Conference 7.286::digital

    In the UK, we have had to charge the maximum amount off time to
    customers for several years now.  It is implemented with the SAMS
    program, which was written as a time recording system, but is nearly
    used for charging - but not quite.
    
    We have long had to suffer the 'mythical 180 days' of chargeable time. 
    Of course, being a numerical metric, and a clear numberical goal, it
    has been open to abuse, 'interpretation', and the cause of much
    undesirable behaviour.
    
    Initially, 180 days was a goal, nice to have.  It then became strongly
    encouraged.  Now it is on our bonus goals.
    
    There is a LOT of debate about its use, meaningfulness and
    achievability.  There are some 'creative' ways of accumulating SAMS
    time.  Some of these ways actually take less time to follow through
    than the time they accumulate.
    
    Some of the more productive ones are that people delivering training
    that they think is a good idea (usually non-technical rah-rah seminars)
    can supply a code so that the time does not appear to be unproductive.
    
    If this in new in France, welcome to the pit!
    
    As usual, there is the Digital chasm between idea (good, really) and
    implementation (words fail me).
    
    I am sure others will offer supporting or contradictory messages.
    
    Martin

    I certainly agree that SAMS is a complete farce. It's main purpose
    seems to be diguising idle time with fancy and/or ficticious workcodes.
    I've heard that it's due to be replaced.
    
    DC? DC profitable? That is, IMHO, some way off, especially in view of
    the rates charged by competing service companies and agencies. I
    suspect that Digital will get shot of DC sooner or later.
    
    Edward.

    I presume you're in California. Under that presumption I'm surprised
    that the questions are being asked. In the 12 years I've been a Digital
    consultant (or specialist) in the Field I've always had to maximize my
    billable time to customers. For the last several years I've been billing
    customers 40 hours/week. Perhaps your questions are more related to the
    "internal charging" you mentioned?
    
    I think if we're truly going to compete against Arthur Anderson and EDS
    that the only way we'll succeed is to cut the non-DC overhead out of
    our pricing structure. My customers have never complained about the
    service they get from us, but they *always* complain about how high our
    prices are. That being the case, they only retain us for the minimum
    amount of time possible, knowing full well that as soon as they believe
    they can live without us they'll drop us for someone cheaper (including
    their own people).
    
    Since we're perceived as a newcomer to this area we'll have to price
    ourselves below the other biggies until we have the same name
    recognition/reputation. I don't see any way to do this except for
    removing the corporate overhead costs.
    
    	BD�

    
    Its rather puzzling why the attitude of 'get rid of DC' keeps
    surfacing.
    
    What overhead does this buisness really 'HAVE TO' carry?
    
    Training should be the biggest expense!  Latest equipment?  SINCE WHEN? 
    The problem is not the buisness, its the absurd overhead its been saddled
    with.  This is and should be one of the easiest and lowest cost
    buisnesses to manage and maintain.  Why would you dump it?  Because you
    can't manage it?  If you can't manage this...

    re: .4
    
    I agree. Also, I thought that we were very profitable when compared
    with other CBU's. Ah well, the chargability factor is the one I'm
    worried about. It's the little things like:
    
    o	Sales no longer responsible for selling DC services
    
    o	Rumors of a new pay structure based of a percentage of your annual
    	salary with bonuses for bringing in new business.
    
    o	Since we've gone geographic, but the business has been broken down
    	into different markets by Consulting Service Providers (CSPs), how
    	will we be able to track revenue other than by the way we currently
    	do (geographic).
    
    o	Will the new, looks like Andersen, feels like Andersen, smells
    	like Andersen, but definitely *isn't* Andersen structure
    	really work?
    
    --- Gavin

    I too do not understand where all the overhead is.
    
    Here are some very rough figures - one significant figure only.  Please
    challenge my assumptions and errors, but please don't argue about
    figures unless they are at least a factor of two out.
    
    (All figures in Sterling - I can't get the poound sign out!)
    
    I charge out at about 700/day to external customers, or 255 to internal
    customers.
    
    We are told that DC in the UK has about 20% gross margin (revenue minus
    cost to supply). So of the 255, it costs us 210/day.
    
