Ticks and mosquitoes prosper by sucking the blood of their victims, often causing infection, irritation, and sometimes even death to their host in the process. It is not a symbiotic relationship; when we are their victims we try to kill them.
On the other hand, plovers clean the teeth of crocodiles, and shrimp clean the grunge off of fish, and all benefit. Crocs and fish welcome these hygienists and leave them unharmed.
IT consultants would prefer to be thought of as plovers. And indeed, most of the time, they provide a beneficial service to their customer and are rewarded with something in return. The greater the benefit relative to the cost, the more in demand their services are likely to be.
However, what happens if the consultant is faced with a situation where they can greatly enhance the benefit to the customer, but with negative short-term consequences for the themselves? This presents them with something of a dilemma.
I was recently reminded of this phenomenon when chatting with the lab director at the QA Center of Excellence for a very large, global consulting firm. (So as not to embarrass anyone, let us call him Fred.)
Fred told me that initially, when they heard our claims about ~5x faster implementation and ~10x faster maintenance, and all of the other benefits we touted, he thought we were full of it — just another vendor over-hyping their products. But, he had been directed by his boss to check us out, so he had his team set up the lab and run our stuff through its paces.
Fred’s team came back to him and said that while there is variability in the efficiency gains to be had depending on what is being tested, the experience of the test engineer,and so forth, by and large our claims checked out.
Fred then advised his company’s local practice managers of this, sharing the results of the evaluations. He expected to get a lot of questions and excitement, but instead he received … silence.
This puzzled him, so he called around the practice managers.
Some were just too busy and hadn’t read or digested the message, others didn’t have any immediately pending projects and had filed his report for future reference, some were scared to use anything they had never used before.But a couple who had read it and had near-term needs showed little interest. When Fred asked why, he was told that improving efficiency by a significant margin would lead to fewer consultants for a shorter period of time for a test automation project, negatively impacting short-term sales of their consulting services.
So what was best for the customer was bad for the consulting firm.
Or was it ?
Fred and I discussed this, and we talked through some scenarios, as follows:
- Imagine you are quoting around $250K for a project while your competitors submit bids of $500K or so. Who would the client select ? And when the project is done on time for the stated price, who is going to have pole position for that client’s next project? And who will the client recommend to their circle ? Long term, all other things being equal, your business increases as you blow away the competition on value.
- In the above example, there may be a lower short-term revenue number, but what about margins ? If your cost is now $125K instead of $400K, and you bill $250K instead of $500K, you win a definite $125K profit versus a potential $100K profit. Factor that across multiple projects and the fact that you win more projects than before due to lower prices, and your bottom line is greatly improved, and, your customers are also reaping the benefits. Eventually, your competitors would catch on and use the tools that give them the efficiency gains, then the usual margin squeeze would be in, but in the meantime you increase margins, win more projects, and reduce costs for your clients.
This is germane to a truism of business: Do the right thing for your customers and they’ll do the right thing for you. Not always, but usually.
As business people, we all have a choice. We can be plovers, benefiting our business associates and gaining some benefit ourselves. Or we can be ticks, trying to reap maximum gain for ourselves with little regard – and perhaps even negative consequences – for those we do business with.
To all you plovers out there – thank you, and I hope to work with you one day.
Ticks and Plovers
Monday, September 21st, 2009Ticks and mosquitoes prosper by sucking the blood of their victims, often causing infection, irritation, and sometimes even death to their host in the process. It is not a symbiotic relationship; when we are their victims we try to kill them.
On the other hand, plovers clean the teeth of crocodiles, and shrimp clean the grunge off of fish, and all benefit. Crocs and fish welcome these hygienists and leave them unharmed.
IT consultants would prefer to be thought of as plovers. And indeed, most of the time, they provide a beneficial service to their customer and are rewarded with something in return. The greater the benefit relative to the cost, the more in demand their services are likely to be.
However, what happens if the consultant is faced with a situation where they can greatly enhance the benefit to the customer, but with negative short-term consequences for the themselves? This presents them with something of a dilemma.
I was recently reminded of this phenomenon when chatting with the lab director at the QA Center of Excellence for a very large, global consulting firm. (So as not to embarrass anyone, let us call him Fred.)
Fred told me that initially, when they heard our claims about ~5x faster implementation and ~10x faster maintenance, and all of the other benefits we touted, he thought we were full of it — just another vendor over-hyping their products. But, he had been directed by his boss to check us out, so he had his team set up the lab and run our stuff through its paces.
Fred’s team came back to him and said that while there is variability in the efficiency gains to be had depending on what is being tested, the experience of the test engineer,and so forth, by and large our claims checked out.
Fred then advised his company’s local practice managers of this, sharing the results of the evaluations. He expected to get a lot of questions and excitement, but instead he received … silence.
This puzzled him, so he called around the practice managers.
Some were just too busy and hadn’t read or digested the message, others didn’t have any immediately pending projects and had filed his report for future reference, some were scared to use anything they had never used before.But a couple who had read it and had near-term needs showed little interest. When Fred asked why, he was told that improving efficiency by a significant margin would lead to fewer consultants for a shorter period of time for a test automation project, negatively impacting short-term sales of their consulting services.
So what was best for the customer was bad for the consulting firm.
Or was it ?
Fred and I discussed this, and we talked through some scenarios, as follows:
- Imagine you are quoting around $250K for a project while your competitors submit bids of $500K or so. Who would the client select ? And when the project is done on time for the stated price, who is going to have pole position for that client’s next project? And who will the client recommend to their circle ? Long term, all other things being equal, your business increases as you blow away the competition on value.
- In the above example, there may be a lower short-term revenue number, but what about margins ? If your cost is now $125K instead of $400K, and you bill $250K instead of $500K, you win a definite $125K profit versus a potential $100K profit. Factor that across multiple projects and the fact that you win more projects than before due to lower prices, and your bottom line is greatly improved, and, your customers are also reaping the benefits. Eventually, your competitors would catch on and use the tools that give them the efficiency gains, then the usual margin squeeze would be in, but in the meantime you increase margins, win more projects, and reduce costs for your clients.
This is germane to a truism of business: Do the right thing for your customers and they’ll do the right thing for you. Not always, but usually.
As business people, we all have a choice. We can be plovers, benefiting our business associates and gaining some benefit ourselves. Or we can be ticks, trying to reap maximum gain for ourselves with little regard – and perhaps even negative consequences – for those we do business with.
To all you plovers out there – thank you, and I hope to work with you one day.
Tags: advising dilemma, IT consulting
Posted in General Comment | No Comments »