Business Value with Oracle

See below for a recent email exchange first between a Principal of an IT consulting firm and one of their prospective partners – and then the Principals of the consulting firm. Email communications start at the bottom of this post.

Principal #1: As we discussed last night – our employees need to know that we will go to the ends of the earth to protect them and our business. They are the real VALUE in the equation.

Principal #2: I am really proud of you and how you are handling all this.

Principal #1: I am staying involved to remind her that we have not yet come to a teaming agreement.

Principal #2: I am impressed that you’ve found someone so willing to just tell you how worthless you are. She treats you like a three year old.

Principal #1: I apologize. Too many high priority things to do yesterday just coming back from the Thanksgiving holiday.

I was surprised to hear from you about <consultant name withheld> as I thought you communicated during our last phone discussion that because <company and partner names withheld> had not come to an agreement, that you would not be presenting <consultant name withheld> resume to <client name withheld>.

I indicated yesterday that <consultant name withheld> has been resourced to a new project beginning 12/6 that will last 5-6 months.

We do have other resources – they are even more experienced than <consultant name withheld> – but their hourly rates are higher, but I certainly don’t want to “put the cart before the horse” as I think we are not yet close to coming to an agreement. The sticking point as I remember it is the specific project/task at hand vs. any/all future projects.

Prospect: I am very disappointed you didn’t tell me earlier in the day as I might have tried to reach out to someone else. I waited all day for your call.

Do you remember the 1995 movie Billy Madison staring Adam Sandler?

How about the business ethics category/question that stumped Eric Gordon at the end of the movie?

At Redstone, we constantly discuss honesty, integrity and treating people the way you like to be treated.  As a component of our employee on-boarding process, Executive Management staff and HR personnel meet with our new hires and go over with them our “Common Sense” presentation.  The core message within this presentation is this quote by Frank Lloyd Wright “There is nothing more uncommon than common sense.”  I think he was right.  There is another slide that quotes the Oracle of Omaha (Warren Buffett).  Mr. Buffett says “It takes twenty years to build a reputation and five minutes to ruin it.”  So true.

Especially in the consulting and software world, I will argue that ethical behavior is more important than technical competency.  The two together make a wonderful team.

Are these characteristics/traits becoming more and more rare?  If so, are the pressures at home a contributing factor to the demise?

Please let me know your thoughts.  I’d love to hear from you!

Do you think organizations that consistently pay late are doing so intentionally?

I believe that most folks want to do the right thing and pay for the services they have received on time.  Based on where the economy has been the last couple of years, I also think its conceivable that some folks may not on occasion have the money to pay on time – even if they want to.

In my example above, I am attempting to illustrate a scenario where services have been rendered and payment terms have been extended.  Consulting services often falls into this category.  Software sales and/or training are not as susceptible to late payments as the software or training class is often not delivered until full or partial payment is received.

I contend that organizations that consistently pay late have a company philosophy or directive to do so.  Unfortunately, I also think this directive comes down from top management.  We all know companies that are doing fine financially but have a reputation for and practice of paying late.

How should these folks be handled in your opinion?  Let me know.  I’d love to hear from you.

I have a theory.  End Users – I’d like your opinion and feedback.

Isn’t it true that the primary reasons for requesting on-site work stem from trust-related issues and previous poor experiences?  You could argue that these two reasons are related.

Let’s start with trust.
I contend that many brand new consulting engagements (client and consultant have never done business before) start with a request from the client that Phase I work be performed on-site.
I’m not talking about the facets of the project that SHOULD be done on-site (like initial scoping or requirements gathering).  I’m talking about a belief that I have that you earn the right to work remotely.  Clients want to “see” work being performed and project tasks being completed.  Certainly there is an element of getting to know one another, but I believe its human nature to want to make sure you touch/feel/see work actually being completely.

Now, onto previous poor experiences.
Isn’t it often true that the on-site work mandate many times stems from the last engagement or two having not gone so well?  The consultant said they would do “x”, but actually ended up doing “y”.  Is the brand new consultant being unfairly lumped into a “poor performer” category?

What do you think?

Part Five: How does your company feel about the inclusion of indirect or “soft” benefits?

One of the knocks I often hear against content management ROI is that the majority of benefits are indirect and that a company resists their inclusion.  Let’s start with a few examples:

Employee time savings
          Process automation (enabling and participating in workflows)
          Finding accurate content quickly

Efficiency gains
          Improved decision-making processes
          CSRs handling an increased number of customers

The best way to measure these indirect benefits is to proactively perform time studies.  Perhaps this work could be included as a component of a pilot project?  If, for example, prior to the implementation of the content management system, a Tier 1 CSR could manage eighteen (18) transactions per hour and post-implementation this figure is doubled to thirty six (36) transactions per hour, you now have tangible data at your disposal.  Other options for the inclusion of indirect benefits include: using a specific percentage (ie. 25%) of the benefits, or lumping these indirect benefits into a section at the end of your ROI analysis and call on/use them only if needed.