    I am expected to be charged out for 180 days/year.
    
    WHY does it cost 210 a day?  Is this my salary? NO. Is this the office
    space I consume? NO. Is it my managers salary plus my managers managers
    salary plus plus plus plus?  Probably.  It certainly does not cover
    training (remember that?).
    
    Heres a deal -
    
    Sack us all.
    
    Contract us in again at a reasonable rate (500/day).  Sell us to
    customer - Digital can take 10% off the top.  I will pay my own NI,
    tax, pension.  I will even pay real money to attend Digital training
    courses.
    
    We are continually asked if we have the right skills.  When my weekly
    income depends on me having the right skills, I will pay attention to
    that - no-one else need be concerned.
    
    There may be a few minor details to sort out.  But we can reduce the DC
    overheads to nearly zero.  No fixed costs = no fixed overheads.  In
    busy times, contract people in.  In slack times, don't.  If I choose to
    contract on a similar basis to HP, IBM or other companies, what's the
    problem?  [Remember Open Systems?]
    
    This is a suggestion for a lightweight DC model for Digital with less
    overheads, more profit and a reasonable wage for the deliverers.
    
    What do you think?

    Along the same note (I've asked my boss, I assume he is gathering
    info), I'd like to know the cost breakdown structure of DC.  For
    example, if I charge $120 per hour as a Principle Engineer, collect $20
    in salary, plus 10 in benefits, where does the other 90 go?
    
    chg

    
    
    re - NEWVAX::MMURRAY
    
    << Its rather puzzling why the attitude of 'get rid of DC' keeps
    << surfacing.
    
     Easy, if you don't know what is is, and what it does you can kill it
    without getting hurt. Sales is being removed from the picture and since
    we do not have our own sales force where are we to be sold from?
    
    << multiple "BUISNESS" in your note.
    
    And you call yourself a consultant?
    
    I have a "Looking forward" document that I can let you have, perhaps
    you can review it and present a clear vision in the next unit meeting.
    
    We do our own selling now, it is called listening to the customer. Of
    course it helps that we *still* have a foothold in this account. What
    about all those accounts with no sales people or consultants on site.
    
    -Mike Z.
    

    Benefits expense is at 29% of labor expense. Hence for $20/hr would be
    $5.80 for benefits. 

Re: .7, don't hold your breath.
About 3 years ago I started asking for the same thing - a detailed breakdown
of where the money goes.  I got all the local costs accounted for, but
there was a figure which worked out to 30-50% of my rate that was labeled
as "overhead".  This is AFTER accounting for facilities, salary, admin,
management at the local level!

Its moot for me now as my former manager and finance person (and their
management, I believe) are no longer with the company, and I've moved into
engineering.

The point is that what SHOULD be a simple request does not seem to be 
easily answered.  I think that THAT is the biggest problem.  We CAN NOT ACCOUNT
for our costs.  How can ANYONE run a business that way?

.10>About 3 years ago I started asking for the same thing - a detailed
.10>breakdown of where the money goes.  I got all the local costs accounted
.10>for, but there was a figure which worked out to 30-50% of my rate that
.10>was labeled as "overhead".  This is AFTER accounting for facilities,
.10>salary, admin, management at the local level!

This is the part that nobody wants to address... they look down at the
floor or away when you ask about it. I once suggested to a manager that
everyone above the local manager could disappear and DC could still bring
in the money and show a handsome profit. The manager agreed but asked
"But where would you get your management support?"

Management support?!? Is that a euphemisim for "middle management" and the
internal busywork that they do?

Lee

        Last few

    Well, I'll admit that I am somewhat concerned by management's desire to
    make us accountable then slap rules on us.  I asked my manager point
    blank today what consumed the overhead.  He said it was very difficult
    to determine, but he did point out a few 'items':

    Engineering: Okay, I said, we do need products.
    Support: grimace, yes that 18005257104 is rather helpful at times

    He mentioned a few others, things I hadn't thought about.  He described
    them as taxes.  I'd still like to see a breakdown, but it's probably
    more classified than the stealth bomber.

    chg

    
     Do NOT even DARE to count facilities in this string. There is a work
    from H.O.M.E program, and most people I know share office space or sit
    at customer sites all day. But I BET we still get charged for double
    occupancy.
    
