Thursday, 14 January 2021

"Were Putting the Band Back Together"​ - Finding the Way Back

The 30th October will always be a special date for me. It was on this day in 2006 that I was privileged to oversee the go-live of the HM Prison Service Shared Services operation in Newport, South Wales (known today as Shared Services Connected Ltd – SSCL) providing HR & Payroll services for 45,000 employees over then 120 geographic locations and ultimately being part of a truly wonderful team that created 500+ jobs.

By serendipity, ten years later in 2016, it was also the same date that saw Certus deliver the very first Oracle ERP & HCM Cloud implementation at the Office for National Statistics (ONS), ironically the ONS campus being just around the corner from the SSCL. So, I find it quite apt to publish this blog today 30th October 2020 regarding the next venture – de Novo Solutions

Just because you have been successful previously does not give you the automatic right or a free pass straight back to the top of the mountain. Running any kind of business is full of inherent risk and it still surprises me as to how so many people do not grasp this, let alone understand it. However, those in the entrepreneurial community live with this day-in and day-out, as any financial risk materialising is often immediately inherently real. For those who are prepared to embark on such a journey, to give themselves and others a better quality of life and just make the world a better place by creating a progressive economy they will always have my undying respect. 

Coming back from a standing start was never going to be straight forward, and “getting the band back together” is not as easy as it may seem or perceived to be, but that is what we are doing. So, let me give you some insight into how we have gone about this. 

It just starts with a conversation…

It always starts with a conversation. Back in October 2011 Tim Warner and myself were in a Client’s office late at night in London, ironically just 200 yards from Accenture’s HQ. Who would have guessed that in May 2018 that they would be our eventual acquirers? we certainty didn’t.   

Roll forward October 2020 and this time it was a phone call to Switzerland, with the opening line “You done with retirement now?”. The discussion that followed talked about what we had achieved, the opportunities missed, what we had learned and what we definitely would not do again.

For those who follow my blogs, it should not be too difficult to work out that I have been researching the experience economy for some time so I had a firm idea of what we were going to do but not necessarily as to how we were going to do it and if anyone would really be interested. However, I enjoyed myself for an hour, the first time in many months and my wife commented I was smiling when I came off the phone and that I appeared to have my mojo back. 

It was fun exploring with absolutely no constraints the art of the possible. I was also excited in that we could not only build something again, but to do something nobody had done before to my knowledge in positively disrupting the same market twice.

Getting the Band Back Together

One of the many rules of creating a successful business, is to surround yourself with people who are better than you. Our famous “black book” of the Oracle ecosystem is full of talented people and naturally this is always our first point of call. 

I often joke with my peers in Oracle and across the wider community, reminding everyone that we created the football pitch for Oracle Cloud professional and managed services in the UK&I that everyone today is now playing on and now we are coming to take our players and ball back, as we need it for the new pitch. (by the way were also going to need the goal posts as well for those that are reading!) 

Seriously though, the trick is to create a collective that is exponentially greater than the sum of its individual parts. The basic characteristic that underpins everything is trust. Hence, why I always stress that we never ever promise anything we cannot deliver, and we clearly outline the risks to everyone involved we talk to so they can make an informed decision regarding if they want to play?

Coming on an adventure with us is anything but risk free, there are no guarantees, but we do promise working with a group of liked minded individuals that are building a great British company, will push the envelope from a technical perspective once again and will have a good laugh along the way.

We don’t have the monopoly on talent, but we do have an eye for spotting potential and bringing people together and developing individuals and teams.

Just a Game of Chess

I have used the analogy so many times, business is just a game of chess. To be successful you need to see the whole board…There is a lot to do in getting started, so here is just a starter for ten. In doing so you begin to see some, not all, of the pieces on the chess board.

1.  No Idea is a Bad Idea – “Be Poets, and let your imagination run riot!” - Nothing is off the table, The beauty about being an entrepreneur and working with a small team is total unconstrained thinking! Nobody can constrain your ideas except oneself, nobody to shout you down, and most importantly no b•••sh•• corporate bureaucracy to navigate.
2.     Stealth Mode – Despite our enthusiasm we have taken our time. We are not in the business of just re-entering a market, albeit one we created, that is now both competitive and is commoditised where the race to the bottom of the rate card has become the only game in town. We have absolutely no interest in this.

The market is constantly watching what we are doing so we are in stealth mode where we can keep the market waiting and guessing until we are ready, but this also gives ourselves time to research and develop the proposition and to test it with all our stakeholders. We need time to see the whole board. The cheapest and most effective form of marketing sometimes is just being quiet.

3.     Business Strategy – No war and peace required here, but by getting the business idea down onto paper allows clarity of thought and understanding for everyone involved.
Included is the hypothesis is the exit strategy
 and timeline. By undertaking this activity up front, we achieve consensus and agreement as to what the end game looks like, and how we are to get there. Albeit the route we decide upon we know from experience will have many-twists and turns.

Our approach is simple, we are repeating the same strategy we did a decade earlier because we know it works. We focus upon creating not only a new service proposition but a new niche market and in doing so we become the number one service provider by default. This underpins all of our thinking from the outset. 

