Breakthrough Cultural Change

Once initiatives are off and running companies need to make sure that they are going to stick, and that they are going to become a permanent part of the day-to-day activities of the organization. This means changing the way that the company does business, and it is one of the key areas where reliability initiatives continue to fall over! This means changing the workforce culture! Great! Got it! The last five consultants I spoke to told me the same thing.

So… what’s culture?

Culture can be identified as the way that a company, as an entity, thinks thus driving how it acts. Lets look at that in some more detail. When one person thinks a certain way this is referred to as a mindset, his or her way of looking at things and of interpreting the world. When a group of people think in the same way then it becomes a paradigm, and the culture of any organization is made up of the paradigms of its people.

One of John Moubrays’ more regular quotes was “if you want to change the way that people act, you have to change the way that they think.” If we tie this in with the paragraph above then it becomes a powerful tool for changing workplace culture. So, to put this into practice we need to change the mindsets that make up the paradigms of an organization. You are probably thinking, that’s easy for you to say, harder for us to implement! And I would agree with you 100% on that!

How then can you go about implementing some advanced technique, method or tool, and ensure that it is both effective and permanent? The rest of this short article focuses on some of the techniques that I have used a lot in my working life every day.

As a consultant, managing through change is what I have been doing for the last 12 – 15 years and I would like to share with you some of the lessons that I have learned in a way that makes them a lot more painless for you to learn, than they were for me to discover. This is not what I think this is what I do! So these are road tested to the extreme!

Breakthrough cultural change tip #1: Create a new belief system

As we have looked at earlier, changing culture requires a change in thinking. So we need to begin at the beginning. What are the new paradigms that your organization needs to have? How do they differ from what “we” think today? And most importantly, how can we introduce these to the workforce in a way that will get them to understand and buy into them?

These are the first questions you need to ask yourself. Define what it is you ultimately want to achieve then look at the thinking that will be needed to support that. Adult learning is different from learning in infancy. Adults are smarter, (mostly), more experienced, more cynical, and generally less willing to believe things that they are told.

So you don’t tell them, you show them! Adult learning needs to be delivered in such a way so as to ensure that the people on the course, seminar, or training event, build their own conclusions supported by logic, fact and their inherent ability to reason. In all my time consulting I have yet to come across a single person who did not respond positively to something that agreed with their internal logic!

Sub-tip: Elements of adult learning

To be effective, any adult learning program, whether it be developed in house or delivered by an external provider, needs to contain the following elements in order to be effective in challenging long held belief systems:

Socratic teaching. This is often referred to as teaching through questioning. As the title suggests it comes from methods Socrates used to teach his students. (As opposed to didactic teaching) So it has stood the test of time I would say! Socratic teaching is about being inclusive, continually getting the course participants to respond to questions and to drive the lesson forward.

The trick, and it is a practiced technique, is to get them to arrive at a point where the limits of what they know, or the errors of how they think, becomes immediately obvious to them.

This sounds difficult and the first couple of times that you deliver this sort of a lesson it will need to be very carefully structured and focussed. After a while it becomes an almost instinctive method of teaching key learning points.

Why is this so powerful a technique? Because they participants arrive at the conclusions themselves, through their own reasoning abilities. You didn’t tell them anything just pointed them at something! And if they thought of it, rather than you telling them, then they are more likely to believe it and remember it. (Don’t ask me why, I don’t know why. I just know it works)

Participative learning. If you do something you are far more likely to remember it than if you are told it. Think about it in your own life, if you learned a craft, the theory side of things was only interesting once you got into the field and did it for real. If you learned an engineering discipline, then it was only once you got into the real world and put it into practice that the reality of it became obvious.

Most modern training courses have an element of interactive exercises and practice sessions. However, sometimes these are unrelated to what’s actually being taught and can often just be something to fill the time. In worst case scenarios exercises are the unimaginative kind that say “Now make a list of the high priority items in your plant”. Wow! What’s to learn here?

If exercises are going to be effective they need to challenge those doing them. Argument, in these situations, is not a bad thing at all. In fact it is a good thing and shows that people are thinking, being challenged, and are going through the pain of changing the way that they think.
Participative learning can be group driven, or individual. It can be focussed on an adult learning game, a set exercise, a group discussion, or any other range of variables. In designing your exercises, don’t make the mistake of revealing everything at the beginning. Structure it so that they reveal things to themselves, or with your guidance, during the process.

Apply the techniques to their day-to-day activities. This is a key element that is often overlooked. It is overlooked because it can often throw up things that are weird, out of the ordinary, extremely difficult to deal with and sometimes controversial. Why? Because no matter who you are, it is likely that they know their plant a lot better than you will ever be able to!
So, if you are going to include a session where they apply the techniques to their own equipment then you need to be 100% sure that you understand your subject matter thoroughly. If so then you can deal with the curve balls that will come at you once people start to apply it to their own situation. Thinking on your feet is not a nice-to-have ability for asset management trainers it is a must-have!

Why is this so powerful? Because it combines the elements of the other two steps. Socratic learning through questioning current practices and using their new found logic and understanding to solve them, and doing rather than hearing about, so they can learn from the results.

As a quick warning, unless you are looking at something very simple, don’t think that you are going to get a fantastic result that you can use in the plant immediately. Take the pressure off everybody and let him or her learn through making mistakes.

So this is the basis of changing culture. Why do we need to do anything else? We have changed the way they think. Right? Wrong! We have only just begun. After the workshop or training session they are going to go out into the workforce with a range of people who think nothing like the way that they now do. And these people are not going to “get it” just from a passing conversation.

