Shefaly blogs about the importance of keeping promises to customers. Drawing largely from the consumer product world, she paints an argument for timely delivery and the serious costs of messing up. In the highly transactional world of consumer goods with large volumes of relatively lower priced goods getting sold to the masses this is very true. You absolutely have to tie in your suppliers, manufacturing, marketing and sales to a tee.

Move to software.

Nick Carr talks of commoditization in the hardware and software product markets: "It's typical when industries mature and buyers start focusing on prices rather than features…. They're competing on cost rather than innovation and features."

What about the world of software services? Firstly, we deal with 'clients' and not 'customers'. Dawud nails the difference. With clients, the 'when' of delivery is important, but the 'how' of delivery is even more important.

When was the last time you had a large, complex program delivered perfectly on time? Let's face it. Slip ups happen. Unlike a P&G shampoo, each project is 'manufactured' to order and there is too much magic in the process for things to be perfect. What saves the day is relationships and the trust that comes with it.

So, how do you build trust while you deliver?

Honesty: Many delivery issues have two sides to it. Both the vendor and the client could have done things different. One way to open up clients to do their bit is by being honest about one's own mistakes. When clients see that they you are your own devil's advocate, they will stop feeling compelled to attack and will instead be open to meet you half way.
Honesty is also in being open about what is good your clients. Say you are trying to sell a rewrite of a large legacy mainframe application. There are two options in front of you.
Option a). Keep the backend as it is and rewrite the UI alone in a new technology. Price: $5M
Option b). Rewrite the whole thing lock stock and barrel.  Price: $12M.
Based on your analysis you are sure that Option b would be too high a risk to take and would likely lead to failure. Option a, though far from ideal would more than meet the needs and has a high chance of success. Which one would you recommend? If you put down the pros and cons in all honesty and recommend option a, this would lead to a high trust partnership and if you land up with downstream issues in delivery, you will have the client on your side. Joe Ippolito has some good tips on honesty in sales.

Communication: Communicate both the good and the not so good at the right time using the right tools. Often, bad news is bottled up and hidden away from the customer until it is too late. The reasons? Hope and fear. On one hand, people hope that somehow the problem would vanish and on the other hand they fear that bringing things out into the open would spoil relationships or make them look incompetent. Often, bad news is brought up through emails. Big mistake. Face to face communication of bad news allows appropriate communication of the context and ensures you have better control on the situation. Communicating bad news early and in a face to face discussion builds trust and shows the client that you really want to solve problems.

Listen, listen and listen: Listening to anyone provides that person psychological air and allows a climate of trust to build. Ask for ways in which your service can be improved and don't take "all is fine" for an answer. All is never fine. Probe to bring out small irritants. Nips these in the bud.

Choose battles wisely: Every client will have shortcomings. Overlook the small ones, complement the client and compensate for these lapses. Letting the small stuff pass builds trust and allows you to bring up the more important aspects where you need the client to change.

How you deliver does matter a lot.

Here are a few good reads on the impact of the fiasco with some snippets below:

Investors.com 

"Hardware purchases will be postponed, software upgrades will be postponed and customer projects will slow. This is not a time for (corporate customers) to take big risks. No big spending decisions will get made."

"Total revenue for the Indian outsourcing market is down 31% this year"

"Disruptions and uncertainty for U.S. financial markets are likely to delay some new software projects until the fourth quarter or next year"

ZDNet.com

"Right now, there are four clear survivors: Goldman Sachs, Morgan Stanley, Bank of America and J.P. Morgan. Tech spending elsewhere may go kaput. "

"Infrastructure consolidation projects will last for years. In IT spending surveys demand for consultants hired by the project remains strong. "

"Project managers will be in demand. Systems integration skills will be critical and you’ll need project managers to consolidate all of those applications and data centers as well as rearchitect systems. "

Ganesh Nagarajan of Zensar.

"The preliminary analysis of the current situation indicates that the impact will be short term and company-specific and though all strategy planners will continue to keep a watch on any further downstream impacts"

Computerweekly

"Tactical software and hardware spending will be hit first, followed by the more-strategic IT services in the long run"

"Software as a service could be a winner from this as could any model where people pay on consumption rather than up front cash"



Yeah, I am lazy!

Check out the SOA India 2008. Details are here. Last year I attended the JAX India conference hosted by the same group and it was decent. Here are some of the topics they plan to cover this time.

The five year rupee dollar exchange rate clearly seems to trend towards a stronger rupee. Here's the picture from Yahoo.

-Long term contracts with US clients would becoming less attractive and compa nies would start looking at ways to avoid long term bill rate lock in.

-With top managers getting incentivized on margins, internal resource arbitrage would start happening with non US clients being able to command more senior and experienced resources. A rupee spent in servicing non US clients would add more to the bottomline than a US client.-Sales folks would start getting incentivized not just on topline but also bottom line and revenue quality. Not fair eh ? Well, people who sell profitable projects are better than people who sell unprofitable ones. Now, before I open up a pandoras box, let me move on to the next point. 

