Getting contracts right and balanced is vital in winning deals.

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I want to share with you a recent experience I had negotiating a contract. During this process it struck me that even though we know there are no fairy godmothers, we still believe they will take care of us.

As a budding recruit learning the commercial ropes, my boss had once warned me about taking that approach.

You can lose your shirt if you don’t get your pricing right. But you will lose your business if you compromise on your terms and conditions.

Don’t take shortcuts on conditions as there are no such things as fairy godmothers to bail you out.

Recently at work we concluded negotiations on a deal. From the get go we thought we had covered the sales cycle well, first qualifying our prospect to make sure our lead was a genuine with substance and had genuine intent. In the education and needs understanding stage we establish our credibility and could decide too if we were a good fit us to take on the work. Then as we looked at functional matches and implementation priorities along with their organizational change capability and resolve, that placed us well to understand all the risks. This process took some time as it moved to and fro on options discussions and as the prospect employed divide and retreat tactics and checked our competitive value.

But in the end with scope, resources and pricing all agreed , as the selected provider, the final step was to agree the terms and conditions to get their signature on a work order. The terms and conditions we included in our proposal had also been part of the practical discussion so we assumed our conditions and working assumptions would not present any issue.

But their legal people did a turn about rejecting anything that had even a hint of risk as they sought to remove clauses that protected us from events not of our making. In particular one clause that was red lined dealt with redress in the event of uncontrollable organization change in their business

As we struggled to find a compromise, suggestions were made to limit the clause to good faith wording and to deal only with specific risks. The watered down clause of course become unenforceable but the temptation to close the deal was by bow very high. This compromise however was still a red flag to me as I reflected on what my old boss would have said.

Blindly relying on fluffy terms to maintain commercial balance is just like lighting a long fuse and believing the bomb will never go off. Or when it does you will be long gone.

In our example we were concerned about:

  1. Many projects have bad experience when key people leave or get re-positioned out. Often too it can even be the sponsors themselves who are gone. In such cases, ongoing carriage of process and managing changes defaults to the service provider to re-sell and continue to implement without the original sponsor support. It also becomes a new ball game as well as you start again at the re-educate stage with a new incumbent and are forced to defend agreements made with a previous one.
  2. In cases where of a key person working with a service provider leaves they will invariably take with them knowledge and leave unfinished work This may revert back to the service provider to back fill and or/redo. Not having redress on this can have disastrous results not only for the service provider to unfairly bear the cost but also the weakened project may struggle and fail.
  3. When the company gets taken over or itself does a takeover of others, there is always a material impact. Any material change in ownership will mean inevitable organizational change which in turn will always have some impact on a current project scope.

When preparing contracts, experience teaches us that pricing is only one aspect. Working assumptions that make this up must also be included and debated well so they are clear.

Terms should never be compromised without also reconsidering the risk and the pricing again. The negotiating approach should not be to reduce mitigation and cover, but instead to sell this as a mechanism to see fairness is re-balanced in the spirit of the original negotiations so nether side in the future can take an advantage

As a service providers it is not only for the burden of added cost or the overall success and gets us paid that is at stake if we get sloppy on our terms and conditions. Doing that can also lose us our reputations that keep us in business.

Do you have similar experiences?

The Marketing message: So what’s in it for me?

Gideon Shalwick, is an experienced and widely known internet marketer and author, who recently shared a confronting lesson he had. This bears reposting here as it has something for everyone.

He says when you get to a certain level in your profession or calling, you become so “advanced” in your knowledge and experience that you often forget the basics of what it is that makes you truly successful.

After sending some marketing material to his newsletter subscriber list, feedback from a friend quite directly pointed out to him that his message lacked substance with “nothing in it me”.

From this sobering learning he decided to create a short video to share and discuss how to be more effective, where you actually touch peoples lives in a real way!

His reflections also beg of those who watch his video, to ask of themselves  “Do I make the same mistake and if so, what can I do to correct it?”

In his typically open and generous style, Gideon also gives excellent tips on how to use video to great effect.  Watch and enjoy!

 

About Gideon Shalwick

http://gideonshalwick.com/

A South African with Engineering and Master in Engineering Management degrees Gideon’s career began with success in project management and business development He soon realized that business was WAY more fun.

