Many company owners have expressed their fear during our coaching calls about the inability to afford a skilled project manager to control the delivery of ERP or CRM projects to their customers.  This fear is rooted in the belief that;

• Customers don’t want to pay for project management services, and
• Their delivery team isn’t ready to accommodate this role yet.

As a business, sales and delivery team coach here at Salesworks having worked with hundreds of partners over the years; consider my perspective on this issue.

Most partners struggle with getting projects delivered on time, on budget and according to the specifications presented to the customer when they closed the deal.  As a matter of fact, there are still a large number of partners that struggle with keeping customers happy throughout the kick-off to go-live stages of implementation.  Projects are still being canceled midstream, or are going substantially over budget or falling short of customer expectations after go-live.  If you look closely at enough projects the reasons for these shortcomings become abundantly clear.

Project Shortcomings

1. We set ourselves up during the early stages of the sales cycle for moderate to high complexity projects by encouraging the “big bang” approach to implementations.   That is, include as much of the customer’s demands, requirements or wishes in the first project as possible since there might not be another chance to get this work.
2. The disciplined approach an experienced project manager brings to the table to control scope, assign/manage resources and hit deadlines is lacking in most consultants working on the project.  In fact, many implementation consultants are saddled with the task of being their own project managers!  All too often I will review a partner’ organization chart to see the titles of many employees listed as project manager when in fact their job is some form of implementation consultant.

Here is the reality.  The skills and talents brought to the table by a good implementation consultant are diametrically opposed to those of a good project manager.  On one hand, the consult is a feature, function, process oriented “people-person” that is very interested in pleasing the customer.  They are the good guys/gals.  On the other hand the project manager is a deadline focused, paranoid, risk manager whose primary goal is to get the job done on time and budget.  They are the bad guys/gals.

Mixing these two roles is highly stressful on your staff.  In fact, role-mashing here is one of the best ways to burn out your good consultants or frustrate a good project manager. Placing our implementation consultant in the role of the project manager, is akin to asking the airplane mechanic to fly the plane.  Is it any wonder that the passengers (our customers) get a bit panicky when the plane (project) starts to wobble and the “pilot” looks and sounds a bit stressed out?

A Good Project Manager Will More Than Pay For Themselves In Four Major Ways:

• Through the better controlling of resources, delivery schedules and anticipating/mitigating risks during the project your utilization of billable resources increases dramatically.

• By pricing in their services into every contract you sign, project managers become just another profitable resource on your team.

• After all these years of doing business, most partners still create 30+% of their new customer adds from referrals from happy customers.  Adding a skilled project manager to your team increases the number of happy repeat customers in every partner we have worked with.

• Many owners are really nice to their staff.  Some are too nice.  Many owners have taken on the role of project management by assuming the role of “services delivery manager” and fall short of doing this role well.  By adding a good project manager to your team, you create a disciplined buffer between the company owner and the delivery team that results in a strengthening of your authority.

If you are struggling with the decision to add project managers to your team roster and need someone to work through the pros and cons for your company or would like a detailed job description to use for hiring, feel free to make contact with me at ross@salesworks.com or call at 604 685 3908 x 106.

Financial Pressures

The financial pressure comes in a number of ways:

• The valuable part of the consultant’s time is diluted by less profitable work in another area and billings suffer.
• Work is performed at sub-par levels requiring rework, delays, poor customer satisfaction, etc.
• In the case of superheroes, you are highly vulnerable to their leaving as well as reducing career path options for those starting at a lower (more profitable) level.
• Staff burnout.

This phenomenon of role mashing is not limited to this scenario.  It is pervasive throughout most of our companies at some point.  Here are a few mashed scenarios to watch out for:

• Owner:  Sales, strategy, marketing, HR, administration, account management, accounting, sales leader, presales demo king/queen, and coffee maker.
• Sales: account executive (new customers), account manager (existing customers), account executive and marketing.
• Consulting: project manager, project implementer, technical support, programmer, consultant, account manager and superhero (they do everything).

The Remedies – Unravelling the Roles

Now that the scenario has been presented, what can we do about it?  The answer involves timing, since most of us can not afford to un-mash roles immediately.