See part Four here

See part Three here

Part Four: ROI Approach

Timeframe
The required timeframe is estimated not only by the overall time needed for the project but also by how much time you are willing to commit to the actual analysis.

Do you have a crystal ball?
Most often, the original intent for conducting the analysis is to give you the needed information to make a future investment.  In terms of a content management example, estimates of annual support and maintenance payments are likely to be used.  Intrinsic in assumptions made are unknown factors that may be outside of your control.  In the annual support and maintenance example, an assumption of a 20% annual payment becomes skewed if the software manufacturer institutes a change.  In this example, an external factor may increase the payment to 22% annually which could have a significant impact on the projected costs and payback period.

Retrospective study
The implementation of content management should be considered a process and not a project, and as such, independent results can be expected when reviewing actual cost and benefit data.  “Pilot” projects provide the needed information for the retrospective ROI approach.  A recommended best practice is to review and perform a per project analysis each time the content management tool is leveraged.  Once document management functionality has been instituted in one department, the incremental expense to enable additional departments will be nominal as initial start-up costs like hardware infrastructure, System Administrator training, etc. are “sunk” at that point.

See Part Three here

See Part Two here

See Part One here

Part Three: Enterprise Architecture and Context

Current business process
The context of an IT project is determined within the current business process(es) that will be impacted and improved by the investment. An analysis will reveal business process costs and possible benefits that changes to the process may illicit. An example of a business process cost is the documentation or mapping of the existing process.  If the current process is complex, it will likely include multiple departments or divisions, and the mapping process may involve many individuals. What then would be an example of a business process benefit? Consider a scenario in which a manual conversion process of a native file to one or more web viewable formats is automated.  The manual task is no longer required post implementation, so the benefits are time savings and improved efficiency.

The business
Understanding the costs and benefits in the context of the organization is equally important. An example of a business cost is the current employee on-boarding process at many companies.  Job candidates fill out multiple documents and forms which are manually filed by Human Resources (HR). A business benefit is easily created by establishing automated routing of an electronic HR form from a job candidate to the Human Resources Assistant and then to the Manager of Human Resources.

External resources
Lastly, a familiarity with the costs and benefits of external constituencies is needed. A general example of an external cost is a taxonomy expert who is contracted to provide an add-on software product to your solution or consulting services billed at an hourly charge rate structure. A relevant example of an external resource benefit is the automated routing of documents that need to be translated.  Instead of physically shipping the English version of a marketing flyer to a chosen translation provider, the new delivery mechanism becomes a secure extranet website with a link to the most current version of the English document.

Another example is a procurement website developed by one company intended to be used by its vendors. An improvement in the time required to make Purchase Orders available may be realized, but don’t forget about the initial training costs required to educate users on the new system or capability.

See Part Two here

See Part One here

Part Two: Definition and Measurement

Will our savings and increased revenues surpass the investment?
This is the most basic form of examination.  You will be laying money on the table for software licenses, yearly manufacturer and/or implementation partner support and maintenance, consulting services and training (system administrator and end user), content conversion and loading from your existing system(s) to the new system (if needed) and integration with other systems (if needed). So, will the savings and increased revenues to be realized, be greater than those invested? Depending on the cost of your overall investment, the span of time required for payback is generally a multi-year proposition.  Three to five year payback period calculations are common and estimates for today’s value of future returns are generally predictive.

Will this initiative “pack a mean punch?”
I advise selecting a project or initiative that is of importance to a high profile person within the organization. An inaugural project, for example, should be visible but not overwrought with risk.  If successful, can a positive project experience lead to a “spring boarding” effect? In a word, yes. When project goals are clearly defined, met, and even exceeded, momentum can be established.

What else can be achieved and what else can I get?
There is an upside and downside here.  For example, with some in depth research and/or experience, you may be able to negotiate a better deal for your organization.  However, you don’t want to “beat down” your chosen supplier to the point that they cannot afford to support you in the manner that will produce the greatest results. Additionally, a ‘bargain shopping’ philosophy requires time and effort as other vendor offerings are examined. The right balance must exist between that which can be realistically achieved versus the time, cost and complexity of analyzing competing offerings.

Are “soft” costs a component of your equation?
Many times the answer to this question depends on your company.  Examples include intangibles like improved morale or happier employees. Financial systems don’t generally take into account these costs.

See Part One here