He emigrated to Australia and started what is now a highly successful online business. In a very short time after he started in 2006 his books on entrepreneurship, lead generation and blogging were being distributed and read all over the world. Publications, “The Roadmap To Become A Blogger,” has been downloaded over 26,000 times and a co-authored book has now been downloaded over 16,000 times. His primary focus is online video marketing and teaching people how to build profitable leads using simple tools like YouTube and blogs. 

CFO X factor as vendors drive for Internet Cloud Power.

Few things are as critical to CFO’s and finance professionals as our systems.  Core accounting and budgeting platforms to back office infrastructure and client relationship management systems are all moving online, into the "cloud", and an entirely new business model called “Software as a Service”. This represents the largest change in technology for the Finance profession since the internet began. (Sungard)

The responsibilities that come with this change are a paradigm shift as systems control moves more to the finance roles. Quite ready too are many of the new breed of finance executives who have emerged in the last decade. This has seen them develop from being passive Information Technology users, to being savvy technology thinkers and change agent leaders, who can relate Information management to the business process and understand how to exploit it to get business value.

As cloud benefits mature and become more and more obvious, the questions being asked now are not what is it but:

  • How can finance people start understanding the dynamics and plan change?  
  • How can they take advantage of Software as a Service to change the business model  and / or generate new revenue?
  • Why are Finance Executives now in high demand to lead this change and why should they embrace it?
    Some of the answers to these questions lie in understanding the provider models and how they will shake out.  A few weeks ago in this series I wrote about an internet cloud based shift in Information Technology with the focus on shrinking corporate IT management  From the market perspective, an excellent  “Greg Papadopoulos” post sent to me since, talks about controlling dynamics of the cloud which make this subject even more compelling when we consider who will be controlling our daily lives in the future.

It was written last year when he was at SUN, a platform and infrastructure services giant who were then being taken over by another giant database software services company, namely ORACLE. In his research he also provides good explanations of how the Internet Cloud is  emerging with distinctions on various layers being infrastructure, platform and software.

Urs Hoelzle Google Search TrendsIn summary, the Intercloud as Papadopoulos calls it has the words  “as a Service” as the key. With emphasis on the big “S” and not on the web infrastructure it is delivered across. Then, by adding prefixes such as “P” for platform, “S” for software “I” for infrastructure it starts to make sense. That is to say cloud services comprise more than one thing. Thus the abstraction layer cake of SaaS on PaaS on IaaS).

Make no mistake, he says, I have no doubt that cloud (nee network, grid) computing will become the organizing principle for public and private infrastructure. The production question is what the balance will be.  Which cloud approach will ultimately win?  Will it be big public utility-like things, or more purpose-built private enterprise ones?

The answer: yes. There will be no more of a consolidation to a single cloud than there is to a single network

And, yes, I know I’ve said that the there will be only about five gigantic public clouds I still think that is correct, but also as suggested by that post, it will look a lot like the energy business, with dozens, or hundreds, of national and regional companies.

Papadopoulos concluded on behalf of SUN last year,  “We should expect and work towards nothing less in cloud computing.”

“Platforms” to run the “Infrastructure” to run “Software” applications, all as a service are now being built into a totally services based managed web environment. This in turn is now seeing multiple third party service providers solutions being seamlessly delivered strategically and at much lower overall costs. Understanding the mix of how these all work and where the cost and value can be exploited is where the CFO needs to be getting involved.

For the Finance and other Business Executives and key operational end users, it is more critical  to understand what this move to market driven service models cover and how to exploit them. With zero latency now part of our business time to decision mindset, it is now much more than having more efficient end to end components that traditionally could only exist on a grid based system.

What some people don’t see as they struggle with the confusion of terms, is  what is actually driving all this. The X Factor here is the race to control of the cloud by the large vendors with cost benefit leadership being the uppermost prize. The value of this to the eventual winners will be infinite. Like energy companies who have controlled oil supply for so long, the stakes on information management control are equally huge. To get there and get a consumption based model established early is vital for the big guys.Equally so mid range players and well placed early adopter firms are now moving in to get a foothold too. This is the classic model that has made so many in past rich as they cashed in on exit strategies as acquisitions and consolidations come on down the track.

Even just two years ago it was all seemed so visionary,  but now cloud based solutions are a reality as they are fast replacing in-house managed network grids. The intense IT and business integration management that goes with this is destined to disappear too.  And as costs tumble and the value of supply and demand take on new meanings, Information Technology as we know it is being redefined  with developers also getting new life and opportunities.