If you don’t follow up immediately then the results will be, changes to thinking 0% – 20%, changes to the way they do work 0%-15%, changes to the way the company works 0%!

Breakthrough tip #2: Prove it!

This is key to success. As a consultant it is my job to continually be backed up by a successful track record. In my business, having a scorched earth policy will only lead to reducing levels of business and ultimately a forced career change! If you are going to put in place a successful change program you need to think like a consultant. Think end of life, not end of project. How will this go on to be a fantastic reference for you within your company and beyond? Through its success!

So, to prove it you need to get the course participants to apply it to their areas of activity almost immediately after the training! Get them to apply the principles of what they have learned, under your expert guidance, to an area of their daily work.

Using their logic and new understanding of a particular area, get them to reason through a problem or issue Arrive at a result, and then go about putting the result into practice. Through it all, make sure you remind them, and yourself, of what you have achieved. This means tracking the benefits. Make sure that they are aware of how their efforts translate into an impact on the corporation. Either through increased productivity, profitability, reduced risk or any of the other key areas that your company is focussing on.

Why is this a powerful cultural change tool? Because they see that what you have taught them actually works! It is not just theory, whiteboard magic or “slide-ware”. It is a real, practical method that they can apply to change their situation.

At this point we start to get into some of the myths surrounding cultural change. Most people are afraid of changing their current situation. This much is true. But, people do want to contribute, they do want to make things better, and they do want to improve the way that their company works. (And often want to better themselves personally in the process. Nothing wrong with that!) Despite what you may hear, it has been my experience that this is the “what’s in it for me” factor.

Breakthrough tip #3: Check it!

Put in place a monitoring regime to ensure that what we said we would do, we actually did. Place some form of scorecard or performance monitoring regime around the asset, department or whatever it was that you applied the techniques to.

Learning about new ways of doing things will challenge their belief system and allow them to look at accept that there are better ways of doing things. Putting it into practice will enable them to see that it really does work and is not just some theoretical program of the month! But, seeing for real that it did work, monitoring the metrics in place to watch the benefits they said would appear become reality. That’s a sealer! And it drives home all of the things that they have learned, in a number of different ways, up to this point.

Breakthrough tip #4: Re-apply it!

As things go on, changes to the way that the company operates, changes to the quality of data available, changes to the way that the workforce is structured and any number of other variables could mean that what you wanted to achieve didn’t come about. Or what you wanted to achieve has been affected by changes in the environment. At this point there is a need to revisit the exercise, re-apply the techniques with the benefit of new knowledge and hindsight, and begin the process of monitoring it all over again.

This is the essence of continual improvement. A workforce, now thinking along the lines that we set out to achieve at the beginning, monitoring and adjusting processes and other tools to ensure maximum performance to what the company requires at all times. Steps three and four become the core of the day-to-day application of the new culture, and the company has successfully changed an element of the workforce culture in a way that will drive it further along the road to breakthrough performance.

8 "lies" companies tell before starting a consulting engagement

(Format shamelessly stolen from Guy Kawasaki’s Blog “How to Change the World”, check it out!)

Okay, so they’re not dirty big “lies”, more like the white untruths, miscalculations, obfuscations and poor judgments that companies (we’ll call them “clients”) generally say just before starting on a large scale initiative.

If you have ever been involved in an ERP system implementation or any other sort of project with a big organizational impact (As a consultant or a client) then it is likely that you have either heard or used these at one time or another.

1. Yes, we will make sure that all of the documents are ready for when you arrive

Like most of these “lies” this one is very well intentioned; just wrong. The people making these statements have often never seen the technical documents, nor do they have any idea if they even exist, neither would they know where to find them if they needed to.

The people who do know where they are often would not make these claims because they were lost years ago, or they are spread out in several peoples desks and offices or they have never been seen since Noah was a boy!

Sometimes companies do have good technical libraries, but this is beside the point. Don’t take any assumptions about this one. If the project is planning to have these and doesn’t, it can upset the entire time line!

2. Providing office space and administrative resources for the team will be no problem at all.

Correction, this will probably be the hardest thing you will have to do!

There is almost never any free space, or if there is it is in an isolated part of the company’s estates that nobody has seen since the entire division was downsized. (And even then it will be a fight!)

This is a good example of how project sponsors or managers tend to over estimate the importance of their project. (The operations, plant and maintenance managers)
And when admin assistance is needed it is often some poor overworked clerical assistant or secretary who cannot possibly meet all the demands of the project and her day job!

Get commitment first, and then work out how to deal with this one! It is easier to deal with this problem before you get a room filled with egotistical consultants and megalomaniacal project managers.

3. We will take care of the communications issues.

Well intentioned and probably something that you thought you could do. My experience has been that when this is run wholly internally, meaning by the client alone without assistance from the consultancy, it often ends in tears.

Why? Because of one small miscalculation, the people carrying out the communications and trying to change the culture of the company’s employees are often the same people that they have been working alongside for many years.

So they have the same workplace culture anyway, they are familiar with each other and know each others faults and histories (not always great).

Also there is a need to get very serious about this. The project is often in the millions, sometimes even in the tens of millions, and you want to entrust the change of workplace culture (and communications of these changes) to an ex-division manager who worked through a couple of big projects like this before.

Okay, sometimes it works but we should be realistic. This can’t be amateur week if you are spending that kind of money. Cultural change is the bedrock that will ensure the success or failure of the initiative over the long term.

Understand what the challenges are (really understand it) check out your options and if necessary spend the money to get it right the first time!

4. Don’t worry, if we tell them to be there for training they will be there!

Um…no, they probably won’t.