No idea is ever entirely unique, so you need to know and understand who your competitors are, and also have an idea as to how they will react. The beauty about the Management Consultancy and Systems Integrator landscape is the large players are extremely predictable. They won’t see this themselves, they never do, but you can use this kind of market intelligence and insight to shape the market. The SME market is far less predictable so you have to do your research. Somebody will always come at you from left field.

Differentiation is the name of the game and resonates with a saying we use internally ‘Be Different, Be You!’

4.     Test, Test and Re-Test the Business Proposition with the Market - Any hypothesis of what the business proposition is has to be tested with as many people as possible including but not limited to former employees, business partners, industry experts, former customers and even previous prospects who didn’t buy from us. This allows any business proposition to naturally evolve, but also allows the 30 second elevator pitch to develop naturally.

5.     Know the Numbers – This was something in the early Certus days I will be honest we never had a proper grip of. This time it is very different as we have a sophisticated financial model (Yes - it is an Excel Spreadsheet, but in the right hands!), so we can determine our cash runway, our commercial proposition, and understand how we are going to fund the venture. 

Cash is always King. Don’t get distracted by future valuations based upon EBITDA multiples – this is absolute nonsense. No cash, you have no business, and you have no value. It really is that simple.
I can’t stress this enough you have to know the numbers from the outset. Make it an obsession.

6.     Bootstrap Financing – If you raise equity money (which is not a bad thing) you are always going to be giving something away. Our approach is always to self-fund and use debt financing through Directors Loans to get going. Depending then on how the business plan develops we can decide funding options to support expansion at the appropriate point in time.  Admittedly were not scratching around in the dirt this time.

7.     Legal Structure – Important; get the share structure agreed upfront. The reason is simple – All the Founders understand the agreement, know the rules of the game and have the agreement on legal paper. Consequently, everyone then feels their interest is protected, and we can all focus on building a great Company. The right expectations are set from the outset and consequently there are no arguments or fall outs. Failure to do this, creates ambiguity and allows bad feeling to foster. This breaks trust and can contaminate the culture from the outset.

8.     Develop the Employee Value Proposition
 – Again undertaken upfront. We know a lot of people, and because of what we do, our success, and most importantly how we go about it, we are quite lucky a lot of people want to work with us. 

I am always reminded by the words of a Senior Partner of one of the Big 4 when he said about what was then Certus ‘It’s like an exclusive private members club, many want to join, but only a few are let in’. And before anyone starts over thinking this in terms of diversity or inclusion, we recruit purely on talent, attitude and mindset of the individual regardless of their background. We always like to say to someone ‘you are really good, but we are going to make you even better’.
Financial remuneration is always going to be a key factor. There has to be limits to what the business can afford, and timing is always an issue. You can’t go writing blank cheques.

9.     Team – Identify the designated executive team, knowing what you need and why you need them. Subsequently you can determine the onboarding strategy and onboarding waves. 
Think of it like fantasy football, in that you cannot afford all the best players, as you don’t have unlimited funds. So, you need to buy carefully. Remember in starting out you have to have people that buy into the vision.   

10.   Start Selling! – Conversations through testing elements of the new business proposition creates opportunities. So, start selling from day one. Always good to get a run on the board however small as early as possible.

The famous Peter Drucker quote Culture eats strategy for breakfast is right, but you still need a strategy. You can’t wildly go wandering off using ‘hope’ as your strategy, burning money left, right and centre. Equally you don’t have an action item that just says ‘Create Culture’. We don’t make businesses overly complicated and the values of the business are our values from which we create our culture:    
  • Do great work every day, be easy to work with, and have fun!
  • Only work with people you like working with and that have a "can do" attitude
  • Always make our customers successful creating customer advocacy everywhere we go
  • Don’t be a d***h**d
Insight delivered. As President Bartlett, from the West Wing, would say “What’s Next?” – well we need to get on building a great British Company in de Novo. See you soon…

Mark Sweeny, Founder de Novo Solutions

Thursday, 1 October 2020

Starting Over & Going Again...Day One

In many ways this is by far the easiest of all blogs to write as I have been here so many times before. 

As Tony Stark from the film 'Avengers Endgame' says "Part of the journey is the end", the final part of my own Certus journey has now come to its natural end with Accenture. But as one door closes, another opens (even if you have to kick it in!).

So, what’s next? I’m not the kind of person to sit on a yacht in the Mediterranean and watch the world go-by (and before anyone asks, no I don’t own one!), and I am far too young to retire as I miss the cut and thrust of the tech ecosystem and I know I still have much to contribute to rebuilding the UK economy.

In the meantime, our once pioneering territory of Oracle Cloud has matured into the most complete back office SaaS integrated solution available, wider technology innovation has progressed, and the market itself is changing with the experience economy coming to the forefront. Whilst all this has been happening the global economy has been devastated and we are in a global recession due to the pandemic. Opportunity a plenty exists but not for the faint hearted, Certus itself was founded just before the last recession of 2008, so in some ways this is history repeating itself.   

My sabbatical is over and my desire to go again burns deeply. Regardless of outcome it is time to step up to the plate once again.

Mixed Emotions - The Mindset of the Entrepreneur

It's Complex!

Mum, Dad and my, ever understanding, wife Natalie all ask, “Why go again?”, “What else is there to prove?”. Even my former CEO peers in the Oracle Partner ecosystem have said "Why do another start up?"