Evidence of impetus that is building in the finance professionals community is also showing up in regularly surveys of CFO forums. One this week forums asked its members to consider how maturing cloud services can now provide options in strategic thinking and operational processes. In this there a list of vendors already offering these services including. Adaptive Planning, Amazon, Citrix, Google, Host Analytics, HP, Intacct, IBM, Microsoft, NetSuite.

The survey also asked questions about the lower-cost alternatives to “on-premise” systems such as:

  • accounting / ERP
  • applications to Consolidate accounting
  • planning/CRM across borders, currencies, and offer improved collaboration,
  • Reduce company’s IT CAPEX and operating expenses
  • Provide scalability without infrastructure build-up
  • Reduce company’s operating risk
  • Reduce  company’s downtime
  • facilitate compliance with  company’s internal policies or external regulation

Microsoft, Google and Amazon are perhaps the most well know household names with Salesforce.com perhaps one of the most well know long time providers with  its CRM services extensively used for nearly a decade.

This week INFOR another giant of the mid ranged accounting systems (ERP) and performance management (PM) software systems. announced plans to run its product as a service on Microsoft’s Azure cloud stack. This adds further momentum to the shift away from licensing on-premises ERP vendor software to a service based model.

So the bottom line for the finance and business strategists is to understand where the investment by vendors is heading and what changes are going on in the development world as the legacy systems become less important to them to support.

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Unfortunately when we talk about Information Technology the language disintegrates quickly into acronym based tech talk .The issue then is we have trouble understanding it all. But for the technically savvy take a look at some rated posts here.

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Thailand in Transition: Impacts and what it means to others!!

thailandWith the recent political unrest in Thailand the strategic importance of this country in South East Asia and its place as a stable economic base is becoming more understood.

As this remarkable economy rebounds, there remains no doubt that indelible “power of the poor people” can no longer be ignored.

Moving around Bangkok you could be forgiven for thinking that the calamitous May 2010, period never occurred .  Remarkably too, if you can believe the statistics unemployment stands at less than 2% and is one of the lowest in the world.

Thailand, like the elsewhere has an underclass”. But compared to 12% in the U.S., 14% in Britain, 36% in Bangladesh. statistics,”officially” Thailand has an estimated 10% of population below defined poverty line levels.

Traffic jams and hubbub continue as people go about daily lives. Thai Stock markets also show undisputable positive growth and the semi-untied currency is strong and remains stable. Economic indicators for the past quarter shows growth of around 4% with predicted levels as high as 8% by the end of this year as demand for Thai products continues in spite of the local and global issues. As testament to resilience The Thai consumers’ confidence index in May rose sharply immediately after the political unrest ended. Domestic political stability and the global economy influences however still remain risks.

One has to wonder why Thailand has continued to enjoy fiscal growth and financial stability. This too is despite the current budget being fifth straight year of deficit spending, The answer perhaps lies in its world position as a consistent net exporter for decades which has built up foreign reserves, of $US138 billion, (THB 4,478 billion) and is 10th highest in the world. By comparison Britain has $US56 billion and Australia $US45 billion.

On the issue of poverty, retired mainstream Asian affairs journalist Robert Woodrow recently gave some insights. In his researched paper he entitled The Down-Trodden Rural Poor of Thailand – It’s not quite what you think, it commences with a bold statement that says the Thai poor are the richest poor people in the Third World.

He warns too that even with statistics being notoriously unreliable, wealth distribution in Thailand as reported no more extreme than in most industrialized countries.

The poorest 10% of the people of Thailand own 2.6% of the nation’s wealth. The richest 10% own 33.7%.Comparable figures for the U.S., are 2% and 30%, in the U.K. 2.1% and 28.5%. These statistics may not be wholly reliable, but distribution of wealth is unquestionably much more equitable than in China, India, Brazil or South Africa

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Woodrow goes on to say that Europe and North American comparisons of poor are not meaningful. Thai poor, typically the rural people, tend to live on family land rent-free, pays nothing to moderate the climate, produce their own vegetables, chickens, eggs and pork, and ride their own motor-cycle to their jobs. American lifestyle seen on TV, it’s so far beyond the range of their experience, so they don’t feel deprived.