This is a standard sort of line that project sponsors and managers give. Why? Several reasons, they overestimate their ability to get things done (this is after all probably a big step both for the company and for this person specifically) or they have underestimated the workload that the sites and departments that have to implement this are already facing.

Organizing training is a pretty intensive and difficult thing to do! What about:

• Turnaround schedules and when people are likely to be busy doing other things?
• Heavy vacation periods? (August and December for example?)
• Other initiatives that are on the go at present?
• Work rosters?
• Current workloads and the ability or otherwise of the department to spare that person for one to three days of training?
• Resources for training and their availability? (Rooms, projectors, flip charts etc)
• Are they even interested? (The people or the plants / departments?)

Face it, they probably won’t be there unless you organize for them to be there beforehand. (Project pre-planning) Doing it after making the commitment (as in 99.9% of projects) means some of the best resources or a large number of ordinary ones, will not get to be involved.

5. This is important to us; we will make sure you have a dedicated team of top level resources to implement this.

The guy making this statement often doesn’t “know” this, but he does believe it! Again, do we really believe this project is so important that the key resources that should be “at the coal face” are going to be taken off line to do it for an extended period?

The reality is often somewhere between a range of possible outcomes.

One, this has happened to me sadly, the guys you get are the people that the company is intending to elbow out once the project is over. Great motivational symbol that one!

Two, you do get a small core of disciplined and seasoned professionals who are overwhelmed by the workload they have to do to get this done for the entire corporation, often leading to frustration and resignations.

Three, you get the people who can be spared. More likely than not this will be the guy who is often quoted as a “hard worker” but everyone realizes they are not really very sharp. But, “he deserves a break!”, so they give him to you to ruin your project.

Four, they give you good core resources, supported by a good network of satellite resources, and once the project ends they go back to what they were originally doing. Conclusion, some small gains followed by business as usual.

Five, you get nobody, but have to get the work done anyway.

This last alternative is sadly the way that many projects are done today in our field believe it or not. Meaning that there is absolutely no chance of realistic knowledge transfer or of the entire thing becoming permanent in any way at all.

6. We want this to be a knowledge transfer process so that we take over the implementation during the handover period.

He is right, he does want this, his company wants this, and sometimes they actually get it. But most times the time allowed for transferring a lifetimes worth of knowledge to somebody who has been running operationally for their entire career is nowhere near enough.

More to the point often the program for realistic knowledge transfer, including post training mentoring, skill audits, reviews and updates of training as well as the role support mechanisms are often not even considered.

Sometimes there will be one or two “knock-em-down-drag-em-out” types who will get the bit between their teeth and take this on as a personal mission, regardless of the support they do or don’t have. But these people are the exceptions, those who will get the most out of the training and then embark on their own personal self improvement to get the rest of the information they believe they need.

But most times it all ends in tears with the client being left with a half implemented initiative, moderate to useless resources to continue the implementation, and a rapid downward spiral of interest once the baton has been handed to their own people.

7. We will make sure you get full access to our existing system for any data you need.

Unless the guy telling you this is the head of IT and can change their policies regarding information, data and its manipulation then this step will be like pulling teeth!

Data, its management, storage and use is the realm of the all seeing, all powerful IT department. And they see themselves as the guardians of the company’s future in many cases. If you want to get access to something as privileged as asset data in an asset-intensive company; then prepare to be met with restrictions, difficulties and outright refusal.

While this can be done through diplomacy, horse-trading and other not-so-enjoyable activities; it is far easier to include them in the project planning and execution from the very initial stages.

8. We have full management support for this

Wrong, wrong, wrong! You don’t have management support; you have their authorization to spend money!

Management support is a whole different thing. Thinking that you can crowbar this into the organization just because you have “the big guy” standing behind you giving out threatening looks is never going to work in the long run.

What it will do is get you compliance, but not acceptance. Think about what you are doing here. Taking something from the center of the company and pushing it out into all of the departments, sites, plants or companies that are associated with it.

What do you think they were doing before you and your project turned up? Waiting for you?

No! They were making do, building their own systems, finding their own solutions and applying hard-earned experience to take care of the headaches of their day to day operations. Sometimes they have done a great job at this, oftentimes it could be better. But it’s theirs! It wasn’t imposed on them by somebody they have never even seen (but have read their names on fliers).

So they are going to view the project with suspicion. Worse, if you haven’t got the communications right at the beginning they will be hearing rumbles in the distance, feel threatened, and raise the defenses.

If management really supports what you are planning then “the big guy” will be out there selling (not pushing) the project to the department heads, plant managers or company presidents. There will be financial linkages for them to the success or failure of the project, and once they are convinced they will also start to evangelize their senior management and decision makers.

If you are going to spend several millions of dollars changing the way that the company works, then platitudes, strongarm tactics and sheer bloody-mindedness is not going to cut it. There needs to be a sense of mission and everybody needs be on it!

Leveraging off new technologies

Consulting is about change, always about change. In fact, more than any other managerial discipline, consultants need to be the ambassadors of new technologies, new ways of working and thinking, and new ways of getting even greater performance.

SaaS is a change that most consultants didn’t see coming to be frank, and those that did are now offering products as part of the continual barrage of emerging online applications.

Regardless of whether you are championing changes to work processes, new technologies, a different configuration to SAP or Oracle (say), or even different strategies and corporate structures; at all times we need to be the most up to date with the changes in our area of expertise, and know how our clients could benefit from them.

So how can consultants tap into this growing trend, by joining in the game of course!

Today’s technological offerings allow consultants to be even more productive than ever before in delivering their solutions. The Force.com visual programming language premiered by Salesforce.com this year gives everybody the ability to rapidly develop online programs, and they will also host it for you on their market-tested servers.

