  Google still leads for text search and mapping. However, Bing does much better if you’re looking for something social, music, or video.

A few remember when there was only Blackberry hanging on and giving away server licensing after Microsoft released free ActiveSync as part of Exchange along with Microsoft Mobile. iPhone and Droid currently rule, but must continually adapt with new features for Exchange/ActiveSync. Windows Phone 7 will likely follow the Excel historical example using Nokia in Europe to leverage eventual win worldwide. By the way Apple and Droid reviewers, you don’t build several tiled screens to swipe for contacts, press the button and say “Call John Mobile” without any training or configuration.

Years before “Cloud” was popular or Gmail existed Microsoft provided free e-mail to millions of Hotmail users. Today, Skydrive for consumers and Office 365 for business may not get the skateboarders to say “cool”, but customers regularly say “YES” to familiar technology with more features, better productivity, and significant cost savings. While the non-sensical chatter about browser wars continues, most industry players are oblivious to the huge strides Microsoft has made in various lines of Accounting/ERP software.

Hopefully, Apple can transition well after Steve Jobs and Google decides to focus back on great offerings around data. Unlike Microsoft, Google has never fought multiple wars at the same time (or had to compete at all) and Apple must fully make the leap to the new business model of media before their devices are an iCommodity.

Mostly, I wish people would remember that technology is the remaining industry in which America leads the world – and it doesn’t have to be a zero sum game where Google, Microsoft, and Apple destroy each other and open the door for a foreign startup. In the previous 5+ years, extreme rhetoric, blame, and wild speculation has been too much in vogue. While President Obama is a great orator and we caught Bin Laden, I’ve never heard any other President blame a previous administration in my lifetime. The press was so fanatical that they somehow thought Vista was associated with George W. Bush and castigated the product while people in the industry had few problems with it.

Now we regularly hear ”No one get’s fired for using Microsoft” or Microsoft is slow/boring/un-innovative. All of this negativity in spite of record profits and obvious innovation on all fronts? Just like the U.S. is just now beginning to recover from horrendous terrorism, Microsoft continues to endure making tremendous contributions to the economy and our competitive edge.

Lessons Learned

In technology, you better be willing to accept change and leverage experience. A potential client recently asked about my background and when hearing I had a Management information Systems degree from 1989 said “then you were born to work with technology”. In actuality, growing up in rural Oklahoma I didn’t get my hands on an Apple IIe until seventeen. Now as a dinosaur in this industry, the following are some lessons learned throughout my career:

1) Start at the end. Determine the outcome, compare what is being done today, and what does it really mean to the person requesting. There is so much buzz and FUD in technology, that a reported problem or requested solution is rarely correct. Working backwards from a goal of why and when also quickly qualifies commitment, feasibility, and time-line. 

2) Think out of the box. As a student at Tulsa University, I quickly got tired of sitting in the gloomy basement and waiting for printouts when programming. I knew I’d  be in the industry, so I bought one of the first Personal Computers with a modem to develop programs on a PC editor in less than half the time and with very little mainframe time.

3) Tell the real story and get buy-in. Over-emphasize things to expect and when upfront, especially any pain. Make sure you have buy-in by management and the project team and that they are doing any assigned tasks. Check the dates and signatures of contracts. I’ve actually seen “Why Bother” scrawled to look like a signature and backdate of a year to circumvent contracts.

4) Re-usability. Everything in technology you will do again. Take the extra time to document the first time or make a template as there are very few one-off things and even with changing paradigms there is base knowledge and historical facts that will prove valuable.

5) Follow-up. In 1987, my old dentist retired and I stumbled across Dr. Hinkle. Whether it was wisdom teeth removed or a simple cleaning, he called the same evening to make sure you were OK. It was a powerful lesson as no one likes to go to the dentist, true caring was shown, and loyalty definitely won.

Technology is like math as it is fairly simple to learn the nuts and bolts. Thought process and proven approach have been much more valuable than some tactical knowledge of a language or infrastructure. Of course starting with mainframes and working through virtually every war in the technology industry, my perspective is a unique blend of old-school and cutting-edge.

Google Journey

Recently, a few prospects and clients have asked what I pay to rank highly in Google. The answer is virtually nothing in dollars, but a great deal in  time, effort, and thought. That is what you have to figure out. Do you want to even play in the Search Engine Marketing (SEM) game and what do you want to accomplish? The standard 10 page website will not rank well, conversion to a sale should be the ultimate intent, and you may toil for months before gaining any traction.

Two years ago, I began researching search engine ranking for my 20% time. I couldn’t figure out why a startup competitor’s site was number one when searching for one of our key services and we were on the fourth page. After all, we were a 30 year old company with several national case studies from major manufacturers. After sifting through the massive amount of mis-information and lots of trial and error, the following are some things I’ve learned so far:

1) SEM is part technical, part content, and part rhythm.

2) Most web developers have no clue about what is invovled.