The point here is that I have nothing left to prove to anyone, but only ever to myself. I can’t solve the Covid pandemic. I will leave that to those who are vastly more skilled and knowledgeable in the science that will ultimately deliver us, but by going again I can get to play my part and contribute to rebuilding the British economy.

However, there is a cost. By going again those closest to me also have to go on the journey as well. Being an entrepreneur, you become quite selfish, as your commitment has to be 110% to succeed, which is never ever guaranteed, and to do that personal sacrifices have to be made that affect those you most love around you.

I can already feel the butterflies in my stomach as the spectre of failure raises its head one more time and my personal anxiety levels are already building. It puts me on the edge again, walking the tightrope of success and failure, for me mentally is the place to be and it makes me feel alive. The corporate landscape by default gives employees a safety net, in the world of an entrepreneur, there is no safety net and you have to embrace failure everyday knowing it has very real consequences. 

Building and growing a business, any business, is in my opinion the ultimate challenge an individual can undertake in the work environment. You cannot afford to have a bad day, you cannot afford not to turn up, and you have to bring your “A” game every day to be successful. More importantly you have to set high expectations with those people that surround you ensuring everyone can also be the very best they can be. This takes serious personal investment and expends your most important of all assets – your time.

The odds from the outset are immediately stacked against you. Pre-Covid, only one in ten businesses made it through the first year, and of that then only 50% of those businesses were still operating five years later. I could not even begin to guess what the odds are now, but they won’t have got any better that’s for sure.No alt text provided for this image
Business is a game of strategy and tactics (and cash!). You have to anticipate customer needs; define new markets; win new customers over; recruit and retain the very best talent; outthink and out manoeuvre the competition (always fun); deliver on your promises; create customer advocacy and now new dynamics are in play from diversity through too contributing to the wider social good. Most importantly you need to create cash, as without liquidity you can't do any of the above.

No one element can be ignored, to do so can be fatal. And once you have a business running like a well-tuned formula one engine, you have to reinvent yourself constantly to remain relevant to the customer base as technology innovation has moved on again and market demand and consumption changes.  

It’s the ultimate game of chess, and to win, you constantly have to think five moves ahead.

Wise Words – Never Forgotten

In the early years of Certus I was lucky to be invited to a very small private audience with the late Mark Hurd, Co-CEO of Oracle Corporation. Mark had just got off a plane from California and was being propped up by heavy dosages of caffeine. I was in the front row, when someone from behind me asked him what was ‘top of mind’ every morning? Alert and as sharp as ever, he for some reason looked directly into my eyes and said one word ‘survival’.

What followed was a masterclass, as over the next hour he shared his worries about ensuring how he had to keep the second largest software company in the world remaining relevant everyday not only to grow, but to survive. There was me, leading a small company of then 20 people with absolutely no money and here was Larry Elison’s right hand man sharing his insight into exactly the same problem I was facing. How do you survive? The answer is you always focus on the fundamentals of a business operation.

A lesson truly learned and something that is firmly on my mind as I get ready to embark on the rollercoaster of new adventure.

Many things will now be tried and evolved before any final offering is ready. There will be plenty of failure along the way. This is all part of the journey. There is no immediate magic bullet, and just recreating Certus as it was is not on the agenda as the world has moved on.

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Back at the Bottom of The Mountain Looking Upwards

Despite the past success, which was by no means was overnight, one does not get a free pass back to the top of the mountain. 

However, having been able to get to the very top previously the experience does give you an edge, but what is important is to remember it is not the same mountain you are climbing again. Consequently, there will be many new challenges and obstacles to overcome before the flag can be planted at the summit. 

But the view from the top? trust me when I say it is worth it and I want to get back there.  

Finding My Feet Again - Renewal  

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Every day is a school day” and one never stops learning. For me over the past year I needed to introduce myself to the next generation of entrepreneurs. 

Many have sort out my advice, which is humbling, but equally I have learned (and continue to do so) much from them.

This is the kind of hard-nosed experience and learning that can only be accessed in the street and not in any classroom. Real innovation created around the kitchen table and in the garage rather than in an MBA class (and yes, I do have one!) or a posh state of the art corporate innovation lab. 

You learn so much from those with hunger in their eyes and you can feel their passion and desire for success. I love learning about their businesses and seeing what they are doing. The UK Tech sector is very much alive, in-fact it bloody inspires me talking and more importantly listening to these people. 

Engaging with the next generation of entrepreneurs is very much about expanding my mind and getting myself match fit mentally again. Time to Reset.

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The Phoenix Rises – Getting the Band Back Together

The Phoenix has to burn, before it rises” – well it has been well and truly burnt and now a new Company arises from the ashes. 

Many of the old faces that created the Certus family I hope will be tempted back for another adventure at some point as we roll the dice one more time and journey off into the next pioneering sunset, looking to push the barriers of technology innovation further, with customer advocacy through delivery excellence of customer value always our goal in the world of business operations and experiences. And just as important re-establishing our reputation as being highly pragmatic and just easy to work with.

We all know the risks involved. Success is never guaranteed and the spectre of failure will always be present. Most importantly it is going to take time, so patience will be a vital ingredient.

Equally, the team (once I have assembled it and this takes time) will be talent spotting the next generation, so very much looking to work with some new faces and seeing what they can bring to the party as well. 