He reports too that every village in Thailand is on the electricity grid and almost every village family has a refrigerator, electric rice-cooker, TV, radio and oscillating fans. Almost all rural households have a motorcycle, and in every villageclip_image003e many families own cars and pickup trucks.

The wealthy absentee landlord is almost unknown with farming families tending a small plot of land they own outright and mortgage-free  This is due to a paternalistic law preventing unscrupulous practices of the past,  forbidding land being put up as security with money-lenders. People however can borrow on anticipated small cash crop harvests which they sell a  through a co-operative.

Main roads in Thailand are well paved and equally or close to first-world standards. And most secondary roads are surfaced, as are many tracks that lead into remote villages. Last month Thailand government announced it would borrow a further THB 270 Billion from local and the world banks to revitalize its economy. At the same time it announced the plans for THB 70 billion of this to be committed immediately from a 15 year borrowing tranche to fund Thai roads being upgraded.

This will bring the national debt to around 40% of GDP.  Tax collections, of around 15% of gross domestic product, are relatively low compared to other countries, so it does leave room for improvement to repay this. In the future that will of course also level the playing fields that presently gives Thailand investors advantage while it develops more .

But it is not only foreign investors who are benefiting from a strong Thai economy. The surrounding countries Like Myanmar Laos and Cambodia all rely heavily on Thailand to be buoyant for work and as buyers of their cheaper production. Trading partners like Australia, New Zealand and others in the APAC regions, see a strong Thai economy with it 65 million people and political stability as very important.  Other factors, such as the US determination to maintain its presence and influence in Asia, relies heavily on having strong economic and political ties with Thailand And balancing that of course Japan and now China too as with many in Europe have similar reasons to keep up their long-standing unbroken ties.So as to why things continue to rebound seems to be not only due to the fact that Thailand is still developing. It is strategically important to others.

But as the country continues its  upward economics, primarily based on its rich resources and a cheap labor force, it will continue to bring with it conflicts of power. The rebellious protests and riots in Bangkok in May 2010 seriously placed the economy and social fabric in jeopardy for nearly two months and will likely fester again if there is no acceptable change. This is a concern to many watching, as this difficult task must bring with it the much-needed harmony and reconciliation of vested interest  political agendas as social demands now accelerate with the relative prosperity.

Divisions are still clear as opposition voices claim the so-called road maps do not go far enough. Academics and civic leaders have questioned the absence of concrete plans beneath the political rhetoric. In the meantime Thai justice is still making headlines as it goes after those  responsible for the killings during the protests. This has been vigorously pursuing more arrests of perpetrators who lead the unrest. This includes ex-Prime Minister Thaksin, in exile, who will likely face terrorism charges if he sets foot in the country again.

But even in the unlikely event of present leaders disabling their political opposition who leveraged poor people to want reform, there remains little doubt that the indelible “power of the emerging poor ” can no longer be ignored with social reform now in transition.

In the aftermath of the unrest the powerful people in the political oppositions at the next elections are hell-bent to take back control of the countries riches . But whoever leads, if they cannot deliver the social change and restore harmony, it will be very hard to avoid more unrest. The longer term impact is not only in Thailand, but the region and many in global economies.

Are we seeing the demise of IT as we know it?

Here is something to ponder. The Corporate Executive Board Company, says five years ago, less than 25% of business leaders rated their IT function’s effective to deliver the capabilities they needed. They go on to say in 2010 the number has not changed.

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IT functions have strived tirelessly to understand demand, set priorities, deliver effectively, and capture value, yet the results still disappoint. Business and IT leaders alike feel they should be getting more—more efficiency, more innovation, and more value—from technology.

In their recently published study of the IT role its findings cover  5 levels of shift.

1. Shift 1: Information Over Process

2. Shift 2: IT Embedded in Business Services

3. Shift 3: Externalized Service Delivery

4. Shift 4: Greater Business Partner Responsibility

5. Shift 5: Diminished Standalone IT Role

At a practical level, in my work in business intelligence and information, I find so many business enabling discussions these days hinge on good information. This invariably leads to a discussion on the capability or lack thereof of IT, as the traditional owners, to deliver it. 

Being in the business end of business intelligence, I also observe the shift in the tasks to set up and coordinate information. As an activity that is now largely falling to the end user business functions like finance, marketing and operations with software vendors and specialist implementers working with them to make it all happen.

