What’s the Plan?
Over the next series of articles, we are going to explore many aspects of labor management for system integration firms. The topics we’ll cover include cost of labor, efficiencies vs effectiveness, billable, retention and culture, along with other connected subjects.
In the industry’s early years, margins on products were the primary focus. They were healthy, especially as the newer technologies evolved. However, systems became complicated, progressively requiring expertise to ensure performance and value. Often retail, and some early-stage custom firms, zero billed or discounted their labor to entice the customer to purchase their systems. In many retail shops, commissioned sales guys would install the systems, at no charge, to make the sale. We’ll consider and explore some legacy behaviors and/or beliefs that stem from this early history.
Labor is both a differentiating and a necessary inclusion in systems integration sales as well as systems support. Today, in some installations, it may exceed product revenue. It also represents one of the most challenging areas for efficiency and optimization. While some firms may be very effective at undertaking and billing their labor, many more leave money on the table, missing opportunities such as: efficiencies which directly improve the bottom line, differentiation, and customer loyalty. Many are quick to discount labor, feeling apologetic for the time it took. This mindset is prevalent in our Industry.
Expertise is one of the primary differentiators for businesses, especially so with systems integration. People, in particular skilled labor, are the heart and soul of the company. To be effective the business must be able to identify where, why and how people are deployed, what is billable, how clear the customer is on the value of services and where and why, by choice not inefficiency, work is subsidized. If the firm decides to subsidize, for whatever reason, good business strives to know why and at what cost. Good business also wants to make sure that the client knows the value, especially if the decision is not to bill.
We’ll explore this and take a look at what might be left on the table. Key to this is an understanding of both efficiency and effectiveness. Doing a job efficiently, that does not need doing or that does not bring value to the customer, is not an effective use of the business’ or the client’s resources.
Join me for my next blog, Anatomy of an hour, where I’ll share some insights on how an hour is typically spent.