But wait – there’s more, Adobe Flex is a free programming tool that can be learned easily and is able to deliver very smart looking products quickly. Or if you are in a hurry to deliver a turnkey product for your clients then just plough through some of the commodity-priced programs already on offer through AppExchange.com, you don’t have to reinvent the wheel.

If you are not able to provide coding services yourself, then there is already a burgeoning market in outsourced independent coders for you to work with. Check out Rent-a-Coder.com if you like, a meeting place for freelance technical consultants and product developers. Auctioning is the name of the game here and you can pick up a good deal quickly. I have used it twice and it has served me well. Today I have ongoing relationships with a couple of coders I met online there and they often deliver small services for me.

WordPress, Blogger, Microsoft Dynamics, WebScribble.com, and so on, the list grows every time you look. All these products are out there for you to use in delivering productivity improvement to your clients. A fascinating time for consultants, particularly those that are keen to tie small technological offerings into their overall service portfolios.

HP Announces Data Center Consultancy Acquisition

On Monday HO announced the successful acquisition of EYP Mission Critical Services, a specialist in the field of designing data intensive facilities where the probability of failure of critical services has to be extremely low.

This follows from their recent purchase of Opsware (OPSW) and positions them for greater revenue generation from the growing market space of data intensive facilities. (From trading floors to storage hubs)

Data centers have been growing in importance for the last five years continually as companies become more and more focussed on the value of their transactional and corporate data as a corporate asset.

BearingPoint Named to GI Jobs’ 2007 Top 50 Military-Friendly Employer List

MCLEAN, Va.–(BUSINESS WIRE)–BearingPoint, Inc. (NYSE: BE – News), one of the world’s largest management and technology consulting firms, today announced it has been selected as one of the Top 50 Military-Friendly Employers by GI Jobs in the publication’s December 2007 issue. BearingPoint, a leader in serving public sector and government clients worldwide, ranked 31^st on the list.

Recently revealed in the December 2007 issue of GI Jobs (www.GIJobs.net), the fifth annual Top 50 Military-Friendly Employers list is developed after the magazine reviews an estimated 2,500 companies with revenues of at least $1 billion; only two percent of companies make the list. GI Jobs considered the strength of a company’s military recruiting efforts, the percentage of new hires with prior military service, and company policies toward national guard/reserve service and veteran community outreach.

“As a leading provider of consulting services to the U.S. government, including the Department of Defense, BearingPoint recognizes the importance of doing all we can to support our employees who are called into service as National Guard and Reserve personnel,” said Robin Lineberger, executive vice president for BearingPoint’s Public Services practice. “We actively recruit employees with prior military service because of the discipline, sense of mission, attention to detail and leadership skills they bring to BearingPoint and our clients. We are proud to be included in this select list of firms.”

Cost of Finance at Typical Companies Rises due to Compliance Activities

Typical Global 1000 Companies Now Spend $138 Million/Year More Than World-Class Companies on Finance Operations; Face Long-Term Challenge in Cost Reduction Efforts

ATLANTA & LONDON–(BUSINESS WIRE) Fallout from compliance-related activities continues to prevent CFOs at typical companies from resuming more than a decade of cost reduction efforts, according to new research from The Hackett Group, a global strategic advisory firm and an Answerthink company.

Hackett’s 2007 Finance Book of Numbers^TM research found that the typical Global 1000 company saw the cost of finance increase slightly over the past year, and is now spending 12% more than they did three years ago, in part due to increased focus and spending on compliance-related activities. World-class finance organizations, which have continued to reduce costs over Hackett’s 15-year research history, are now spending less than half what typical companies do. At a typical $22 billion Global 1000 company, this spending gap now amounts to savings of $138 million/year for world-class companies. In addition, world-class finance organizations operate with less than half the staff in virtually every key area of finance.

Compliance-related activities played a key part in ending the 14-year trend toward lower finance costs at typical Global 1000 companies in 2004, and according to Hackett, it is very likely that typical companies may face long-term challenges in their efforts to continue to reduce finance costs. As a result, the gap to world-class performance is expected to continue to widen. Companies with world-class finance organizations are now spending 47% less than the industry average on external audit fees, and operating with 44% fewer compliance staff.

Hill International Selected as Construction Manager for $200 Million Modernization of NASA’s Langley Research Center in Virginia

MARLTON, N.J. & WASHINGTON–(BUSINESS WIRE)–Hill International (Nasdaq:HINT – News), the worldwide construction consulting firm, announced today that it has received a contract from the U.S. General Services Administration to provide construction management services in connection with the $200 million New Town Program at the National Aeronautics and Space Administration’s Langley Research Center located in Hampton, Virginia. The potential five-year contract, consisting of a one-year base term and four one-year options, has an estimated value to Hill of approximately $7.5 million.

IBM acquires Cognos

With Cognos the last of the big Business Intelligence technology offerings now off the table, what will this mean for consulting within the Enterprise technology landscape.

On Monday, Ottawa based Cognos (COGN) formally announced that it would be recommending to its shareholders to accept a $5 billion proposal from IBM (IBM) to acquire the company. This is IBM’s biggest acquisition to date and follows from the successful purchase and integration of MRO Software (MRO) into the IBM technology portfolio of products.