     How can management live with this no control over their organizations
    business?
    
    -Mike Z.

    
    Sorry Z,
    
    	I don't buy that bunk about needing more Sales Reps.  Digital has
    BEEN THERE, DONE THAT!  Several years ago.  The issue is far more
    complex than a simple 'add more sales reps'.  Seems customers are more
    interested in issues around PRODUCT and SERVICE at COMPETITIVE PRICES.
    What Sales requires are the above with the administrative tools to push
    and track them.  But, even beyond that, the buisness (deliberately
    spelled wrong because this is a notes conference, not a formal report)
    model has changed.  Look at what our competition is doing and figure it
    out.
    
    Case in point, you sit down on your customer site and have watched
    NOVELL eat your lunch!  WHY haven't you been able to stop this
    threat to digital's OA base?  You were there first.  Your there eight
    hours a day, five days a week.  If your being there all day can't stop
    this drain, how is a sale's rep going too?  There must be more to the
    problem?
    
    So, who sells?  Fact is sales still is, and plans on selling
    consulting, at least as of today.  I perceive the issue on our picking
    up selling is the inevitable loss of sales personnel, based on our high
    cost of sales, and the complexity of selling consulting in the first
    place.  How many blood baths has DC taken on fixed-price projects?
    To be quite honest, were really and have always been the best ones to
    sell it anyway, IMHO.  So how do we bring in the buisness (speeeelled
    wrong again just for U)?  How does every other consulting organization do
    it?  Geezz, we got a big head start with name recognition, and the
    second largest installed base.  And for the first time I know of we can
    consult on any DAM thing we chose.  Wadda ya want?
    
    Lastly, as far as 'Looking Forward' is concerned, whats your point?
    
    
    Mike M.

    re:  .14
    
    I agree with most of your statements.
    
    Concerning whether Sales is still planning to sell consulting next year
    or not, I don't know what the plan is as of today.  As of last month, a
    Sales VP told us that we could "sell" it and maybe get a finder's fee
    but it wouldn't count toward your budget.  In other words, if you help
    sell a complex project you may earn a few hundred dollars extra but not
    not make your number and lose your job.  He indicated this was because
    DC didn't want to pay for any Sales resources, so Sales won't be doing
    more than "throwing it over the wall" if we turn something up.
    
    And for those of you who think that's all Sales is good for anyway,
    good luck.   :-)
    
    Most of us have mixed feelings about not selling DC.  It will simplify
    our job in many ways, and focus us on the traditional business.  That's
    what management says it wants us to do.
    
    The bottom line is that we hurt each other.  DC tries to apply the same
    model, the same thinking, the same pricing, the same procedures to
    every need (both large and small).  That hurts the traditional business
    because we often need just a "little bit" of consulting to tie together
    the pieces and wrap them into the customer's environment.  We come off
    as slow and ponderous.
    
    And DC is hurt because they are perceived as a "closed" operation.  DC
    needs to be thought of as vendor-neutral, and it can't be.  So being
    associated with the traditional business keeps them from being what
    they say they want to be.
    
    I suggest that DC spin off independently.  The traditional business
    should keep a fraction of the resources who can do the "small s small
    i" si integration work that is needed to help sell hardware and
    software.  DC can go off and compete with EDS and AA for the big
    projects.  We'll both be happier.  The stockholder who receives a new
    certificate for an independent DC will be able to track their success
    based on them having their own identity, their own overhead cost
    structure, and their own strenghts and weaknesses.
    
    Sometimes when a couple just doesn't share the same interests, a friendly
    divorce is the best answer.      
    
                    

    I work in OMS, a part of DC, and put together a 5 year deal for a
    customer, I have to be very aware of the 'overheads' and boy do they
    distort..
    
