Focus on Outcomes to Deliver Value

Your customers have no business asking how you deliver value. What do they care how you do it? The only thing that should matter is that you deliver what other people cannot. This sounds harsh, and perhaps it is a little overboard. I like our clients to see how we work through problems and business strategy sessions in real time. It gives them a sense of what is happening. But it is also dangerous. In our business the danger lies in having a client watch what we do, put us on the clock, and say "that took you about 4 hours and it cost me $5,000. How can you possible be worth $1,250 an hour when everyone else is charging $200 or $300 or $400 an hour?"

This happens to me all the time, and it happens more often on due diligence engagements than any other type of work we do. Due diligence is the process of examining a business that is about to be purchased, kicking over every rock you can find, and basically trying to avoid any nasty surprises for the purchaser. Due diligence from the legal side involves making sure that the contracts, corporate documents and legal track record of the target company are all in order. From the financial side it involves a gut check to say "Is this business worth buying?"

Just this week I was meeting with a potential client regarding this type of work and when I told him how we typically quote our fee (1.5% of the asking price) his response was typical. "That's a lot of money." He then proceeded to tell me that he had budgeted about three times as much for legal fees as he had for financial due diligence. Understand his position. He was willing to spend a lot of money to make sure the contract was written correctly, but comparatively very little to determine whether the money he was going to spend would be a good investment, whether the business had a reasonable chance of success and whether or not the financing terms were something the business could afford.

When customers don't understand outcomes they skimp on $15,000 in due diligence and invest $1 million in a failing venture. They save $500 or $1,000 on a logo for their startup and have trouble landing their first big contract because it looks like they're operating out of the student union.

Customers need you to teach them why your outcomes are so much more valuable than your competitors. They don't need to know how your process or product is different from your competition. In sales they call this focusing on benefits rather than features. In service businesses it is sometimes hard to describe features and benefits but everyone understands the difference between process and outcomes.

The next time you draw up a professional services proposal avoid the temptation to spell out HOW you are going to go about your job of delivering value. Instead explain exactly what the customer is going to get in the form of tangible and intangible outcomes.

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[Carlos Lozano]

::: These tips may help your clients as they plan for accounting / ERP software changes :::

12 Steps to a Better ERP Launch©
Carlos Lozano, MCS, MBA, Consultant

Improved processes and a competitive edge are the destination, but how do you get there? Whether your business is entering a first ever enterprise resource planning (ERP) experience or considering a move to an ERP that more effectively meets current requirements, clear expectations and planning can improve your experience and near term success. The following steps will help you reach your goal.

1) Quantify ROI expectations. Know why you are implementing a new ERP and what the results will be. These should be specific to the processes you are seeking to improve such as inventory, and the time frame in which the ROI is to take place.
2) 100% organization “buy in” is essential, including managers and non-managers. Buy in looks this way:
A. Be willing to commit the time, information, processes and resources to making this transition successful.
B. Keep the vision of improved competitiveness and profits at the forefront at all times.
C. Accept that current processes will change and prepare to adapt to the new processes.
3) Understand who owns the final responsibility for success.
A. The company is the final owner of the outcome.
B. Consulting partners facilitate success, provide tools and expertise.
4) The CEO, COO or CFO assign individuals or a group as project managers and empower them to insure compliance, buy in and smooth process execution. Empowerment is a tool for addressing organizational resistance.
A. Project managers should include key player from all departments and processes.
B. Project manager should welcome individual input while conveying that they will have final decision making responsibility.
5) Assume that the project will take time away from established resources for the project implementation period.
A. Time impacts productivity.
B. Time may require additional human resources allocation or redistribution on a temporary basis.
C. Plan ahead to compensate for these changes.
6) Stick to the initial scope of the project, unless a critical element has been overlooked, and save the “wish list” for later.
7) Acknowledge expertise gaps and bring in objective outside resources when necessary for first round implementation success.
8) Assume that change is not easy but it is the way to growth. Let go of what isn’t working for your organization. The goal is greater efficiency and competitiveness. If the old way worked, your organization wouldn’t have launched on the path for a new ERP.
9) Train to reinforce, test, transfer knowledge and insure the best delivery for your project. Training completes the cycle and takes the hypothetical to real world success.
10) Make a clean break. Do not run parallel systems once you launch. This reinforces old behaviors and habits. Test the system before launch and make sure everything works before you Go Live.
11) Allocate on-site support for the first 30 days or more after you go live. Do not assume that your human resources already know how to do their job in the new construct. It’s easier to identify and fix glitches earlier than later.
12) ERP will not be painless but the process can be made easier by following these guidelines.

Carlos Lozano, an entrepreneur and international manufacturing and ERP software expert, has launched two successful technology companies during the last 20 years. He is currently the CEO of ITS-Dynamics, Inc., with operations in Austin, Texas, Mexico and Chile, and the company is a leading Microsoft Dynamics Gold Partner in both the U.S. in Latin America. Lozano is an MBA graduate of the IPADE School of Business, considered one of the world’s top MBA programs. He may be contacted at info@its-dynamics.com or you may visit the company web site: http://www.its-dynamics.com