This will give IBM the ability to leverage additional services income from the technology, the ability to deliver one-stop solutions for clients when linked with their Tivoli (MRO Software) offerings, and access to a mature and well-developed distribution channel. (Cognos’ clients include Lufthansa, Home Depot, Amazon.com and Manpower)

The IBM move into Business Intelligence means that companies offering comprehensive Enterprise Management technology solutions have purchased all three of the sector leaders. Oracle purchased Hyperion Solutions for $3.3 and SAP AG (SAP) recently dropped $7 billion on the table for Business Objects. (BOBJ)

The Business Intelligence industry is booming, Sarbanes-Oxley, Asset Performance Management, Business Analytics and the continuing success of Balanced Scorecard Initiatives have breathed a lot of life into this sector recently. Put bluntly The Dashboard is shaping up to be the killer enterprise app of the early 21^st century.

What will this mean for consultants around the world? It may be too early to tell, but there are some easy predictions to make.

On one hand, VAR’s around the world will suddenly have access to a larger portfolio of products that they could represent if they desired, increasing the potential for IBM, say, to find additional distribution channels for their Tivoli technologies (MRO Software) increasing overall revenues.

However, service only consultancies, offering Cognos consulting and training only, will suddenly find themselves faced with competition from gigantic and immensely successful service consultancy like IBM; squeezing their markets and potentially forcing out some of the smaller players.

One of the problems immediately facing IBM is that Cognos is not unique to MRO Software, but with many different Enterprise packages. Large scale consultancies such as Accenture, CapGemini may be less willing to work with technology whose IP is owned by one of their main competitors. This potentially opens up a third unintended consequence in this consolidation; namely the growth of other smaller players in the market such as CorVu, MicroStrategy and SAS.

On balance, the entry en masse into this area by three giants in service delivery and Enterprise technologies is undoubtedly a wise move. In the past, their clients often noted SAP, Oracle, and other ERP systems, were “great for putting information into – but terrible for getting it out again!” So better technology, the ability to increase service sales, and tapping into existing distribution channels are all key benefits.

It will also be good for client organizations; they can now get everything from one source, maybe in one project, enabling them to leverage cost savings out of their Enterprise technology implementations. Lastly, it will generally be good for VAR’s providing everybody with additional avenues to increase earnings.

The ones caught in the middle will be those delivering services, within these areas there are three options open to them.

1) Expand their service offerings by taking themselves into some of the business process work and data analysis work that underlies successful Business Intelligence, thus pushing themselves further into the client company and creating a barrier to entry of the giants such as IBM, SAP and Oracle.

2) Look to develop relationships, and grow their services portfolio, with smaller competing Business Intelligence providers; giving them additional revenue sources alongside the services they already deliver on the big three Business Intelligence products.

3) Alternatively, they can look for other means to deliver additional value through developing add-in software, technologies or templates; or through new pricing or service delivery models.

View Business Intelligence Jobs

What is consulting worth?

An intriguing question? What are consultants worth? For different industries the rates can vary widely, Henri Vanroelen, a VP for Estee Lauder Companies believes the following are general guidelines for pricing IT consultants:

• Help desk / PC support / IS Operators: around 40$/hr
• VB / RPG / Cobol programmers: around 65$/hr
• Oracle SQL / ABAP prgrammers: around 95$/hr
• business analysts / ERP consultants: 120 $/hr
• Program mgrs / projects leads: upward of 120/hr, depends on experience level

Sounds fair doesnt it? In many sectors consultants do indeed charge by the hour, in others they charge by the day or week.

The maths is simple; find out what you are really worth a year. (Salary plus costs) divide it either by the number of expected billable days, or by the number of expected billable hours, then add a percentage. Remember taxes and overheads and make sure to capture all expenses that you normally agree to recharge to the client.

Some common approaches to this type of rate setting include:

- Double or triple your cost per hour/day
- Setting consulting fees based on each particular project
- Setting fees based on actual data
- Or just charging market prices

The last option is the most common. Within a short time in your industry you will become very aware of what your competitors are charging.

Often, when they are confident in their space, they charge by value; meaning that they charge a portion of the value it would represent to their client company regardless of the time they spend executing it.

Alan Weiss has always been one of the more vocal advocates for value based fees, a method he has used and publicized as the best means of earning what your services are worth. As always, he makes a very good case for the practice.

These include:

• capping investment at a specific level
• never having a meter running so clients can feel free to call or email on any issue without additional authorizations
• and no debates over what constitutes billable time and what does not

Ultimately many consultants end up choosing a range of methods for pricing their services, including some that may not be here. Your ability to generate consistent high yield fees will end up being determined by:

• Your relationship with your client
• Your track record
• The uniqueness, or perceived uniqueness, of the services you offer
• Your ability to keep your overheads under control, and
• Your familiarity with your clients industry or business

Rick Schultz, Founder and Software Architect of 100Watt Solutions, ties the concept of fees to overall consultancy effectiveness and paints the picture this way ” The other part of the question, though, is “which clients do you want”? You don’t have to be in any consulting role long before you meet “the client from hell” and need to fire them. If you charge top dollar, you have a smaller pool of clients to choose from, and they’re often pickier (because, hey, they’re paying you so darn much, right?). The lower your price, the greater your pool of potential clients. “

SaaS and the new VAR landscape

As Internet Access becomes faster and more widespread SaaS is starting to gain some real traction as the next evolution of business software.

This is forcing radical change throughout the IT community, with impacts on technology providers as well as VAR’s and Channel companies. How will this dramatic shift in technology impact on this area of consulting activity?

A map of the internet published by Technology Review

Under the old-technology architecture of SAP and Oracle value added resellers were a viable part of the distribution landscape. Their income streams were largely generated from margins on hardware and technology sales, and the high yield consulting rates due to their particular specialty.

SaaS is emerging as a large scale disrupter in this area. While the large E.R.P vendors are playing it down and trying desperately to relegate it to the Small and medium Enterprise level, there is growing evidence that globally, industries of all sizes are tapping into the benefits that SaaS offers.