In creating a new business, in whatever form it takes, it becomes our vehicle to now give back to the wider community. Just like we were mentored and advised it is so important to contribute by passing on our experience to the generation that follows and celebrate in their success as well.

No more blog disclaimers to keep the Corporate lawyers at bay. If you say it, write it, then you mean it, so stand by it. (Politicians please take note!). So, in words I am going to steal from Robert Downey Jnr “Sometimes you may need to disappear for a little if you want to be successful!

See you all soon…exciting isn’t it?
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Wednesday, 29 July 2020

Can the Future of Remote Performance Management be found in American Sports? A decade on it’s a Second Coming…

When I started my career in Information Technology or Data Processing as it was known in the 1980’s, the key performance metric for career progression was how much you could drink at lunch time and after work with the boss. It was the era of pub culture and if you didn’t drink you weren’t part of the gang. Most importantly if you were not seen to be with the right crowd you just weren’t visible and therefore remembered, with this having a direct correlation to one's progress up the corporate ladder. This was quite normal.

Studying high performing individuals has always fascinated me. I have often looked to the sporting world to understand the makeup of a Champion, especially the mindset that enables delivery excellence and success.

The very phrase human capital implies and screams financial value. My argument being that if we value people as much as we all say we do why doesn’t it find its way onto the balance sheet? (I’ll leave that thought to the Accountants out there). But what really is it? how do you identify it? and how do you measure it? The fundamental problem is that performance scoring an individual always involves a high degree of subjectivity.  This often leads to the well known phrase of “it’s not what you know, but who you know”.

With Civil Service reform back on HM Government agenda my interest has stirred once more. After all, are we not living in a world where data science rules? so surely we should be able to measure human performance consistently, fairly and accurately allowing for rational informed decision making.

This blog tells the story of an idea conceived over a decade ago that was ahead of its time with the lofty aim of introducing a consistent level playing field across the multitude of HM Government performance management systems, minimising subjectivity, removing subconscious bias whilst objectively demonstrating an individual's employee value to the organisation.

Back to the 1980’s – Fire Up the Quatro..

Such behaviours create and fuels subconscious bias, and this excludes factors such as race, religion and sexuality, which depending upon one's background and culture are always present to some degree. The workplace was very different back in the 1980’s. Watch “Ashes to Ashes” and you will get a realistic picture of what it was really like.

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We have all witnessed individuals who deliver very little value but demonstrate incredible dexterity in understanding politics and leveraging power accelerating their career up the corporate hierarchy. That in itself is a remarkable skill and I have to admit something I have grown to appreciate over time. Just how valuable it is to the organisation itself I still question though?  

Equally, how many times have we seen the individual who works all hours, achieves incredible feats of delivery, but is by-passed and over-looked for promotion?

It can be argued the smart ones gamify the corporate system, but for those that don’t want to play and who look to the performance management system to argue their case can only come to the conclusion that it is fundamentally flawed when it falls short. 

In the post Covid-19 era, where remote digital working has had to become more widely accepted the perceived disparity for those that are often out of sight and out of mind is only going to increase.  

Flaws of Performance Management Systems

The internet is awash with articles citing the flaws of performance management systems with the list below being by no means exhaustive:
  • Reviews are still seen as an annual or bi-annual event
  • Outcomes are heavily influenced by subjectivity and perception of an individual
  • Lack of consistency in approach throughout the organisation
  • Measures too often not objective and quantitative in their nature
  • Measures are not linked to the Organisations goals
  • Absence of quantifiable quantitative data to support objective decision making  
What are we trying to achieve through performance management? In its simplest form we are trying to identify, justify and reward those individuals who add value to an Organisation. Equally, we are also trying to identify and justify those individuals who are not contributing and where corrective action is required. However, as people are involved we immediately introduce by default various degrees of subjectivity and bias. Consequently we have a lack of consistency and the playing field becomes uneven.

But what if you could minimise or even eliminate bias? thereby providing a level playing field for all, creating transparency for the employees, and rich operational insight for the Organisation. Sounds like utopia? Possibly, but in an era where data drives everything we are only a stone’s throw away from actually achieving this.

In-fact, some of us were here over a decade ago...  

American Professional Sport and Data Science 

The underlying thinking for such a solution is not new, in-fact its origins can be found in American professional sport whose use of statistics and measures has been around for what seems the dawn of time. 

Over a decade ago I was introduced to a book called Competing on Analytics – The New Science of Winning” by Thomas H Davenport and Jeanne G Harris, published through Harvard School Press (2007). On first glance you might think this is a technical book, but buried on page 78 there are a couple of paragraphs on how Bill Belichick, Coach of the New England Patriots, outlined his approach to performance measurement and its influence on team recruitment policy. It also touches upon Michael Lewis book “Moneyball”, and how something similar is applied to Baseball. Whilst Moneyball, thanks to the film and Brad Pitt, is well known, Belichick’s approach is not so.

The New England Patriots were a failing American football team in the 90’s. They were in a very dark place when Belichick was named Head Coach in 2000. He had done his time, with 25 years in various coaching positions in the NFL, including 4 years as the Cleveland Browns as Head coach 1991-1995.