    In the DC line of business I was hit by 10% selling costs, on 5M that
    equates to a lot of sales effort for a deal that is struck only once,
    even worse was the Admin 'tax' this amounted to approx 12%, (and my
    model included my own admin staff as I was so appalled at the service I
    get)
    
    There was a lot more which totalled to approx 30% of the deal, the
    competition runs with overheads of 12%, how can I compete...? Yes I
    bend the rules, I put some of the predicted headcound into 3rd party
    services, and suddenly lose half a million 'overhead'
    
    I reason tho' that OMS does not fit the DC model which needs high
    selling/admin costs for frequent consultant engagements in any year
    versus a deal that runs for 5 years.
    
    One thing I have learnt is that you can argue your case and if the
    finance guys understand your business then you can get to a level of
    sanity, I could have sold more instead of arguing about trvia tho'
    
    If anyone is interested in a 60 page 2.6MB Excel spreadsheet that has
    all the allocation breakdowns for the UK businesses then please don't
    call me... I am too busy trying to justify my prices to my customer!
    
    Peter Brand                                                         

    To summarize, DC will produce 70% billable utilization, at current
    rates, with no sales force.  Doesn't sound like a winner.
    
    The plan is for DC to do its own selling, which can be done, but not
    overnight.  One competitive advantage, which AA would kill for, is our
    sales force and the leads generated.  Looking forward says we'll get
    there, with CSPs and others bringing in the business.  Problem is, DC
    is not there - people haven't done this before, and are going to take
    time to get there.
    
    
    Second issue is the rates.  To sell at our current rates means 20% FCM
    at current overhead.  The entire issue is that our profitability models
    allocate costs that are related to products, to DC.  A pure consulting
    organization doesn't need product, doesn't need warehouses,
    engineering, field service, logistics, doesn't need much accounting,
    etc.  We're paying for all of that in this overhead allocation. 
    Therefore, our rates are uncompetitive.  (We also have very experienced
    and good people, who cost more.  AA has a mix of experienced people and
    college grads.)
    
    As for billable utilization, we've lived with it a long time.  The
    answer is travel.  If there's no business here, you have to go there. 
    An organization can't afford people on the bench, so they have to find
    billable work in another city or state or country, if there's no work
    at home.
    
    That's how you do it - carve the non-consulting out of the profit model
    and cut our rates, move managers into a business development role
    quickly, and measure consultants on billable utilization.
    
    - Don

    Any business model based on billable utilization is fundamentally
    flawed.  Profitability -- not billable utilization -- is what is
    important.  
    
    Two weeks ago, I delivered one day of consulting for $8,000 (plus
    travel and living expenses). I billed at an effective rate of
    $1000/hour, but my utilization is terrible because I only had one day
    of billable activity.
    
    Set a revenue goal for each consultant -- not a utilization goal, or
    I'll be selling my time at $20 an hour to meet the billable utilization
    metric.

   Re: Note 3081.18 by SAHQ::LUBER "I have a Bobby Cox dart board"
   

�    Set a revenue goal for each consultant -- not a utilization goal, or
�    I'll be selling my time at $20 an hour to meet the billable utilization
�    metric.

   Billable utilization happened because DC could not do the above. 
   Digital consultants and specialists used to have $ on their goal
   sheets.  However, these people have no control over their lives. 
   Example that happened with me around 1990.
   
   My boss managed to get me to agree to about $210K of revenue for the
   coming year.  I didn't balk because I was slated to go into a
   residency (1800 hours at @ $120/hr should pose no problem).  Guess
   what.  Because I had no control over what the customer gets billed
   (only the hours I put in), I left myself wide open.  
   
   My boss and sales get blindsided by the customer and I get sold at
   $95/hr instead of $120/hr.  Makes it kind of hard to do vacations,
   holidays, a couple of sick days and two weeks of mandatory training
   (HA!).  This means I have to average 51 billable hours at the
   customer site (assuming 43 weeks of onsite time) for a total of 2210
   hours.  Of course, the customer has only budgeted 1800 hours (plus
   some fudge factor) to the contract.  The customer said "No overtime." 
   My boss said "Do the overtime and we will bill them anyway."
   
   A lot of people were in the same boat I was in.  We only control how
   many hours we put in.  We grunts do not control what Digital charges
   the customer.  So, a lot of us put up a big stink.  Only hold us
   accountable for the variable we control.

    That's not the model I operate under.  I propose, close, and deliver
    what I sell.  