3) You and your staff must  be committed to regularly generating new and different information for customers of approximately an hour per day.

4) Use Google Alerts, Analytics, and Webmaster Tools along with corresponding Bing Webmaster Tools to monitor performance.

5) Research some keywords or key phrases by searching Google and Bing to see your competition.

6) Decide if you want to compete or identify longer or more specific phrases like adding a geography to try and rank.

7) At least monthly, research, monitor, and add/adjust content – you’ll need a spreadsheet to record various activities and ideas.

8) When searching, always note the related searches for content ideas and alternative anchor text.

9) Compare and contrast your website versus the competition to determine unique approach for customers.

10) Your competition reviews your website more than your best prospects or customers.

11) Your site should be about what customers need, giving away some expertise for free, while not arming the competition with a complete approach or your best ideas.

12) ”Content is King” is so vague and overused – It means you must have quality and quantity from a variety of sources.

13) Put another way a 100 page well-structured website with quality information for customers and supporting links from recognized external sources will dominate over several 10 page sites.

14) Eliminate duplicate content and ignore the multiple fake websites with canned content of any competitors.

15) Use a 301-Redirect so that company.com is automatically redirected to www.company.com as otherwise they are treated as two separate sites with duplicate content for search.

16) Home link should always point to www.company.com and not default.htm or index.htm.

17) Have a folder for images, company, and any other general or utility type folder to group information.

18) Don’t use more than one level of subfolders.

19) Keep the website structure as flat as possible.

20) Important pages should be named by keyword like estage-planning.htm rather than services.htm.

21) The same is true for folders – accounting rather than services.

22) Dump any Flash as it’s not searchable, is a legacy technology, and no one wants to wait for it to load.

23) Feel the need for speed – focus on making all pages load fast.

24) Consolidate CSS into one file and use simple HTML menus rather than script.

25) Smush images to increase load time with smaller file size and no quality loss.

26) Eliminate unnecessary code.

27) Each page should have a unique Meta title of up to 65 charachters with keywords first even for the home page such as “Estate Planning – Jones Brown Law Firm”.

28) Each page should have a unique Meta description of up to 150 characters which is used as the snippet information under title link in search results.

29) Customize headers H1 – H4 to fit the page style and utilize at least H1 as the keyword title on the page.

30) Images should have the Alt tag with the keywords for the page.

31) Pages should start and have some keywords throughout the page.

32) Internal website pages should link to keyword named pages with anchor text that matches or is a variation of the keyword.

31) Identify one or more conversion or calls to action.

32) Write for customers. Start at the end. Tell a story if possible.

33) The best content answers a question, automates a task, or illicits a response.

34) If you are expert in a product or service, have more than one page about it.

35) Forget the brochure features and think what buyers want – how will their lives be different and what questions they need answered.

36) Review your competition regularly to verify you have a different and more compelling message.

37) Use robots.txt to block irrelevant pages for search like login pages and pages that have been moved or removed.

38) Create a sitemap.xml to submit to search engines and track published pages versus crawled pages.

39) Similarly, create a rss.xml file to submit to related RSS directories to your site.

40) Create a blog at Blogger or your favorite to add content that supports and links to your site with no web development.

41) Use main keywords or phrase to link to your site.

42) Link to important keyword subpages too.

43) Use LinkedIn, Facebook, Twitter, Google+, Youtube and other social media sites to link to your content – again by keywords or variation.

44) Everything you start with social media will be wrong – learn the merits of each and add your own personality.

45) Automate as much as possible linking services together so one update hits them all.

46) Participate with major players in your industry for listing at their site and linking to yours.

47) Find communities where you can provide information that you can link back to your site.

48) Press releases and article sites are another way to link to your site.

49) Some things you do will have a negative effect and you will have to adjust.

50) Use a URL shortener like http://goo.gl/ in status updates to save characters and provide a place to track hits.

Stay focused on your goals and observe the competition, but don’t run after everything new. Again, track how you are doing and evaluate if it is worthwhile. If you aren’t capable or don’t enjoy creating content for customers, stick to your day job as half-hearted shows through even more on social medial than on the phone. SEM is something I enjoy, but more importantly it has brought in more business than 2 salespeople in the last 2 years for little cost.

Flat Cost Versus Billable Hours

We Sooners are known for first to aid or fight  for wars or disasters. Given the auspicious start for our state, we’re also a bold and stubborn lot that unfortunately trails the nation in business trends and technology. For over 30 years, our firm has provided flat cost professional services for IT. This decision was obviously a business strategy and my former partner often said “I’ve made enough mistakes in business that would have paid for dozens of  college degrees”. (By the way, I’m proud to report that he is neither dead or estranged and was simply bought out on amicable terms in 2003.)

