Hello PSVillagers:

Below, please find the survey results and notes from the Bay Area PS Executive Breakfast that was held on May 15, 2009. The topic was the “Impact of the Current Economy on PS”.

Results of Group Questions - Bay Area Breakfast , May 15, 2009

Size of company: 

$10M [7]
$10M - $100M [8]
$101M - $1B [5]
$1B - $5B [1]
Larger [0]

Type of company:

Pure services [2]
Hardware [1]
Software [14]
SaaS [8]

PS Services split:

5% [6]
5% - 15% [5]
16% - 30% [7]
31% - 60% [2]
60% [2]

Size of PS Group:

10 People [8]
10-100 [11]
101-250 [2]
251-500 [0]
501-1000 [1]
Larger

Do you have a dedicated PS Sales force?

Yes [8]
No [15]

Is $1 = $1?

Yes [9]
No [13]

Are product sales guys paid on PS sales?

Yes [18]
No [3]

Do you have a dedicated PMO?

Yes [6]
No [11]

How are your consultants compensated?

Flat Salary [11]
Margins [2]
Revenue [3]
Product leverage [0]
MBOs [12]
Product Sales [2]

PS Delivery Strategy:

Mostly by employees [19]
Mostly by subcontractors [3]
Mostly by product distributors [0]
Push to partners [2]

Do you use a PS Automation Solution?

Openair [4]
QuickArrow [3]
Excel/homegrown [4]
Other:

• SugarCRM [1]
• ChangePoint [2]
• Unanet [1]
• Evaluating [1]
• NONE [2]

Are your engagements primarily:
T&M [10]
Milestone [3]
50% T&M and 50% fixed [6]
Fixed [1]

Are your engagements primarily:

Sold with product [17]
Leading product sales [1]
Trailing product sales [4]

Do you expect to grow revenue in the next 6 months?

Negative [1]
Flat [7]
5 - 15% [8]
15% [5]

Do you expect to grow margins in the next 6 months? 

Decline [1]
Flat [13]
2% [3]
2% - 5% [3]
More [2]

Do you expect to grow staff in the next 6 months?

Negative [3]
Flat [9]
5-15% [6]
15% [4]


Impact of the Current Economy on PS


TOPIC: UPGRADING TALENT - #1

• 2 companies [at the table] are hiring in services.
  
• 1 in “Hiring like mad” for their size (SMB)
  
• Through contraction of expansion!

1. Mainly contract employees
   
2. Hiring Tech Leads as contractors didn’t work

• Upgrading Talent with “like” Capabilities
  
• Comment: after a recent merger, removed bottom 15%

1. Will hire in next 2 quarters
   
2. Customer project were hit.
   
3. Typically don’t cut bottom 5% if they are on key project.
   
4. G.E: cut 15% every year!
   
5. Scale of company ditches how you would prove on regular basis!

• 25% cut in PSA but now need to make PS people more sales driven
  
• Consider moving people to different roles that are a better RE for their talent!
• cycle PS through Engineering to get deeps skills.
  
• External Training : created development plan for staff

1. Both soft and hard skills
   
2. Formal training helps on hard skills, but not necessarily improve the performance

• Need to apply the training to re-enforce it.
  
• Coaching, mentoring: (some companies do it)
  
• Can help if employee is mentored.
  
• Mentoring is stronger in a service company.
  
• Larger companies have more scope for mentoring.
  
• Q: How to bill for mentoring time?
  
  
  • Build it into the utilization model! “Billable” us “non-Billable” utilization.
    
  • Identified top 10%-15%, ensure they have a mentor! 
    

• Very good skills prediction, salary perspective
  
• If Bring in 10-20% below market, what happens when market improves?
  
• More cross training
  
• If I let someone go, do I get the headcount back?
  
• If I give up someone even for a transfer (internally), do I get it back?
  
• Contractors can help you with margin
  
• If CFO looks at backlog, need to cut 20%
  
• Training for PS services management
  
• Upgrade talent means take boot camp $ at Improving skills
  
• Lunch and Learn, bring ice cream or cookies
  
• Create and internal network skills profile
  
• Community leaders for different business practice
  

• Comp Plans. A $1=$1; not a decrease.
  
• Dedicated PS Sales person.
  
• Trust delivered with customer satisfaction.
  
• ROI, strategy (product sale)

• Challenges
  
  • Less so with startups; more control
    
  • Sales says how could customer ever need “$X Services?”
    