Here are a few steps to take to align your team members with their most profitable and motivating roles:

1. Evaluate all sales and delivery team members to determine what they are best at.  Include yourselves, the owners.  There are formal tools out in the market for this or you can simply conduct your review with a few simple questions and several points of view.
2. Evaluate each current position and identify the different types of work they are performing.  Depending on your organizational make up and solutions provided, this will vary.  One of the best ways to define roles is to use the Sure Step methodology framework available to all Microsoft Dynamics partners and review the roles section for job descriptions based on the size of projects you work on. You can download it here for free.
3. Perform a bit of triage.  Which roles are most critically injured due to the individual trying to wear too many hats?  Make a priority list based on seniority of staff, nature of the position, customer/project involvements, etc.
4. Define new role definitions (see step #2) that will relieve the pressure.
5. If possible move staff to a more effective role immediately.  For instance, if you do not have a dedicated project manager, and one of your consultants shows signs of strong project delivery discipline, consider moving them into a pure project manager’s role and rehire the consulting position.
6. As the company grows, rework your organization chart to include pure play roles.

In the end, we run companies powered by human beings that possess intricate mechanics.  Paying attention to how each of our team members fit into the organization and perform their jobs optimally is one of the most challenging functions as an owner and manager.

Unfortunately, most of us pick up this skill through informal means or by trial and error.  As a result, time passes and profitability suffers until we can get it right.

If you are feeling bewildered about the process for moving forward, send me an email at ross@salesworks.com.  I would enjoy providing some guidance to you and your consulting team.

Adjusting for Growth

After 9 years of being a value added reseller Hayworth, Nash & Co (name changed), had grown to 26 employees in a Midwest U.S. city implementing Microsoft Dynamics ERP, CRM and related services.  They have been reasonably profitable and there are thoughts of either expanding their existing office or opening an office two states away where they have acquired four new profitable customers within the last year.

Brian Hayworth, one of the two owners, has been concerned about improving utilization and profitability before making a final decision.  He asked SALESWORKS to undertake a review of his delivery team to determine if there are any improvements in efficiency to be made and where best to add to his team.

Role M*A*S*Hing was Unprofitable

After a review of the 19-member delivery team and their approach to project execution, the most significant finding was that many of the consultants where combining roles (role mashing) which interfered with in their ability to apply their most valuable skills in a profitable manner.

Here is what we found: consultants were their own project managers.  Consultants where selling new projects into existing accounts (account management).  Consultants where answering technical support calls and providing training services. A few consultants role mashed their way into superhero status by doing everything, including programming, testing and customer support. Consultants were generally very unhappy, except the superheroes.  Superheroes were strangely happy, but just about burnt out. Billable mark up rates (BMUR) where well below the 2.0, healthy level.

Role M*A*S*Hing Manifests Dysfuntion

Often it is out of shear necessity that we role mash early in our company’s development as a means of selling, delivering projects and managing our organizations profitably all the while keeping our customers happy.  As we grow, we tend to forget that role mashing has taken hold in the organization and a moderate form of dysfunction has crept into the family.

The pressure to wear multiple hats creates great stress; both on the personal level and financially to the organization.  Before we look at remedies, let’s take a closer look at how this dysfunction manifests itself and where the stress originates.

Focusing on Strengths

At a base level, most of us are naturally talented in just a few areas.  If we are lucky or thoughtful during our career development, we navigate towards jobs that take advantage of this natural talent and we apply training and experiences to add skills on top of our talents.

For instance, we are often better at being analytical than creative, or good problem solvers versus effectively managing a team.  It is often a helpful exercise to take your team through a process of identifying what part of their jobs they are best at (i.e. history shows they are efficient, certain functions seem easy for them to execute, they really like doing the work, they are impatient with others that do this task less well, etc.)

Right Brain, Left-Brain

When a consultant mashes the roles of good problem solver with disciplined project task master, they tend to do one well and the other poorly.  In fact, in this instance, the talent required to do each of these roles is vastly different.  On one hand the problem solving consultant is a highly analytical, product oriented and a task driven individual.  The ideal project manager is time, scope and value focused, where the elegance of the solution is less important than applying discipline to get the job done on time. In these situations something has to give and it is typically the role that the individual is least talented at.

This leads us to the stressful part of our story…Read part 2 of Role M*A*S*Hing next week on the struggles and remedies.

It’s said that with a lever long enough, you could move the world.

If you find a steady place to stand, of course.

Why Is The World Not Moving?

Unfortunately, for many Partners, their world is not moving. The reason? Their service delivery teams are bloated, to varying degrees, with layers of non-producing management.

It all happened innocently enough, of course. You started a business. You were successful. Your business grew. As it did, you added people. And eventually, managers. Who, unfortunately, stopped billing even though they earned more.

They were managers, after all.

