A New Favorite Word – Sprezzatura

I am sesquipedalian. So when a new word that I had not ever heard comes my way, I am very excited. This one comes courtesy an exchange between Ron Baker and Jim Caruso, Partner in charge of Financial Management Outsourcing for Fesnak and Associates LLP.

Jim send the following email to Ron a few days ago and Ron passed in along to me.

Saw this great quote on Twitter from Nassim Nicholas Taleb, author of The Black Swan.

“Only in recent history has "working hard" signaled pride rather than shame for lack of talent, finesse and, mostly, sprezzatura.”

sprezzatura (plural sprezzaturas) From the Italian, Sprezzatura meaning nonchalance; (art) The art of doing a difficult task so gracefully, that it looks effortless

[It] gives new perspective to the concept of the billable hour as the basis for revenue generation, doesn’t it.

I plan on using this one quite often. It is a characteristic that to which all professionals should aspire. Of course, if you bill by the hour, it is not possible.

For further reading check the wikipedia entry.

April is turning out to be a big month

First, I received word that an online comment I made on a Harvard Business Review blog post would be printed in the magazine.

image

For those of you that can’t make it out, my 15 seconds of fame reads, “Business ain’t science.” I told the copy editor that I had more to offer than that and that I usually am grammatically correct, but they did not seem interested. “No, your thought really says quite a lot.” Uh-huh…

Next, my article on using project management to replace the timesheet finally made it into the Journal of Accountancy. Please comment there as I would love to get a big long string going.

Could it be that the Mets getting out of the gate strongly? I can only hope!

Really, Revenue Recognition, That’s All You Got

While I have heard the objection of revenue recognition to fixed price and service level agreements before, there has been a recent spate of them and my default value reply is to say, “Really, that’s all you got!”

The more detailed answer is to ask, “Are you a publically traded company? If not, there is really no problem.”

This is usually met with silence followed by some mumbling about a possible future creditor using WIP or receivables to secure a loan. The response is then to say, “What about using the signed agreement from your customers? Isn’t that better than time either billed and not collected or time not billed at all? Besides, I recommend you get paid upfront.”

Again, more silence followed by, “Yeah, but if they prepay me, I can’t recognize the income.” My reply, “So, you are complaining that you will have too much cash is the bank? Maybe you won’t need a loan in the first place.”

That usually ends the argument, as if there was one in the first place.

While some objections to pricing on purpose and service level agreements are better than others, this one takes the cake. It is just a non-starter.

Another reason why I am obsessed with uncovering value

I am often accused of being obsessed with uncovering value when in the discovery and dialogue step (sometimes known as the sales process) of a consulting engagement.

One of the key statistics I cite is from the Standish Group and their research on small and medium business information technology projects – 47 percent of SMB IT projects cost 190 percent of the original estimate. I often round it and say, “half cost double.”

This of course leads me to suggest using the McKinsey and Company mantra, that unless the consultant can help uncover three times the value of any price they would propose for a solution, then the consultant will not even propose a solution. In addition to being sound business advice, it is also quite a disarming comment for a consultant to make.

Well, there is more distressful news on this front this week. In an article in PCWorld by Chris Kanaracus entitled Widespread Discontent Persists with ERP Projects, the author opens with following citation of a recent study conducted by Panorama Consulting Group, “More than half of companies that implement ERP systems end up garnering no more than 30 percent of the business benefits they expected.” To round this one I would say, “half get a third.”

Now, I will not vouch for the veracity of these numbers. I believe that business is art, not science, and any attempts at making it science are of the pseudo variety.

That said, combine these two thoughts together and you have a pretty good explanation of why no decisions and other forms of stuck sales are so prevalent in this industry.

Think about it, we are in a position where prospective customers have (at least some form of) documented “evidence” that:

  • half cost double
  • half get a third

If you do not assist a customer in developing a perceived value in dollars, the following will (perhaps has) happen:

A company budgets $30,000 (software and “services”) for a new ERP solution. It ends up costing double, $60,000. Since the provider never got a solid understanding of value from the customer, the customer assigns the original price to be the value number, again, $30,000. A year goes by and the customer only feels like they gain one third of the value they thought they would get, $10,000.