Like process applications that have long since been commoditized with highly advanced process packages, management information is now being delivered the same way. In large generalized database applications with configurable end users web tools for both administration and end user use now to deliver the information. There in is the issue for IT as they have become just environment managers with limited skill to be involved in the business strategically.

In many organizations I see significant investments that have occurred on complex systems, are, aside from being in use in the core process, scarcely understood technically by IT. The fact that IT defers the information based deployment task to market system vendors means they also devolve a once hallowed territory of process change management with it. So the argued best placed leaders on joining all the dots of the business processes, being IT, is now scarcely even aware.  

Among all the talk of engagement, alignment, and “being part of the business,” one assumption is never challenged—that for information technology to grow in strategic importance, so must the IT function.

But what if this is not the case?

What if a dedicated, standalone IT function is no longer the best option and the function’s resources and responsibilities were better located elsewhere?

What has occurred is vendors have become de-facto managers of change and are more often than the resident experts in inner workings of their client’s organizations. As cost pressures increase they have also becoming less tolerant and less willing to withstand the continuing conservative commodity based thinking of now quite limited in-house IT functions who try to hold onto power with things like the control of security. For this they are still needed to manage things networking and authentication although even that is changing. There is so much more to IT of course including redundancy standards and communications but the relentless shift continues to vendor services for IT and to cloud based computing for delivery of infrastructure management. With this being cut away from IT it is fast moving the direct control of the business functions who will naturally rely on end to end serviced IT models more and more.

Typically now applications all have their own infrastructures (servers etc.) with communication and hardware to fit the internet generally. And With major vendors are now spending huge sums investing in cloud infrastructure change is now inevitable and one-way from in-house IT. This totally new world of computing in the next few years will also see business knowledge based IT skills move to the  business to work in service based mode. As is the case with most small to medium sized business now who use low cost and even free service based models the big end of town businesses will also be fully outsourced to the service providers as a demand based service.

As to the timing and transition, the huge cloud based investment vendors like Microsoft and others speaks volumes. In the last three years the massive deployment of resources now sees Microsoft, for example, emerging as a high end hosting company. Of the 40,000 or so Microsoft based developers around the world it is estimated that 90% are currently focused on cloud based applications. This rapid move of the Microsoft business too, from traditional mass markets of desktop and database services to an infrastructure provider, will be seen very soon at all virtual levels

“The IT function of 2015 will bear little resemblance to its current state.  Many activities will devolve to business units, be consolidated with other central functions such as HR and Finance, or be externally sourced.  Fewer than 25% of employees currently within IT will remain, while CIOs face the choice of expanding to lead a business shared service group, or seeing their position shrink to managing technology delivery . . . This study argues that the changes will be rapid, permanent, and radical.  We have advocated for a decade that IT leaders become demand shapers, not order takers.  Similarly, we now recommend that IT leaders devote the time, energy, and resources to actively shape the coming transition.”

The quotes are taken from the paper that you can download here, entitled The Future of Corporate IT . Authors are The Corporate Executive Board, a consulting firm. This provides research and analysis to business executives and professionals around the world. In addition on my recommended reading list is a post by   Irving Wladawsky-Berger called IT in the Age of the Cloud In this he makes balanced comment of these issues.

 

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Parking Inspector Goes Global

imageThis week in Melbourne, I had a great lunch with my son. He talked abut his city based vocation as a building construction manager It is not without hazard when it comes to parking he told me. Later he sent me a very funny letter written to the Melbourne City Council about a parking issue written by one of his aggrieved mates.

I send it to my very good friend, Lawrence Berezin for an opinion, being he is Lawyer in New York. He in turn sought  wider views in his regular web publication “New York Parking Ticket”. In this he very kindly added some great publicity about our National Song Waltzing Matilda. Plus he got some great comments from his readers including some nice ones about us Aussies. Here is his post that included my son’s message. He headed it The-Wacky-World-of-Parking-Tickets

In this fun site Larry takes what to most is an emotive subject and makes it not only advisory and educational but practical too. Although about New York City Parking,  it has huge appeal with everyone who parks their car in any city anywhere in the world.  Go and make yourself known to Larry (as he prefers to be called by his mates) and let him know what you think about the things he writes. He always replies so you wont regret it.