-Fiscal management would move down to the project level and margin management which is currently a delivery management responsibility would start becoming a project manager responsibility.

-There would be an added incentive to apply the offshoring model to business segments like consulting to squeeze out even better margins. Standalone consulting that cannot be offshored in itself and does not lead to downstream business would be questioned.

CNN's list of career gotchas inspired me to come up with my own ones for software services.

Proposals should be done by offshore: Broadly speaking, there are two aspects to any proposal a). The sales pitch comprising the Story, how you want to position vis-a-vis the competition and the value proposition b). The technical approach, timelines ,costs and all the delivery yada yada (usually cut pasted from other proposals). There is nothing wrong in taking offshore contributions for a proposal. In fact all delivery related aspects must be owned and driven by offshore. But unless the guy who is close to the customer moderates and drives important differentiators are likely to get missed out.

The client is wrong: It is human to err. Or is it? In this business, the client is always right and yes, clients are human. There are times when clients make mistakes and the vendor ends up paying a price. Take these as learning opportunities, introspect, and see what you could have done to avoid the mistake. Maybe there was a communication gap that you could have resolved proactively but did not. Understand the client as a person and not just as a 'client'. Cover up for him when he has a slip up,make him look good in front of his boss and don't keep score. You might take a tactical blow once in a blue moon, but you'd end up building a solid long term relationship. I don't mean that one takes anything and everything lying down, but with customers it is important to pick your battles wisely. You cannot win a fight against the customer, you can only fight to win him over.

Saying 'No' to the customer: Never ever use the word 'no' in front of customer. Just go back to the time when you were a little boy and someone said "no' to you. How did you feel? Paralyzed? Rejected? Angry? Now imagine if your child were to say "No" in front of you. You would feel even worse than your child did when you said "no" to her. Outraged, confused, and wanting to punish your child for her impudence. After all, you are more powerful than your child. Now, clients have more power than you do because they sign your paycheck. It is easy to imagine what the word "No" does to the client's psyche. So, what does one do if the client makes unreasonable demands to which you simply cannot say "yes"? Well, reframe the demand as a requirement. If the client says, "I want this project for under $10M" and you are damn sure, it cannot be done for less than $12M, reframe and say "I understand what you are saying. You need a highly cost effective solution that stays within your budget" By reframing the unreasonable demand as a requirement, you are emphathizing with the customer and have turned the emotionally charged demand into a mutual goal that both of you can work towards reaching. Often, the client might be saying what he is saying just because he feels you are taking him for a ride, or because he needs to feel in command. The minute you give psychological air through genuine empathy and a real desire to help, accompanied by the willingness to be transparent, the defenses are down. There is simply no place in a salesman's dictionary for the word "no".

Quality assurance is not my job:  While it maybe true that quality was considered more 'glamorous' a decade back than it is today, the fact remains that if you don't do a quality job with your execution, all the front end sales savvy and consulting magic is not going to work. Quality in execution is and will remain the bedrock of the industry. Quality needs first rate people and quality begins with each employee and ends with her. It cannot be shoved into a corner, into a group or a department. It is everybody's job including that of the salesman who sells. 

If only I had more time: This is a tough industry. Work follows the sun and when you are asleep someone else on the other side of the globe is creating 'work' for you to do when you wake up.


 Stop cribbing about how with a little more time, you could have done a much better job or had a more fulfilling life. It only makes a person look incompetent.

Unclear RFPs and software services go together. It is assumed that the ability to respond to unclear RFP's is a sign of 'maturity' and 'risk taking ability'. The typical offshore vendor is good at solving well defined problems, but has serious trouble in framing the problem statement. Here are the top signs that the RFP is unclear:

• Huge variations in bids from vendors with similar capabilities.
• Too many open ended clarification requests and the same clarifications coming from multiple vendors.
• Vendors backing out of the RFP
• Partial submissions and too many strings attached to the quote
• Capable vendors suggesting solutions that are recognized by your internal IT staff as being way off the mark.
• Vendors trying to modify the RFP by suggesting execution options that were never requested as part of the RFP.

PS: Sorry folks I have not been posting for a while. Relocating to the US ain't easy. Someone once told me, that all it took to live in the US was a credit card and a set of wheels. The wheels are in, but the plastic still evades me. Here's a pic of my Accord while it was still in the showroom.

It's funny seeing ads for credit everywhere, reminds of "Water water everywhere, but not a drop to drink" :-)  

 

I was surprised to read this article on TCS planning to hike rates because of the rupee moving north. Why would a client want to pay more because of the exchange rate?  When the rupee was depreciating for the good part of the last decade, did companies offer a discount to customers? I find this strange. It would be better to sell a rate hike by quoting an increase in wage costs at offshore. This is a fact and is something clients would be more willing to listen to. It is also strategically safer because wages rarely fall in India, but the rupee can depreciate again. This is one pill clients are unlikely to swallow easily!