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Back in 2000, Belichick’s application of data science created not only a team, but a dynasty that turned a failed franchise into several winning teams that spanned multiple eras, winning six Superbowl’s out of nine appearances over a 20-year period! (I guess it also helped that he had Tom Brady as the Quarterback, but let’s not stray off-piste here)

Belichick’s view was the perfect team was one that could deliver high performance consistently week-in week-out. To achieve this, constant performance measurement of the individuals that comprised the team would be required, but it needed to be a combination of both quantitative (objective) and qualitative data (subjective). It was only when both these elements were combined a common scoring system was created that allowed objective ranking and insight.

Innovation through the measurement of human performance

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Belichick's insight as a Coach was that it wasn’t just how good an individual could throw, catch, block, or move; this was quantitative data that could easily be measured but of equal importance it was how an individual got on with their team-mates; how a player interacted socially; what they were prepared to do for the team; level of egotism; and their intelligence. This second dataset, or intangibles as Belichick refers to them, was devised by a number of coaches subjectively inputting their individual perspective on watching the interaction of an individual with others and attention to detail in terms of research of a players background. In doing so numerous opinions were collated and bias marginalised. No stone was left untouched. Ultimately a player gets one score that represents his value to the team. 

The Patriots armed with this new outlook began looking for new talent pools outside the annual college draft recruitment - the accepted route into the NFL. The Patriots would look at smaller less well known colleges; Freeagents - players who for various reasons were out of contract; had been over looked or considered to be past their sell-buy date; and finally the minor leagues like Canadian Football League (CFL), where teams might just possess an individual with the capabilities they were looking for. The added bonus being, that players identified from these new talent pools didn't cost as much as the primary college draft route. (that's the "Moneyball" dynamic).

Under Belichick the Patriots installed their "Draft Decision Support System" and applied it to everyone across every talent pool, through the draft and at the Patriots Summer Camp, where additional individuals are invited to participate to try and make the squad for the new season. Rigorous and constant application of the new system combining the new performance datasets determined who stayed and who was cut based upon their individual score and their value to the team.

Eureka! – The birth of EmpIndex 
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So why couldn’t we apply Belichick’s Draft Decision Support System and evolve it one stage further and create a performance index, just like the Stock Exchange FTSE? In doing so we could objectively measure an employee's value and link it directly to an Organisation’s objectives, comparing individuals uniformly across the organisation by role.

Consequently, you could minimise subjectivity by creating an index that comprised of both elements – quantitative and qualitative, objective and subjective data. If everyone is scored with the same criteria by job role, assuming this is a true reflection of the work they do, you create a natural index. Whilst you couldn't refresh this on a daily basis, depending upon the criteria, you could measure on a monthly or quarterly basis, which for this area is virtually real time.

Fundamental Concept - An Individual can Create Value, but can also Destroy Value

A key principle of design is that as much as an individual can add value to an Organisation, they can also be destroyers of value. Negativity, poor attitude, poor performance, creates a negative score. This is absolutely critical in determining the overall score of an individual.

Each factor, regardless whether it is measured by quantitive or qualitative data, has to have an underlying scoring system where it was possible to receive a negative score as an outcome. Technically, behind every factor was a different graph, that allowed a score to be generated between +100 and -100. 

When all the factors are combined and weighted the final score is produced.

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Subsequently, you could create not only a score for an individual, but for a team, a department, and ultimately for the Organisation as a whole. More importantly you could then track this.

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2009 - UK Public Sector - An Idea was way ahead of its time 

Back in 2009/10 a group of us looked to push the idea of EmpIndex inside HM Central Government and we met with numerous MP’s who were working with Frances Maud at the time around Civil Service reform.

This was an era just before Enterprise Cloud SaaS applications and even thinking like the 9 box-grid didn’t really exist. The most novel thinking was from the 1990's the 360-degree review, which at this point been around for years but was still not widely adopted.

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2009 - Market Testing – SHRM & CIPD Perspective

We presented at the CIPD (Chartered Institute Personnel Development) Conference in Manchester and also locally at several branch events. Despite the idea being both revolutionary and innovative, British Companies, the UK Public Sector and some CIPD members were extremely negative, always highlighting the potential flaws of such a system include, but not limited to:
  • Adoption, to make the index as accurate as possible, everyone needs to take part
  • Accessibility to various datasets; quality of data would influence the scoring
  • Would people accept the approach? or will it be seen as “I am just another number?”
  • How do you stop gamification of such a system?
The points raised were valid, and no-one said we had all the answers as we were pioneering and constantly finding our way.

Our best piece of negative feedback was from a Finance Director of a large Public Sector body who emailed saying, “We cannot measure our people like this, we would have them walking out”. It is at this point you know you have a really good disruptive idea, but the market, especially Public Sector wasn't ready for it.

However our biggest breakthrough and interest was from a couple of American multi-national companies and SHRM (Society for Human Resource Management), the American equivalent to the CIPD. The Americans culturally simply “just got it” and more importantly saw value in it. SHRM even asked us to participate in developing their standards, but due to our bandwidth we were constrained. A real opportunity lost that I have always personally regretted.  