While most of the industry eliminated the billable hour over a decade ago, much of the state channel still utilize billable hours which are bad for customers because it is fraught with conflict, deception, and poor performance. The conflict is often heated before, during, and after projects for rate and number of hours.  Critical tasks may be shortened or eliminated imposing significant risk and costing additional time resulting in significant overage - which leads to the main deception of padding hours to start or milking tasks during. When you pay by the hour, the only incentive is to stick around and bill more hours. Forget about thoroughness, prevention of future problems, or anything relating to efficiency and quality.

Flat cost is a win-win for customers and professional services firms. Customers know what they’re paying and service providers leverage their expertise and assume all of the risk for the unforeseen and lengthier than expected engagements. However, we occasionally still have prospects ask things like “How can I compare without hours?”

And there it is: a descriptive list of tasks/outcomes, estimated due date, and total cost. Now you compare approach, credibility, and repeat wins. No it’s not fair to startups or one-man-shows with their journeyman approach of rate and hours, desperate hope of impressing with the 10 page brochure website, and BB logo everywhere even though no focus on consumers. Comparison is done on business criteria rather than the sales person who was liked the most, along with the hourly company the CFO feels is easiest to renegotiate or delay payment based upon too many hours.

Obviously, the more physical or smaller the task make time and charges a better fit. However, for the viability of a business, achieving goals with smooth operation is often a much more valued criteria than simply cost. Again, we sometimes hear “You obviously started with hours so why not show them?”

So it’s MBA 101 and anyone doing pricing knows cost-plus is easy to understand and manipulate, but also a novice business approach that has diminishing growth potential leading to eventual bankruptcy. It comes down to business savvy and motivation. If we haven’t proven our worth upfront and will not make a required margin, then it’s not a fit for either us or the customer. Our personnel are not paid by the hour, so the only motivation is providing good service and not dragging out every task to make the weekly hourly bonus.

I recently approached a customer and pointed out a potential risk issue, but more importantly where they could save $100 – $200 per month going forward. It was a fairly simple two sentence quote with the work done over the weekend for a nominal cost less than a PC. The customer balked and said it was too high. It was an impending risk point and a great customer, so I recommended I show them how to do it. We spent about an hour in a remote session having them drive and do the task. Our team still had some minor work to do afterward, total cost to the customer was zero, and the customer had reduced recurring cost going forward.

So Monday comes and the customer sends an e-mail stating it didn’t take very long and maybe we should look at an hourly rate going forward. Somewhat rebuffed I called back and explained that my 25 years of experience was leveraged to train them exactly what to do and that our team still had cleanup tasks. Also, where did I go wrong with zero cost and less going forward?

Such is business life with no good deed going unpunished. It’s a good lesson to never get complacent and always over emphasize value, no matter all the previous wins. So what is your take on flat cost versus hourly?

IT Spring Forward

Back to the future in the late 80′s, I started with a company that did automatic identification (bar coding) and data collection for Fortune 500 manufacturers and distributors. At that time, single hand laser scanner and data terminals started at nearly $4,500 and label printers at $7,000.  My first day was spent cleaning and organizing. The kids may not be in bed, so to put it politely there was debris everywhere. Files and software on the computers were even in more chaos.

The job was to bring some technical and business analysis, along with software development to what was previously limited manufacturer demos for scanning and labeling. The company had Billy (not his real name) who worked part-time after hours and had done some minor software tweaks and loved the hardware. The problem was that Billy was just plain odd throwing often expensive things around like a monkey, rummaging through every drawer in the company, and in a few lucid moments breaking a full suite of demos that had been restored.

So the second day, I went to the owner and told him it was either me or Billy. It could have been over with dismissal as some punk kid. Instead opportunity abound working with some of the most well-known customers in the nation and the ever-changing wave of leading manufacturers and latest hardware and software over the last 20 years. Looking like you know what you’re doing sets a tone and only helps to build trust, along with solid action.

Q1 one is done and gone, so you can continue status quo with your lost hour of sleep or spring into action. Clean off your digital and physical desktop, donate or disperse that bone pile of miscellaneous technology, delete or file the myriad of haphazard files in your user folder, and do some real work and re-establish your priority and project list.

Now, what is it that you and/or your IT staff spend the most time doing or costs the organization the most? If you have no case history and use gut feel, that’s another problem – but  a start for now. Rank the task/project list and put columns for start and end dates, cost for products and support, and yes/no for management buy in or approval. Now be realistic about effort and available time. Then be further pragmatic of what management will accept.

You’re all cleaned up and ready to perform. Pick the one thing that is a win-win-win for lowering organization cost going forward, improving your productivity, and hopefully learning something new. You’ll have a double sense of accomplishment and many of the answers are getting easier with cloud computing, online backup, and managed services.

Some things management will not understand or may choose to gamble with high risk. Let it go as it’s not something you can control and you’ve done your part by bringing a problem/opportunity to their attention. After you knock out one project, move onto the next. One thing is for certain like everything in IT, you’ll be doing this routine next year. If the project list hasn’t changed significantly by then, serious reflection is in order. Step up, continue as usual with no grounds for complaint, or move on.

Follow

Get every new post delivered to your Inbox.