And why wouldn’t they? Reduced cost of ownership, infrastructure as a browser, access throughout the world, commodity pricing and increasingly functional platforms is a very enticing proposition. Particularly where data security and transactional speed can also be guaranteed.

And the big players are sitting to attention, on one hand talking down the technology as something for Mid market companies, while on the other hand making sure they have a position on the playing field.

Oracle chief Larry Ellison is currently having a bet each-way with his investment in NetSuite, the company that launched its IPO recently. SAP has also launched into the space with its Business ByDesign offering, but has stopped short of driving this product into its existing Enterprise Software marketplace.

Channel distributorship will continue to exist, and maybe become even more profitable. The Enterprise market is still strong and it will take some years for this change to become universal one would assume.

However, as always it will be the first-movers that benefit the most, while those trying to hang onto recognizable business models will see their sectors becoming increasingly threatened by improving online offerings.

So how can VAR’s adapt? Experts seem to be divided on this, and even divided over whether they will all need to change their business models.

Jim Collins, CEO of Affinity Internet Inc, sees this as a positive for VAR’s “By removing the more mundane aspects of application installation, the alternative delivery models allow the VAR to focus on what will most please the client, and that is the successful implementation of applications that clarify, secure and simplify business processes.”

In his view those VARs who have focused on building the resources for implementation, adaptation and training will be well positioned for renewed growth.

This is an interesting point and one worth considering further. When the technology has become a commodity in terms of price, other perspectives also change. A client could easily decide to switch between (say) Salesforce.com to Microsoft Dynamics based solely on the ongoing price of ownership.

Why wouldn’t consultants look at representing several SaaS applications? There are more and more springing into this space everyday, and there are even platforms for generating online applications.

Joe Bevk, a Partner at ServiceVantage Corporation sees it this way “In the transition, partners will have to protect current “resale” revenues and grow new revenues throught a combination of referral fees (the new resale revenue base) and changing the service model to business process re-engineering (BPR).”

But what about new business opportunities? And if everybody is focusing on services then who will be able to tell the difference? Jim Holt actually saw things a little differently, with a belief that those companies who “get it” will will “create unique bolt-on application adders and and use the application exchanges that are becoming popular with the leading SaaS and HaaS players. (Such as Appexchange)

Their are changes on the horizon. No doubt about it. The extent of these changes is yet to be fully understood. Will they do to SAP-style architecture models what Google did to Yahoo? Or will it ultimately be more of what Skype failed to do to landlines and mobile phones (Despite the early promise)

regardless of the scale of change, there is definitely an opportunity within this space. Emerging service delivery options within this redefined landscape will definitely include sharper and more developed focus on pre and post implementation services, business process engineering and providing a one-stop shop for add ons, additional packages and extent ions.

It will also force a dramatic change in the way that VAR’s and vendors form agreements. Finders fees, ongoing revenue sharing and other (as yet) undefined models could point the way for technology companies and their consulting partners in this scenario. Models that will provide incentive for both parties to stay loyal and to specialize, rather than offering a bit of everything depending on their mood.

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Transfield capitalizes on growth in services demand

Australian maintenance contractor Transfield Services (ASX:TSE) continues to go from strength to strength.

Bloomberg recently reported that Transfield Services were considering offering up to $A529 million for GRD, with particular interest in its Minproc engineering group and the waste recycling technologies it boasts.

GRD is a recognised supplier of technology and services within the mining sector and also has significant contracts in the UK and Europe with local councils and other industry sectors.

Just one of a trail of good decisions by the team of Transfield Services. I worked for this company before it was separated from Transfield in Australia where we were providing turnaround management services to BHP at the time. (Many moons ago)

Their success since that time is a testament to just how strong the market is for quality services and technologies in the areas of maintenance and asset management.

In recent press releases they have announced facilities management tie ups in Qatar, they already are into their second year of a maintenance contract there with RasGas, opening an office in Calgary to take advantage of the boom there, renewed contracts with Shell in Malaysia, and the acquisition of Intergulf giving them an additional 400 workers and an even greater beachhead in the Gulf states.

Dubai Aerospace Enterprise takes a stake in US Aerospace

The mergers and acquisitions market in the field of maintenance outsourced providers stepped up a notch this week with Dubai Aerospace Enterprise (DAE) announcing a $1.9 billion acquisition of engine maintenance firm Standard Aero and aviation maintenance company Landmark Aviation.

The integration of these companies within their Middle Eastern operations under DAE Engineering will further develop the company’s capacity to deliver services for commercial engines such as the the General Electric CF34, the Rolls-Royce AE3007 and Model 250, and Pratt & Whitney Canada’s PW100 and PT6 as well as a range of propellers and auxiliary equipment.

The purchase shows the growing interest in asset maintenance companies by large investors such as the state backed DAE, and is part of the increasing trend towards further consolidation within the industry. This is particularly true of the burgeoning aerospace industry within the Middle East as providers scramble for position to provide the services the industry will be requiring.

As the prize continues to increase and more companies lean towards outsourced maintenance providers, we are expecting to see even further consolidation in the area of services and technologies as companies try to cash in on the need for reliability in process, infrastructure, aviation and utility industries particularly.

However it also shows another uncomfortable side to the acquisitions feast. The Middle East has made a lot of progress but it is still a long way from what commentators would call a fair and open marketplace. Nepotism, national associations (often family assets of the local royalty), and the “mens club” tend to determine who will walk away with what part of the pie, rather than the best value for money.

This means that companies backed by state funding and entrenched discriminatory practices will be able to stride through the worlds markets taking advantage of open markets and lax ownership laws within the developed world.