But as they billed fewer and fewer hours, and their salaries increased, your service margins started dropping. And now, the bigger you get, the less profitable you become. This is obviously not a good thing.

Leverage Model View

What’s the solution? A sound leverage model.

Consider the following example:

Your business is something of a pyramid. Management is needed, of course, to keep everything on track. But in order for you to grow, it must also be affordable. Every management layer must contribute to your bottom line.

At the base of your pyramid, your producers must generate the strongest financial performance. As a rule of thumb, every dollar in cost must produce at least $2.50 in revenue. In other words, they must deliver a billable markup rate (BMUR) of 2.5, or more.

Moving up, managers must also generate billings, although not to the same degree. Their cost will be higher, and they will bill fewer hours, so their chargeout rates must also be higher. But, however you slice it, they should still provide you with a BMUR approaching 2.

Everyone MUST Pull Their Weight

Span of control is an important part of the equation, too. If the first layer of management is responsible for too small a team, your margins will drop. Unless they bill more, to compensate. Everyone must pull their weight.

As you progress, higher levels of management will have a smaller span of control and the number of hours they bill will also drop. But not by too much, or you will find yourself with a leverage model that cannot scale.

In the end, the fact is that you must maintain an overall services margin north of 50%, to have any reasonable prospect of growth.

That’s a BMUR of at least 2, all management layers included. And the more layers you add, the stronger the performance of layers below it must be. This requires continuously raising the bar.

Where’s your leverage?

If your leverage model doesn’t do this for you, it is only a matter of time before you hit the wall.

And then, your world stops moving.

So ask yourself, where’s my leverage?

Like the gangly teenager that transitions from childhood to adulthood, the growing Microsoft Dynamics Partner often faces difficult but necessary growing pains.

As partners approach 30 to 40 employees ($6.0m – $8.0m in revenues), there is a tendency for owners to add a layer of mid-level management to control functional groups like sales, marketing, delivery, lines of business or even separate offices.

Often these managers come up through the ranks or are part of the ownership team that are empowered to manage a small group to reduce the reporting impact on the President or CEO, as well as to provide focused leadership to improve performance.

While there are viable operational reasons behind this, caution must be taken to keep an eye on key profitability metrics to avoid costly mistakes during this time of transition.

Sustainable Profitability

To determine whether your growth spurt is on a profitable track, consider the following:

A. Look at your organization chart and identify how many managers are listed.  They may have different titles, but fundamentally they are responsible for a functional group.

B. Determine which of these managers have a personal revenue target included as part of their job function.  These targets typically take the form of sales quotas or chargeable hours.

If you have employees listed in A. and they do not have a measurable target in B. you may be setting yourself up for a costly transition.  The real signs of distress will start to show up in two key dials on your management dashboard:

1. Revenue per Employee – it declines significantly below the average of $200,000 to $220,000 (depending upon the current economy).
2. EBITDA – it will start falling; generally well below the 10% mark.

Managers vs. Team Leaders

The vast majority of Dynamics Partners aren’t large enough to absorb the amounts of overhead that non-chargeable, mid-level managers represent. So, how do you provide the leadership to a growing team, yet stay profitable through to your next growth hurdle?

Consider these steps:

1. Team Leaders
Your company employs team leaders not managers.  This sets a revenue generation tone for everyone and keeps the leadership team focused on productivity.

2. Define Their Roles
Be very prescriptive when it comes to defining what you expect your team leaders to do.  Left to their own devices they will chew up valuable time managing their teams with unnecessary initiatives, systems and meetings.

3. Set Targets
Team leaders should all have sales quotas or billable hour targets depending on their role.

4. Higher Rates
Chargeable team leaders should have significantly higher charge-out rates and should therefore be providing higher value services to clients. Their billable-mark-up-rates (BMUR) should be 1.0 or greater. When combined with realized billable hours, the resulting revenue drops directly to your bottom line.

5. Limit Office Expansion
Resist the temptation to open up a new geographic office until it can profitably sustain 10 employees or more on their own.

6. Performance Dashboards
All team leaders must have their own performance dashboard where their team’s success is constantly evaluated.  It may be as simple as billable hours or utilization percentage by team member.  Without the metrics it’s hard to adjust behaviors.

7. Leadership Training
Provide your team leaders with some form of leadership training.  Most good sales and consulting staff need this help has they grow.

Reaching the Next Level

If profitable growth is your end game, then transitioning your leadership team is a key piece of the puzzle.  Keep them chargeable, focused and motivated – then you’re on the way to the next level of performance.