2020 - Elevating Performance Management in Post Covid19 Environment 

Now a decade later innovation in performance management systems I would argue is needed more than ever. Not a day goes past where we discussing in the news corporate racism; BAME agenda and lack of opportunities for advancement; unconscious bias; pay gap agenda; whilst we are all having to accept, adopt and adapt to new ways of working enforced upon us by the pandemic. In doing so we need performance management systems that allow us to: 
  • performance manage a remote workforce fairly, determining an employee's value
  • demonstrate the removal of unconscious bias
  • be open and transparent about how we measure individuals
  • ascertain and connect employees true value to the Organisation
  • unlock employees “Value of Connection” to gain insight as to how things really work inside an organisation
Today in 2020 we are living in an environment where data is driving our everyday decision making. So why not use this for the good and level the playing field for all? Getting individual performance feedback closer to real-time and then leveraging this to keep checking the pulse of the Organisation can surely only be a positive.

A hard lesson in Entrepreneurship - How did it end?

At the time my other Company - Certus Solutions was just about to take off and I didn’t have the funds to push EmpIndex forward. It is a classic example of having a great idea but ahead of its time. Software development is a very capital intensive business. I made the call and wrote off my investment, and a great idea was put on the shelf for another day.

The lesson here is sometimes you can be just too far ahead of the curve. They say "the bankruptcy courts are full of good ideas". Market timing is everything, and always very difficult to call. But if you don’t test ideas out you never get there, hence why it is important to talk to as many people as possible, even your potential competition, to gauge your chances of success.

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An Open Invitation to Pioneer...

EmpIndex was ahead of its time and the market wasn’t ready for this type of solution. However both technology and the market has now moved on at dramatic pace. The need to address the inequalities that we all know that exist and raise corporate capability through diversity and inclusion but based upon performance and the value an individual brings surely must be the new order. We are constantly talking about these topics, but I see very few pragmatic solutions being offered.

Has the time finally now arrived? Is the market now ready for something revolutionary, innovative and disruptive as EmpIndex? Could it be deployed and work effectively inside an Organisation, especially one that works remotely? Is it time to brush off the old prototype from a decade ago? Would the UK Public Sector be ready for something like this now, especially with No10's increasing appetite for data science?

Just imagine if you could apply artificial intelligence and machine learning algorithms to the data, we would take innovation in this area to a whole new level. What insights and discoveries would we make? This technology wasn't accessible to ourselves in 2009.

Please let me know what you think as I am genuinely interested to hear and to talk to those who are interested as I have a mountain of research on this subject. The real question for me is am I going to let this stay on the shelf gathering dust? 

As for No10 you know where I am. 

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Wednesday, 22 July 2020

SaaS - The True Cost of the Race to the Bottom of the Rate Card

Recently a recurring theme appears to be emerging regarding Cloud Customers (regardless of platform selected) in not being able to realise the value promised from their Software as a Service (“SaaS”) ERP implementations. Whilst I might attentively raise an enquiring eyebrow, experience tells me that I probably already know the root cause of their problem – they bought an implementation on the cheap, struggled to embrace the change despite being told it was going to be transformational and they never had a plan beyond go-live.  So how did the Organisation get here? Well unfortunately it often, but not always, starts with the buying process.    

Immediately I now find myself in dangerous territory walking along the tightrope that bridges the Buyer-Supplier divide. But with all my musings hopefully they are educational as it gives the reader a real glimpse of what really happens and where these types of implementations can fail right from the very outset.  For some it’s going to be controversial, but I promise to save some of my more outrageous experiences for my book (and yes to those that follow me it is still coming!). Smile.

Seriously though, what I am not trying to do is level any criticism but rather educate through insight by providing a heavy dose of reality of what goes on when a procurement for a Systems Integrator commences and the implications of a price driven competition.

However, if price is always going to be the overriding factor in an Organisation’s purchasing 
decision making, then no matter what I say here is not going to make any difference. So, before you stop reading, remember in this game you always get what you pay for. 

The Concept of Value?

It’s a term banded around like sweets in a sweetshop. In-fact we all subconsciously use it in our day-to-day decision making. The dictionary definition of value is simply “the importance, worth, or usefulness of something”.

I am often asked as to how we valued Certus Solutions before we sold it. Now valuing a company as a mathematical exercise can be determined by a number of methods including Discounted Cash Flows; P/E Ratio’s; EBITDA; Revenue Multipliers; Book Value (Asset); and Liquidation Value.  Each will come up with a different number. All of this is working to quantify objectively something that can be pretty intangible, especially in Professional Service Companies whose only real asset is goodwill.  I can tell you it is the most subjective of all exercises and I have personally spent many hours trying to explain this to people often without success.

However, the one single factor that is the most important which is not found on the balance sheet, the P&L or in a valuation method is simply how much a willing Acquirer is prepared to pay? and how much is the Owner prepared to sell it for?

It’s the same for buying a SaaS ERP and selecting an implementation partner. What is the Buyer prepared to pay against what they value? and what can a Supplier provide at a profitable price point that realises that value for the Buyer?

Where both sides reach an accord is the sweet spot of any deal, as both recognise the value generated as being beneficial to one another. To do so means eliminating subjectivity and trying to objectively crystalize value as a commercial transaction ensuring expectations on both sides of the equation are met.

Buy-Side – The Competition

A professional Buyer quite rightly wants to know they are purchasing the right product or service at the right price and that its going to deliver the benefits that they have identified. Consequently, they will want to test the market against their requirements.