To sum it up, spent 60K, got 10K. Oh yeah, let’s upgrade!

Licensing – Is it necessary?

While watching John Stossel last week, I was suddenly interested in how the idea of licensing and/or certification as we call it in the software implementation industry. Please review this five minute video and share your thoughts.

How does the fact the software publishers in a sense regulate the market effect you, your businesses and even your customers?

My Sessions at Sage Insights 2010

A few of you have written to me to ask about what sessions I am facilitating at Sage Insights 2010. Thank you for the vote of confidence as I assume this is because you would like to attend them, not avoid them. In either case, here they are:

Code Day & Time Title

PRE19

Sunday, 8:00am – 5:00pm

Sage Consulting Workshop

GEN55

Monday, 1:15pm – 2:15pm

Creating a Great Scope Document

GEN23

Monday, 2:30pm – 3:30pm

Managing an Engagement From an Issues List

GEN54

Tuesday, 3:15pm – 4:15pm

Enhancing Your Customer’s Experience

GEN53

Wednesday, 9:15am – 10:15am

Consulting and the Crisis of Self-Esteem

GEN52-1

Wednesday, 1:30pm – 3:00pm

Creating the Firm of the Future (Part 1 of 3)

GEN52-2

Wednesday, 3:15pm – 4:15pm

Creating the Firm of the Future (Part 2 of 3)

GEN52-3

Wednesday, 4:30pm – 5:30pm

Creating the Firm of the Future (Part 3 of 3)

GEN58

Thursday, 8:00am – 9:00am

Creating a Partner-Based Service Level Agreement

GEN22

Thursday, 9:15am – 10:15am

The Parting Glass: So What and Who Cares?

Efficiency Gone Wild

Many readers will note that I am not a big fan of the so-called efficiency experts. OK, I am down right hostile in some cases.

Sage Partner and friend Tony Chiodo of Axis Global Partners passed along the following story last week.

Thanks Tony! Enjoy!

“The opposite of love is not hate, but efficiency.” – Pittman McGehee

A lesson on how six sigma can make a difference in an organization.

Last week, we took some friends to a new restaurant, “Steve’s Place,” and noticed that the waiter who took our order carried a spoon in his shirt pocket.

It seemed a little strange. When the busboy brought our water and utensils, I observed that he also had a spoon in his shirt pocket.

Then I looked around and saw that all the staff had spoons in their pockets. When the waiter came back to serve our soup I inquired, “Why the spoon?”

“Well,” he explained, “the restaurant’s owner hired a six sigma black belt to revamp all of our processes. After several months of analysis, they concluded that the spoon was the most frequently dropped utensil. It represents a drop frequency of approximately 3 spoons per table per hour.

“If our personnel are better prepared, we can reduce the number of trips back to the kitchen and save 15 man-hours per shift.”
As luck would have it, I dropped my spoon and he replaced it with his spare. “I’ll get another spoon next time I go to the kitchen instead of making an extra trip to get it right now.” I was impressed.

I also noticed that there was a string hanging out of the waiter’s fly.

Looking around, I saw that all of the waiters had the same string hanging from their flies. So, before he walked off, I asked the waiter, “Excuse me, but can you tell me why you have that string right there?”

“Oh, certainly!” Then he lowered his voice. “Not everyone is so observant. That consulting firm I mentioned also learned that we can save time in the restroom.

“By tying this string to the tip of our you-know-what, we can pull it out without touching it and eliminate the need to wash our hands, shortening the time spent in the restroom by 76.39%.”

I asked quietly, “After you get it out, how do you put it back?”

“Well,” he whispered, “I don’t know about the others, but I use the spoon.”

Cynics v Sentimentalists

Fred Wright from Aries Technology Group recently reminded me of one of my favorite regarding price and value. The exchange is from the Oscar Wilde play Lady Windermere’s Fan:

Cecil Graham What is a cynic?
Lord Darlington A man who knows the price of everything and the value of nothing.
Cecil Graham And a sentimentalist, my dear Darlington, is a man who sees an absurd value in everything, and doesn’t know the market price of any single thing.

It is obvious, to me anyway, that as pricers we are striving for the midpoint between the two. However, I am curious as to your thoughts on this.

Go!