        My unit had our meeting to discuss these very issues: cost control,
    billing rate, etc.  Basically, *every* question with real teeth was
    answered with 'it has not been finalized', so I hope somebody is
    reading this string.

    Charlie - very hopeful that pay for performance will fall out of this.

    p.s. - Anyone hear any rumors about profit sharing in DC?

    re .21
    
    At Andersen, the partners do not get paid a salary. Rather, at the end
    of the year, the profit gets counted, and divided amongst the partners
    in proportion to the amount of 'equity' (in fact, long term loan) they
    have in the firm. [In fact, they may get a small number of
    distributions per year - even partners have to budget !]
    
    So, for the top people, there is ONLY profit related pay.
    
    Given this incentive, all barriers to achieving a highly profitable
    organisation tend to get rapidly overcome. 
    
    In the Looking Forward model, DC success depends on the CSPs acting as
    entrepreneurs, developing business at a high level.
    
    Oh, and at AC, a partner that loses the firm money doesn't last long at
    all.
    
    Rgds,
    
    AW

    
    	I think DC will remain/be profitable only if we will reduce the
    amount of overhead (ALL kinds of overhead) we have at the moment.
    
    	My opinion is that we are doing exactly the opposite. Leading a
    big project at the moment takes more time to do internal/burocratic stuff
    than spending time with Customers and with the Delivery Team.
    
    	EVERYBODY in DC should provide/save at least the money to pay his/her
    salary. Directly. A manager should two budgets, one to be done by
    him/herself, the other to be done by the ones who report to him/her.
    And s/he should be measured on both.
    
    	I'm not so ambitious to say that this should be applied to every
    Digital BU, but it should be done for DC.
    
    	Sounds so unrealistic?
    �AA

    The following entry has been contributed by a member of our community
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				Steve






I suppose this is an appropriate string for this...

I'm NOT in DC. I'm in sales. While (at least for the time being) I am able to
sell our consulting resources to my client, I am experiencing an issue that
MAY also be occuring elsewhere. I'm entering this anonymously because it
appears to be impacting careers. I'll be as brief as possible.

I have had dozens of DC resources working on various projects for my client 
over the last 12 months or so. These have ALL been T&M engagements (for 
reasons I'll NOT go into here). My client will NOT consider using anyone
not an "official" Digital-badged employee from us (i.e., we can't sub to
"body shops" like the Computer Merchant). We've billed people out at rates
ranging from $240/hr - $130/hr plus expenses for people from all over the
US, based upon skills and the importance to my client. FY94 billings are
approximately $600k. The current situation/issue?

We have a skilled VMS system manager type. This person is very good, and has
been doing work for my client for some months now. The current cost per hour is
more than my client could afford for an extended period. Local DC management
agreed to a SLIGHTLY lower rate for a 2 - 3 month extension, while the client
tries to find an independent consultant that can work at $75 - $100 per hour
(because they're not burdened with all of our overhead as a HW company).

I've heard that some more senior management may purge any DC consultants not
billing out at >$130/hr or so, and that by selling this particular engagement,
and bringing in about $50-60k in revenue, I may be putting this individual 
"at risk".

What's a poor sales-type to do? EVERY other consulting organization (and I 
compete with ALL of them with this client) has people they can bill at $75/hr, 
$90/hr, $120/hr in addition to the more senior $160/hr, $240, $300 people.

Logic says we are making money at 70% utilization by billing out at lower rates
assuming our consultants are earning in the $50k-$75k range even with a 75%
uplift for benefits, office space (another issue), etc. Yet, we don't want
this business??? 

    Here's an attempt at an answer and an explanation.
    
    First, DC's hourly rates are not always competitive because of the way
    we allocated overhead costs.  If we used an activity based costing
    system, and only included overhead costs that consultants cause to be
    incurred, our rates would be lower.
    
    Second, the real money in consulting is NOT in billing people at hourly
    rates, but in selling value priced packaged consulting services.  I
    frequently bill at effective hourly rates of $750/hr to $1000/hour.  Of
    course, the customer is not looking at it from that perspective.  The
    customer is buying a packaged service, such as a seminar or workshop,
    or some packaged consulting engagement.  The commodity type consulting
    you describe in your note is not going to generate significant profits,
    even if we properly distribute overhead costs.