Interesting times for investors looking for the next take over target. The recently rebuffed offer by Transfield Services for GRD in Australia, the recent takeover of Maximo by IBM, the private purchase of Aladon by Ivara are all signs of that the market is heating up as even small and mid size firms strive to be a part of the bigger picture.

Acquisitions in the pure play asset technology space

This year has been a watermark year for takeovers and mergers in the area of asset management consultancy and services companies.

Growing regulatory burdens, rampant resource sector demand, financial regulators stiffening their resolve in European utility markets, surges in defense spending, and the recent infrastructure spotlight in the US are driving a greater need for companies to understand, predict and manage the risks of asset failure.

This has been most apparent in the sectors of software and technology companies. Since late last year we have seen a range of technology take overs.

The most high profile to date has been the take over of MRO Software (MRO) by IBM (IBM), sent a warning that a new and large scale player was entering the field of asset maintenance technologies. The flagship product IBM Maximo holds a dominant position within manufacturing companies as well as within the North American Utilities industries.

Private equity firm Francisco Partners deepened their exposure into asset-intensive technologies with the purchase of Mincom, the Australian Asset management Software house, specializing in Mining, Defense and Utilities industries. This adds to their already impressive portfolio of technological assets within this sector including the ubiquitous Primavera technology and a range of supporting technological companies in IT and hardware.

The most recent addition to this has been the purchase of Information Science Consultants in the UK, ISC, by IFS Defence adding a deep and recognised level of RCM functionality to a company that is already a dominant player in asset management with many of the world’s larger organizations and institutions.

This particular acquisition holds possibly more interest than the rest within this field, because it signals a drive to widen the functionality base of standard EAM approaches to asset management.

Last of the big deals is a range of deals that have been undertaken by Infor Global Solutions a very low profile operator in the Enterprise Asset Management field; yet according to AMR Research it has more enterprise customers than SAP and Oracle combined and is the third largest Enterprise technology vendor in the world. (Around 70,000 customers)
Still a private company, with heavy support from Golden Gate Capital, have made an astounding number of acquisitions, giving it around $2.1 billion in annual revenues and making it the 10th largest software company in the world.

A phenomenal success story for a company that is barely 5 years old!

The list of acquisitions is impressive and shows a level of momentum and vision beyond other notable players in the field.

• May 2007 – Purchased Hansen Information Technologies providing a launch pad into government and utility sectors with their popular Windows based ERP system. (Rail, public works, government, utilities)

• April 2007 – Purchased Workbrain a workforce management solution for around $200 million.

• January 2006 – Purchases SSA Global. Giving them access to their large customer base of supply chain companies as well as the Baan product that they had previously acquired.

January 2006 – Purchases Datastream for $10.26 per share in cash.

While others are focusing on organic growth and playing the time honoured game of competing on price and functionality, Infor has ridden over the top of all of them securing themselves as the leaders within the field; even though nobody knows who they are. So what could be next for this amazing feature of the AM landscape?

An IPO seems inevitable although there is no news on that front. In the meantime they have ensured that their voice will be heard above most others around the globe; challenging recognised leaders SAP and Maximo (for this sector) to dominate the playing field altogether.

The ERP Game (For two or more players)

The ERP game has grown in popularity since the end of the 1980’s. Today a growing number of teams all over the world play the game.

Despite the surge in popularity, there is no record of the rules of the game. Therefore, for the first time, here is a guide to the unwritten rules of The ERP Game.

The Players

The Home Side – Traditionally consists of people from a “client” organization. The team members often have some experience in IT, and some of them will have participated in at least one game prior to kick off. The Home Team also includes experts in managing The Game.

However, it is normal practice not to have too many subject matter experts in the Home Team. If they are included then it is normally as an adviser or reviewer, a role designed to make sure they do not interfere with the playing of the game with irrelevant business related issues.

The Away Side – There are usually two or three Away Teams; the ones that start the Game, the ones that Finish the Game and the ones that manage the Game.

The initial Away team is usually comprised of seasoned game players. Veterans of many games through the years and well versed in the rules of the game. It is customary to replace these with less experienced players after the start of the game.

The Away Side is the only team in the Game to have a comprehensive playbook of past games.

The Rules

• The Home team is obliged to change some or all of the requirements of the game at any time (Home team advantage)

• The Away team can change one or all of the team players for lesser experienced people at any time after the beginning of the game

• The Away team must try to point out obscure reasons in the contract to limit the playing of the game

• Withholding funds by the Home Team can stall the Game but is a valid maneuver

• Stopping work by the Away team is a valid but risky maneuver which could mean the end of the Game

• “Configuration” shall be defined by the Away team and will take whatever amount of time they deem necessary for this Game

• “Availability of resources” shall be defined by the Home team and the Away team will accept their decision

• The Away team will use the word “scope” continually when defending recent plays

• The Home team will at all times attempt to bypass the “scope” rule through any tactic necessary

• At no time will the Home team be fully aware of the definition of “Scope” within the Game; if this happens then the Game is forfeit by the Away Side.

• “Functionality” will be defined by the Away team in very narrow terms

• The Away team shall attribute any delays, failures, or lack of progress to issues related to the Home teams lack of experience and preparedness. At no time, will the Away team take responsibility for any issues of this nature.

• The Home side will always ensure that the team managers see the Game as successful regardless of the opinions of others in the company

• The Away side will always refer to the plan as “dynamic”

Winning the Game

The ERP Game is one of the only games in the world where each Team has different criteria for winning. However, neither Team can let on that they have different goals and it is traditional to talk incessantly about a win-win.

Neither team can ever let on that they are winning.

The Away Team

• The Away Team wins if they earn more than they originally quoted to play the Game.