Best practice is always for Buyers to engage the market informally and early to gain understanding of the “players” out there. Consequently, the Buyer can shape the “ask” accordingly, and also sensible conversations lead to Suppliers becoming interested in the opportunity.

A competitive procurement process is full of ironies.  After a Supplier has attended a procurement briefing which are usually held as a showcase for the Buyer to tempt and explain to the market as to why they should be participating, the well-crafted Invitation To Tender (ITT) or Request For Proposal (RFP) follows.

This is a document that has usually taken many months of significant effort to create, with the Buyer explaining in great detail what they are wanting to achieve in terms of outcomes, and with realms of questions they require the Supplier to justify why it should be them.
But then, regardless of what has been said, the scoring and weighting criteria for price is stacked on the high side. In a single stoke of a pen, the Buyer has completely contradicted themselves.

The Supplier also knows the first thing a Buyer does on receipt of a response is to turn to the commercial section to see what it is going to cost? and subsequently skip over the 30+ pages of a Supplier’s equally time consuming well-crafted answers proving they have the capability for delivery and what additional value they can bring to the party.

The rule of thumb is if its 40% or more weighted on price, the procurement, regardless of its size, total value, and what the Buyer says is important, is immediately labelled by the Supplier as a “race to the bottom of the rate card” and the qualification dance begins. 
Price is always going to be a factor and rightly so. However, to achieve value for money, it should be a factor alongside a number of other factors that collectively are all positively correlated to the value generated required. 

In my time I have seen some of the most complicated mathematical statistical equations for scoring a procurement which for the majority of us (myself included) need an Advanced Mathematics degree from Oxford or Cambridge to understand. However, this all counts for absolutely nothing if the “Supplier Fit” - the culture, their beliefs and values are not aligned with the Buyers Organisation. Because, when things get tough, and they will as they always do in an ERP implementation, it is the behaviours of both sides that will get you through.
However, when the Buyer encourages the race to the bottom of the rate-card and gets two horses running they often leverage this by playing one off against the other driving the price lower in search of the better deal. At some point it becomes completely uneconomical for the Supplier to deliver the project. That sets both sides up for a future commercial conflict with the project never meeting the Buyer’s expectations in terms of benefits sort. 

Supply Side – The Qualification Dance

Every sales opportunity, big or small, always gets qualified. Competitions cost serious money and require significant effort to take part in. Nobody ever plays to lose, as you get nothing in this game for coming second. However, the Buyer sometimes is completely oblivious of the costs involved in playing the game, despite the usual legal wording in the document that the they will not be liable for any costs incurred from the Supplier taking part. 

What does qualification mean? Simply should the Supplier invest their time and money into even responding in the belief that they will be successful. If the Supplier believes that they cannot win or the procurement isn’t in the right shape; then it’s a no bid. In doing so the Supplier has just saved significant amounts of effort, cash and often goodwill amongst its staff for another day.

Selling on price is easy, it belongs to the “stack’em and pack’em” brigade. It’s a valid business model, and there are many Companies that work in the Systems Integration space that are extremely successful at doing this. So, if a procurement is weighted 40% or more on price, your definitely in the game if this is your business model.

Do I personally believe this is the right approach to maximise value from a SaaS implementation? Absolutely not! To do this properly you have to constantly generate value over the life of the contract. To achieve that you must have a long-term relationship with the Client and this requires constant two-way investment from both sides.

Selling on value is an art. It’s not easy. Your proposition has to be specifically crafted to hit all the Buyers values; and then some! To do that, you need to understand the Organisation and business your selling into, joining the dots as to how your proposition will enable them to overcome some of the market challenges they are facing. This takes research and serious amounts of effort on part of the Supplier before you go anywhere near a keyboard to write the proposal, often then weaving this into the specific questions the Buyer is asking.

So how does this play out? if the price weighting is 30% or less; and the procurement structured in such a way you are given the option to differentiate yourself from the competition, then it is worth looking at if you sell this way. The Buyer is saying “What can you bring to the party, because we are genuinely interested?” and indicating that price is not the only factor, and you have the opportunity to innovate, and therefore differentiate yourself.
The other key supply side qualification criteria is always around the competition and the relationships they have or you yourself have with the Client. What are they looking for? has the procurement been influenced or shaped by someone else in advance. I have talked about this before in more detail in my blog – If you are not working the inside channels of a client in advance I will absolutely guarantee that someone else already has or is. It creates subconscious influence and potential bias in people. That's why Suppliers do it.

Wider Market Impact – Price of Commoditisation

Anyone can sell on price alone and equally anyone can buy on price. That is not salesmanship or balancing the equation best practice procurement in a non-commoditised market. 
Dropping the price can be dangerous for a Company’s business operations. Deals become economically unviable and cannot be delivered. This has implications as it drains a company’s most critical asset – cash. Large Companies can ride a bad deal out, for SME’s it can be fatal. Buyers putting Suppliers out of business, regardless who signed the contract, never helps the Buyer in the long run. You can't recover costs from a Company that has gone out of business.
Even worse it can affect the wider market. A market driven purely by price, becomes commoditised. Two things then happen. Firstly, Suppliers stop competing, especially if known suppliers are constantly undercutting everyone else on price. Choice becomes limited, quality of service is impacted, Customer satisfaction and advocacy drops.