Feel free to shoot holes in this idea for Digital Consulting FY95...

	Salaries
	--------

	#1 Institute a 10% pay cut to all DC
	#2 Establish a revenue budget of 2 X salary for each consultant
	#3 Pay bonus of 10% of all revenue above 2 x salary

		So, let's say after 10% cut, consultant A makes 50K.
		1400 hours @130 = $182K, bonus at end of year is $8200.

	Revenue is based on list price times hours worked.  
	
	#4 Failure to make 2 X salary for two years in a row is grounds 
	   for termination


	Training/Technology
	-------------------

	#1 Each consultant is provided with a training/equipment budget 
	   equal to 10% of salary for the FY.    This money can be used
	   for any purpose related to training/equipment with a simple
	   memo to the manager stating cost and business justification.
	   This money could be used for: training /travel costs;  purchasing
	   shrink wrap software;  purchasing PC's, home office equipment;
	   paying for on-line service subscriptions; etc.    As long as it
	   is justifiable between the consultant and manager...  Give the
	   consultant a chance to act as a professional capable of making
	   the correct decisions.  Unused funds can be carried over to the
	   next year.  Any purchased equipment is the property of DEC.

	#2 Provide each management level with a 2% fund of all employee
	   salaries to handle special cases not foreseen in #1


	Management Hierarchy
	--------------------

	#1 PSC's should have about a 40:1 ratio of consultants per manager
	   with at most two staff positions for the PSC manager to oversee
	   staffing/reviews/business plans/etc.   

	#2 PSC Goal should be to have 80% of consultants at 100% or more
	   of revenue goal.   

    No holes in that one.  Sign me up now!
    
    Martin [Author of 3081.6]
    

re:               <<< Note 3081.27 by DUGROS::ROSS "Go, OJ, Go!" >>>

<Feel free to shoot holes in this idea for Digital Consulting FY95...

<	Salaries
	--------

<	#1 Institute a 10% pay cut to all DC
<	#2 Establish a revenue budget of 2 X salary for each consultant
<	#3 Pay bonus of 10% of all revenue above 2 x salary

<		So, let's say after 10% cut, consultant A makes 50K.
<		1400 hours @130 = $182K, bonus at end of year is $8200.

<	Revenue is based on list price times hours worked.  
	
<	#4 Failure to make 2 X salary for two years in a row is grounds 
<	   for termination


    Sooooo... I work for Digital Learning Services (Customer Training).  We
    happen to be (unfortunately) under the DC umbrella.  How's this gonna
    work for us?  We don't "sell" our time.... there's no established
    "rate"... we are about a $40,000,000 business and contribute
    approximately 30% margin to Digital.  Ya wanna cut our (already meager)
    salaries?  The instructors in DLS already contribute revenue to the
    tune of more than 8 times their salaries.  Your plan might prove an
    incentive for SOME DC folks... but not for ALL of us.
    
	Training/Technology
	-------------------

<	#1 Each consultant is provided with a training/equipment budget 
<	   equal to 10% of salary for the FY.    This money can be used
<	   for any purpose related to training/equipment with a simple
<	   memo to the manager stating cost and business justification.
<	   This money could be used for: training /travel costs;  purchasing
<	   shrink wrap software;  purchasing PC's, home office equipment;
<	   paying for on-line service subscriptions; etc.    As long as it
<	   is justifiable between the consultant and manager...  Give the
<	   consultant a chance to act as a professional capable of making
<	   the correct decisions.  Unused funds can be carried over to the
<	   next year.  Any purchased equipment is the property of DEC.

    
    In a WELL RUN company, you shouldn't HAVE to do this.  Digital should
    provide you with ALL the tools you need... basing the quantity or
    quality of the tools you use on your individual performance might not
    get them to the ones who need them the most... or at least as much as
    someone who happens along at the right time or the right place.
    
<	#2 Provide each management level with a 2% fund of all employee
	   salaries to handle special cases not foreseen in #1

	I think management SHOULD have such a fund.  But it should be much
    larger than 2%... and should not be discretionary.  
    