• Sales of extra software, functionality or services by the Away team will earn them bonus points.

• The Away team can only lose the game if they spend more than they earn for the game.

The Home Team

• The Home team wins the Game if they get what they wanted without paying more money. (The Home Team doesn’t normally win the game.)

• There are many ways that the Home team can lose the Game

• Successful adoption of the system by the users in the company will earn bonus points for both teams, but this is very rare.

Talking about the Game

Traditionally both Teams to refer to the Game as a success regardless of who wins.

This is often supported by a practice known as Creative Reporting; a skill that players seem to develop only after they have spent millions of dollars.

Where applicable these reports can be published and used at conferences to demonstrate how well the teams were able to play the Game.

­­­­­­­­­­­­­­­­­­After the successful completion of a Game, either side can call for a rematch often termed an “upgrade”. This is common among evenly matched teams or where the Away side has won easily.

Executive Briefs November 06, 2007

Executive Briefs is a weekly roundup of some of the headlines globally in the fields of Consulting and contracting. Where longer articles exist they will be linked to.

BT to Acquire Consultancy

Net2S, an IT consultancy based in Paris France, will soon become part of BT’s drive into the French economy. In a cash and shares deal they have offered €5.27 a share in cash for 3.34 million and a share swap for approximately 42% of the company; taking their stake to approximately 69%.

Net2S reported annual revenues of €77 million until December 2006 and employs an international workforce of about 800 people in France, Europe, Morocco and the US.

Thomas Cook Signs Accenture for $400 million outsourcing deal

Accenture continue to grow their IT outsourcing practice in the UK with the recent deal signed with Thomas Cook to renew their outsourcing arrangement originally signed in 2002. Requirements to integrate recently acquired MyTravel.com to the existing outsourcing functions spurred the renegotiation.

Under the terms of the new contract Accenture will manage the SAP operations, accounts, payroll and HR as well as the provision of network and technical services. The work will be performed by its UK service centers, but will also draw on the human resources internationally including India where Accenture expects to increase its workforce from 8000 to 35000 by 2008.

CapGemini Turns up attention towards the North American Utilities Markets

In an indication of just how much the North American utilities and infrastructure markets are growing CapGemini have announced the appointment of three senior executives to their Utilities team.

Sudhir Rao, Don Durbin and Roy Ellis are examples of hard to find talent within the bursting consulting markets in this region. This includes management of regulatory relations, system architecture and business development within the outsourcing arenas. We will watch closely for the next moves in this space.

WSP Group remains on the Acquisition Path

WSP Group has agreed to pay 11 million GBP for SEi an engineering consultancy with three offices in the USA and clients in both the private and public sectors. WSP group is one of those slow burning companies. They continue along a very conservative path towards profitably growing their headcount across the world and returning a steady 8 – 10% for investors.

SEi has 150 staff, assets of around 2 million GBP and posted annual revenues of 10 million GBP in latest results. (More)

Coffey Continues on path of Growth

Coffey International is a Specialist Consultant delivering services to the Mining industries throughout the world. According to recent press releases they have recently purchased two international mining consultancies.

South African (backfill) consultancy NS Consultancy was acquired for $0.4 million in cash. The highly specialised Johannesburg-based business, founded and solely owned by Mr Nils Steward, employs five staff.

Coffey International Limited managing director Roger Olds said that the continued expansion of the Coffey group’s operations in Southern Africa and other key markets was part of the group’s strategy to compete in diverse specialties and geographies.

“Coffey Mining now totals approximately 200 staff across offices in South Africa, Ghana, Senegal and Zambia and sister company Coffey Projects employs 15 from its Johannesburg office,” Roger said. Coffey Mining chief executive officer Dan O’Toole said this acquisition complemented Coffey Mining’s current service areas.

Webber Associates UK Limited, a specialist geotechnical consulting firm based in the United Kingdom. This is Coffey’s second geotechnical acquisition in the United Kingdom. Coffey paid a total of $2.2 million, consisting of $1.5 million cash and $0.7 million in shares in a transaction completed today. The company is wholly owned by founder Ian Webber.

Webber Associates is a specialist geotechnical design group primarily servicing the construction sector. The company, based in Knaresborough in Northern England, employs twelve staff plus a number of specialist consultants.

Coffey International Limited managing director Roger Olds said acquiring Webber Associates was part of Coffey Geotechnics’ intent to rapidly grow its range of services offered in the United Kingdom and longer-term pursue work more widely in Europe and the Middle East.

Chief Executive Officer of Coffey Geotechnics Matt Thomas said that after a period consolidating the acquisition of EDGE Consulting, this was the next step to expand Coffey Geotechnics’ range of services in the United Kingdom. “Webber Associates’ specialist geotechnical design skills complement our existing services and enable us to offer a greater range of services to our clients. (More)

Mincom Edges Closer to Department of Defense Deal

The Age newspaper from Australia reports a Defense Department spokeswoman confirming that they are in negotiations with Queensland IT consultancy Mincom for the latest phase of a massive Supply Chain project for the Australian Defense Forces.

The project is aimed at providing logistics software for troops that are cut off from normal communications for some reason. Mincom already holds a $150 million AUD contract and this round of project work could see it in the drivers seat for an additional $100 million AUD.

Although a long term supplier to the worlkds Defense forces these projects mark the transition of Mincom from the Maintenance and Mining software it so successfully exported into area of IT consultancy and the wider logistics fields.

Since its take over by Francisco Partners earlier this year Mincom has recorded a surprisingly healthy string of successful bids, emerging as a major thorn in the side of Oracle and SAP within its chosen markets. (More)