  • Solve by pushing solutions concept
    
    • [Product] gets put on shelf without services/solutions

• Use this as a leverage with management
  
  • Good if revenue can be predicted
    
  • Train the sales folks
    
    • Feature vs. Solution

• Use tools
  
  • Take a customer centric approach
    
    • Solution sales - show the value
  • Comp reps on margin

• Issue with long POCs (Proof-of-Concept) engagements.
  
  • Learn & define scope with PreSales
    
  • Margin analysis on long-term vs. short-term projects will vary
  • T&M mostly - shorter projects more profitable
    
    • By adding high value in complex situations almost all remote delivery helps with margin

• Big Deals
  
  • Revenues pressure from Sales
    
    • Need to look at and manager projects
    • Work closely with Product Management to productize enhancements and not impact downstream implementations and rework
  • Build solutions & sell as product. Packaged.
  • If you want to do an innovation & product - find a customer to fund it
    
    • Have a look at margin - make the business case
  • Sales loves to sell things we don’t have - especially product deficiencies

• SaaS Model is different
  
  • No, or less, engagement from PS in Sales process
  • SMB focused
  • Harder to manage margins
  • Managed as Support in this model
  • Customer assumptions vs. SLA can be a challenge

• Less sales resistance if you can predefine scope and fix price it - easier to sell shorter projects better, less risk.
  
  • The better to define the initial scope - educate the representatives what is proof of completion

• Theme varies on types of solution and duration project
• Fixed price vs. T+M - discussion around how this works - contractual and expectations balancing.
  
• Deferred commission for Representatives if paid on Rev Rec is a detractor.
  
  • Rev Rec issues - has to do with rev rec. overall
  
  
• Provide a set of implementation qualifying guide. (Guide the sales people)
  
  • Build definitions of service packages include deliverables highlighted to the sales team where their future pitfalls and objections may be - they see the value of this.
  
  
• Use your presales engineers. 
  
  • Good cop bad cop - don’t worry about the sales team as long as the sales engineers know the parameters.
  
  
• Build the relationship with sales.

• Market Stage - Does services driven product costs increase?
  
• Partner Focus
• SaaS - Unique/Stronger Emphasis on Adaptation
• Opportunities vs. Growth - Actual services SKU.
  li>Bundle Service/Product. 10%-20% Packages. Avoid SOW’s
• Market Stage-Early stage companies based diagnostic services
• SaaS - Possible exception to that, services strategies part of adoption
• Bundled Services/Product - Successful growth/Sales Strategy
• Package Services Pre-Seized & Pre-Scoped- Minimizes perceived value because SOW is not required
• Create Sales Culture in Delivery - Including incorporating into MBOs
• Face to Face with Sales Leadership - Being in front of them all the time

• Weekly project review meeting to assess the current status
• Before the sale, have a solid SOW and meet with Sales to understand what was actually sold
• Hold back Sales commission until implementation is complete and accepted by the customer
• Well defined process to get PS into the Sales Cycle
• Check points during the implementation with key executives
• Dashboards in place to pro-actively give the project status @ consultant level
• Understand early on what the Executive sponsor will be like to work with
• In the SaaS world, they are finding that being offsite (software hosted by) is an advantage for getting things done when there are issues
• Use RACI (multiple meanings: Responsible-Assists-Consulted-Informed), client audit, certify clients, make client do what they say
  

• Incentives for Services group during Sales cycle to avoid overselling
• Incentives for Sales group through Services engagement
• Sales comp @ time of end of Service [engagement] and customer satisfaction
• Delivery team sets project expectation with Sales Reps
• PMO Office
• Project Manager over multiple projects using a standard methodology
• Reporting up to engagement manager
• Relieve administrative burden from Project Manager
• Stick to the sweet spot
• Reduce risks upfront using project management
  
• Solution manager first contact for offshore implementation - wise to have onsite consultants
• Use case upfront in defining requirements
  
  • Distinguish nice to have vs. need to have
• Phase approach
  
  • Get them to understand product first
• Out of the box first
• New integration
  
  • Develop relationship with other vendors
  • Be upfront w/vendor
  • May have to get technicians involved
• Do ROI for new integrations first
• Get involved with Sales team to show knowledge of product
  
  • Get proof stakeholders know what they are getting into
• Not just verbal communications
• Go through methodology before SOW is written
• Marketing in synch with what product can pass as product capabilities
• Integration without domain expertise
• Stay with sweet spot, then outsource
• Carve out “this” area and give best effort estimate
• Negotiate reasonably when out of sweet spot
• Solutions help from Sales person