<	Management Hierarchy
<	--------------------
<
<	#1 PSC's should have about a 40:1 ratio of consultants per manager
<	   with at most two staff positions for the PSC manager to oversee
<	   staffing/reviews/business plans/etc.   
<
<	#2 PSC Goal should be to have 80% of consultants at 100% or more
<	   of revenue goal.   
<

    What's wrong with 100% of consultants at 100% of revenue goal?
    
    tony

        Re: .the grand plan

    I don't see anything about management's responsibilities.  What about
    the ability to set my rates?  Margin competition?  Complaints about
    high overhead?  On and on....

    Let's see, based on your assumptions, 10% would mean a budget of 5,000
    for training.  Pretty slim - how realistic is this?

    One class to Colorado - airfare 500.00, hotel 400.00, class 1500.00,
    meals 200.00 (on a diet) = 2,600.00 average.  That's about 2 weeks per
    year *maybe*.

    Charlie - I have more trouble with *management accountability*,
    primarily at the senior levels.

    I think you've failed to accomodate the folks who fall under DC, yet do
    no external consulting, such as internal IS Support. The consulting 
    label is a misnomer for many of who now fall under the reporting structure. 
    
    Gail 

>
>   Sooooo... I work for Digital Learning Services (Customer Training).  We

	Sorry, I was not considering DLS.   Obviously, they (and the overhead
	positions that support DC) would not fall into this plan.   
    
>   In a WELL RUN company, you shouldn't HAVE to do this.  Digital should
>   provide you with ALL the tools you need... basing the quantity or

	But Digital doesn't.  And it won't.    A mandated pot of money
	would eliminate  a) difficulty in forecasting expenses  b) costs
	associated with getting approval for stuff like shrink-wrap
	software, etc.  c) put the decision making process into the hands
	of the consultants who are expected to be professionals

>   What's wrong with 100% of consultants at 100% of revenue goal?
	
        Unreasonable goals would probably lead to unreasonable behavior.
	Reasonable goals would allow for investing in developing people 
	for the long term at the expense of revenue this year.  

>   One class to Colorado - airfare 500.00, hotel 400.00, class 1500.00,
>   meals 200.00 (on a diet) = 2,600.00 average.  That's about 2 weeks per
>   year *maybe*.

	Maybe that's the part of the problem.   In ten years in Digital 
	I have never taken a course that I would pay for myself especially
	when the fee is over $300 /day.    The content is just not worth 
	that kind of money.   But my plan would allow individuals to make
	those kind of decisions for themselves and feel the pain of spending
	half their allocation on a course where the instructor reads off some
	slides and takes a 15 minute break every 90 minutes.   The "market
	forces" would cause attendees to demand more of the instructors.

	It would also hopefully force us to use and develop other lower  
	cost instruction methods:  video tapes, video conferencing, computer
	based tutorials, hands-on expirementation, notes conferences, local
	college night classes, etc.   There are plenty of cheaper alternatives.
	Why should training require airflight and a hotel room??

    1. 	I don't control my billing rate.  Over my nine years with Digital
    	I've frequently been billed out at rates that wouldn't cover my
    	salary. Why? A valuable customer needed the work done, the salesmen
    	sold it and I was the only one available with the needed skills
    	(remember when all the Specialist 2s and 3s disappeared?).
    
    2.  I'm currently assigned to a fixed-price project that has only
    	recently been generating revenue. I didn't bid the thing.  I didn't
    	write the code.  I inherited the whole mess from people who are no
    	longer with us.
    
    So how can I be held accountable for a revenue budget?  

    The biggest hole I'd try to shoot is wrt the salaries. A smart company
    will pay their people a bit more than what those people could get
    elsewhere because their worth to their present employer is higher than
    their worth to a new employer. (Consider how much the "network" of
    people you know within Digital helps you do your job. Consider how much
    more effective you can be, vis a vis a newcomer, because through
    experience you know the way Digital works.)

    Since I'm worth more to Digital than I am to anyone else, I would
    expect them to pay me commensurately. These are the infamous "golden
    handcuffs" that keep many people in a position because they can't make
    even a lateral move to another employer. The minute you start reducing
    someone's salary you've unlocked the handcuffs.
    