Secondly, with Suppliers unable to make a profit, and therefore not having the case to constantly invest in its delivery capability they start exiting the market. The market in-effect becomes constrained, as potential suppliers leave looking elsewhere for commercial profitable opportunities. 

Regardless of what Vendors sometimes say SaaS ERP systems don’t implement themselves. Cloud is transformational, it’s going to change how you operate. If you don’t possess the internal capability to manage such a transformation you are going to need external expertise. Remember, Cloud SaaS technology is not really a leading technology today, the technical risk is minimal, as thousands of successful implementations have been undertaken around the world. Projects fail not because of the technology; projects fail because the Client can’t manage programme complexity; the business change required isn’t delivered; or the Systems Integrator personnel don’t know the SaaS product.

True Cost of Price Driven Implementations

Price driven implementations are the equivalent of assembling a building and just switching the lights on. However, when you enter and look around nobody has fitted the building out, so its use is extremely limited. Characteristics of price driven SaaS implementations usually involve:
  • getting the Supplier’s “B” team, with the “A” team players seen only during the procurement process, therefore poor implementation advice results
  • getting the barest minimum, you have contracted for and no access to the real innovative functionality that exists. You didn't pay for value add, so don't expect it
  • having a stressed-out delivery team, that ends up taking time off as they become ill and cannot deliver against the original contract 
  • not realising the benefits over the life of the contract as your Organisation hasn’t accepted the change and adopted new ways of working
  • negativity across the business in what they are being given to use, often results in new Spanish-practice and lack of adoption
  • not in a position to take advantage of new innovation as and when it arrives as you don't have the foundations of the system in place
  • getting a poor reputation in the marketplace. Buying Organisations forget it’s not just the Suppliers that can suffer from reputational damage; it works the other way Suppliers all have unofficial lists of organisations they won’t do business with – so when your looking for help, if you are known to be a pain and "cheap", then suppliers will politely avoid you
Consequently, low price overall has a negative correlation linked to the value realised.

Don’t Just Switch the Lights On - Maximising the value from SaaS

SaaS applications provide you with truly a wonderful opportunity to modernise the back office in many ways. So how do you maximise the value from the implementation?
  • Accept the fact that implementations are only as good for the people who put them in, expertise costs money
  • Stay true to the “Adopt, not Adapt” approach to SaaS, adopting out of the box functionality and standardised processes whilst adapting the back-office business
  • Undertake a Cloud Readiness Assessment against the chosen SaaS platform up front; understand before you begin the functional fit, business process redesign and business change effort required – formulate your Future Operating Model based upon this; NOT the other way around; you will just incur cost, create rework, and confuse people with un-necessary change 
  • Accept the implementation of SaaS Cloud is only the beginning of the journey and not the end; therefore, you need a long term plan which will require on-going investment to benefit from continuous improvement by sweating the asset
  • Make the transformation stick. Business change activities need to be carried on post go-live; constant re-enforcement to ensure adoption rates remain high is often needed to drive the benefits through
  • Understand the SaaS vendors product roadmap; looking for the innovation coming through and how look continuously for opportunities to use new functionality as it becomes available
Buy Cheap you Buy Twice
An old adage, but true. You buy cheap you will ultimately end up buying twice. I have lost count of how many rescue ERP implementation projects I have undertook over my career. Always extremely stressful for everyone involved, very expensive and most of all so annoyingly easily avoided.  

For those recovery projects that do make it live, you still have an unhappy Customer as their expectations haven’t been met and they are still upset over the cost. Recovery projects at a minimum get you live and that requires you to revive the Client from their initial cardiac arrest. Even then the building fit out is still required and that requires more investment. 

In the early days of Cloud, every software vendor was sighting just how easy and quick it was to implement their solutions. The truth is that Cloud SaaS technology in a business context was by far too transformational. Consequently, many implementations could not be delivered for the price contracted for, and Suppliers (as I well know) are only going to invest in buying market share for so long. On the Buyer side frustration builds, and the only way to defuse this is through constant education, enhancement and enablement to drive value. 

The market moves in cycles, and we are now definitely seeing those Clients that have bought their implementations cheaply are not reaping the benefits that the Cloud SaaS applications can generate. It’s all about expectation setting from the outset and this requires realignment. 

Why is this happening now? primarily we are in the first major 3 or 5 year renewal cycle for those having bought previously and they are now questioning what they have done. SaaS provides innovation, the functionality is there, but you have to invest to release it. Continuous improvement is the order of the day, but if you are not prepared to do this, then don’t complain you cannot get the value from Cloud, because you absolutely can.

The very best commercial deals are always the ones where collaboration between Buyer and Supplier both parties create value for one another. Those that understand this are the real winners. For this to work properly both sides have to take time to really get to know one another; then work at having an effective working relationship (it doesn’t always come naturally); and most importantly are prepared to share the risk and the rewards of any engagement. 

Alternatively, if you side with the opposite logic regardless which side of the fence you are on, that the best deal is where you win and the other side doesn’t, then you will see an appropriate set of behaviours that are frankly counter intuitive to generating not only long term lasting value but you will be lucky to get anything substantive in the near term.

Time to turn the lights on? Anyone know where the light switch is?