    Employees who are income constrained (which I suspect includes most of
    us "grunts") still have mortgages, car payments, school payments, etc.,
    that continue to rise. Even if you love your job, if comes to losing
    your house versus switching jobs, which would you do?

    Those of us loyal to Digital may try to stick it out, continuing to cut
    all discretionary expenses just for the privilege of continuing to work
    here - but I'm afraid these past few months have revealed just how this
    loyalty is rewarded.

    Economically speaking, because of the financial pressures of the real
    world, a reduction in salary would put most of us at least even with
    what we could get elsewhere. Digital would end up losing its best
    people - the very people we need to retain if the company is to regain
    its health.

    Now, you also mentioned the "bonus" proposal, presumably designed to
    ensure that the good grunts don't end up losing any money. The problems
    with that include the fact that we don't have direct authority to book
    our own business, quote our own rates, find our own customers, or make
    our own deals.

    To a large extent, we consultants (at least in the Field) depend
    largely upon Sales and local management to find us our next opportunity
    as we diligently provide our current customer with our undivided
    attention 40 hours/week. I assure you that my customer would not be
    getting the level of service they're currently getting if my attention
    were diverted to my finding my next assignment. I'm doing all I can to
    provide high-quality service so that my current customer wants to
    retain me. I'll concentrate on renewals so that others can concentrate
    on building new business.

    Holding someone responsible for revenue that they can't directly earn
    is not only unethical but demoralizing. It would have exactly the
    opposite effect to what was intended. Instead of building customer
    relations to improve Digital's presence, the consultant would more
    likely be making moves to secure a steady job.
    
    	BD�

    And this latest still smacks of a misunderstanding of Demming's
    principles.  The implication here is that the people in DC are not
    doing enough to generate revenue.  For those of us who have generated
    revenue, some of it resulting in obscene margin rates, you're going to
    hit us with a stick and offer the hope of a carrot? 
    
    

         I just re-read this string to see whether anyone had commented 
    on what seems to me to be the real problem: our business model and 
    our ability to handle cross-charging and measure profit or added-
    value.  No one did and I think this reflects our ability to do so.
         
         Re-organizing DC won't make this problem go away.  When we still 
    don't have P&L by any other cost centre than Bob Palmer in six 
    months' time no doubt we'll a) re-organize again, and/or b) hire 
    another sackful of VPs and/or c) sack one or, at most, two VPs (or 
    even a P?).  We will still have the majority of the sales force 
    thinking SWAS resource is for free:  "These guys are on the payroll 
    anyway; why shouldn't they do work for me at no charge?"  Look out 
    those people who were retained in sales support last year.  This year 
    sales is going to say, "I can cut my costs by dropping them and using 
    the expertise centres (remember ACTs?) instead."
         
         We need a model which deals with sales questions like, 
         
         -    "Why shouldn't I use an external consultant if (s)he is 
              best qualified?"
         
         -    "Why do I pay less for a contractor than I do in cross-
              charge for a Digital employee?"
         
         -    "How can I get credit this year for investment effort due 
              to pay off in five years' time?"
         
         -    "Was that programme we spent so much money on five years 
              ago really profitable after all?"
         
         I have my own ideas but I would like to hear other people's as 
    well.
         
    dp

    
     re -.1
    
     I am glad you have your own ideas, but let me tell you that the vast
    majority of noters in this string will probably not have an arguement
    with what you said.
    
     The problem is getting some upper level managers to hear what is going
    on. The problem is to get upper level managers to acknowledge there are
    problems.
    
     I recently heard from a customer that had met a senior vice president
    of ours in a local town meeting. The customer basically was telling the
    VP how it is, what digital lacks, and in the customers opinion, what to
    fix to make life easier. The VP was listening. From across the
    conversation came another digital person, they told the VP that the
    customer was incorrect in their thinking, that in fact certain things
    were in place, that the customer just did not take advantage of.
    
     You tell me where the disconnect is. Is it the troops in the front
    line? Is it the senior VPs? Is it the customers?
    
    -Mike Z.
    Digital Consulting