| T.R | Title | User | Personal
Name | Date | Lines |
|---|
| 13.1 | EIS Questions | HAMSTR::MURPHY | Sue Murphy MKO2-2/D14 dtn:264-0723 | Wed May 22 1991 12:55 | 19 |
| 1. U.S. Team has decided to run parallel budgeting processes for FY'92.
The"traditional" functional budgets (ie: CS,EIS,Systems) along with NMS
budgets for the Account Teams. Account Team goals will be set and
finalized in June.
2. Still investigating.
3. BUP pricing is specific to a particular product or line of business
and will vary as the Business Units begin to acheive best-in-class
pricing. It is the Account Manager's decision to propose the price
based on market conditions.
4. NMS tracks back-log, both certs and revenue. Both are used as data
elements for the planning and budgeting systems.
These have been excellent questions that require some additional
investigation. Look for a follow-up note to answer completely.
|
| 13.2 | EIS allowance question | MAMTS3::GTOPPING | | Wed Jul 24 1991 17:12 | 12 |
| I am still a little concerned about FY92 goaling.
I have recieved proposed FY92 goals in the traditional manner - NOR and
Margin. However, in January, Don Zereski indicated in a memo that EIS
districts would be measured against Gross revenue (before allowances).
My question is: as an EIS DM, am I measured on revenue before or after
allowance?
Any info will be appreciated.
|
| 13.3 | Custom Projects: figuring the list price | USEM::CHERNACK | Where is the fountain of youth? | Fri Aug 16 1991 10:48 | 416 |
| (Permission from author received)
re. note 13.2
I N T E R O F F I C E M E M O R A N D U M
Date: 15-Aug-1991 09:40am EDT
From: George Ekman @MRO
EKMAN.GEORGE AT A1 AT CARTUN
AT MRO
Dept: US EIS PSS Business Practice
Tel No: DTN: 297-3795
TO: SUSAN H MURPHY @MKO
CC: FRITZ AUMANN @MKO
CC: Marty Scarpati @MRO ( SCARPATI.MARTY AT A1 AT CARTUN AT
MRO )
CC: JON CAPUTO @OFO
Subject: RE; US SALES AND VAXNOTES CONFERENCE
1
Recently you requested an answer from Jon Caputo to question #13.2 on the US
Sales and Vaxnotes Conference regarding the establishment of list price for
custom projects. The answer is as follows:
List price for custom projects delivered by EIS Professional Software Services
is the price derived from the Project Pricing Worksheet -- a spreadsheet model
developed by EIS whose use is prescribed by the EIS PSS Business Practices
(BP106).
For further information on this subject, I am attaching a memo from the EIS
NMS Planning group which was distributed to the field in July. The answers to
questions 1 and 2 in this memo deal specifically with pricing. If you have
any further questions on this subject please feel free to contact me.
I N T E R O F F I C E M E M O R A N D U M
Date: 19-Jul-1991 04:26pm EDT
From: EIS NMS PLAN @MRO
PLAN.EIS.NMS AT A1 AT CARTUN
AT MRO
Dept:
Tel No:
TO: See Below
Subject: PSS Q. & A. RE:NMS
Attached is the first in a series of memos that will address the questions and
issues raised relative to the question "What is wrong with NMS?"
This memo focuses on questions/issues relative to the Application Project
Services and Digital Consulting Services businesses. Future memos will address
CSS/EIC and SI topics.
Your feedback is important in ensuring we are providing you with the
information you need to better understand the goals of the New Management
System. Please let us know, through this account, if this information has
been helpful or if you require further clarification.
Over time, we hope to answer all the questions that have been forwarded to us.
If you feel we have missed something, please let us know and we will
address it in a future memo.
Regards,
NEW MANAGEMENT SYSTEM QUESTIONS AND ANSWERS
FOR THE
APPLICATION PROJECT SERVICES (APS)
AND
DIGITAL CONSULTING SERVICES (DCS)
SERVICE CREATIONS UNITS
18-Jul-1991
*****************************************************************
1) Who sets prices on customer quotes for the APPLICATION PROJECTS
SERVICES (APS) and DIGITAL CONSULTING SERVICES (DCS) business Sales
or APS/DCS ?
APS/DCS, the service creation unit, sets the LIST (GROSS) price.
The LIST price is either printed in the price list or is a custom
price developed by the service creation unit. Responsibility for
APS/DCS custom pricing is assigned to district (level 2) and unit
(level 1) APS/DCS managers as described in the EIS/PSS Business
Practices Guide.
Sales sets the NET price to the customer; the net customer price is
the LIST price less discounts, less allowances, plus additions for
account value pricing. Discounts are preset through a corporate
agreement (DBA, GSA, etc.) and allowances and value pricing uplifts
are set by the account manager. EIS planning partners, as part of
the account team, should provide expertise and advise to the
account managers.
If there is no assigned account manager then APS/DCS sets both the
LIST price and the NET price.
*****************************************************************
2) How are projects and consulting GROSS/LIST PRICES calculated ?
For APS & DCS the LIST price comes from one of the following 3
sources:
1) PRINTED IN THE PRICE LIST - The LIST price is fixed by the
service product manager and appears in the price book and on
AQS. Services priced this way are: DECstarts, Performance
Services, other packaged services and hourly rates.
2) PRICED FROM HOURLY RATES - Fixed hourly LIST rates appear in the
price book and on AQS. The number of hours required to deliver
is determined by the appropriate APS/DCS unit or district. The
LIST price is then the number of hours times the printed rate.
Services priced this way are the "hourly" services including
Systems Engineers, Consultants, etc.
3) CUSTOM PRICING "Call OPS" - Services printed in the price book
without any LIST price are calculated by the appropriate APS/DCS
unit or district. These prices are calculated in standard ways
such as by using the pricing model (see BP106). The calculated
price is the LIST price. Services priced this way are custom
projects and custom consulting engagements.
All appropriate Business Practices must be used in calculating
and approving the CUSTOM LIST price.
*****************************************************************
3) Why is the CUP (Country Unit Price) for DCS/APS (66.4%) higher
than the systems CUPs ?
CUPs were recently adjusted and Phase II CUPs were listed in
advisory #11 and are reprinted at the end of this memo. As part of
Phase II the DCS/APS ("PSS") CUP was lowered to 66.4%.
Different CUPs have different impacts on the account P&L. A major
difference to the account P&L is whether the product or service
creation unit regularly grants discounts. Under the new management
system all discounts and allowances are paid for by the account
group. APS/DCS does not give DBA or GSA discounts to end user
accounts.
To compare the true cost of a product or service to an account the
appropriate discount has to be added to the CUP. For most accounts
adding the DBA discount to the systems CUPs shows that the APS/DCS
CUP is very competitive if not cheaper than the systems CUPs.
EXAMPLE: Comparing the profit to an account of a VAX 6000 and an
APS/DCS service. Mid-Range systems have a CUP of 49%, if this
system is sold to an account with a 15% DBA the effective CUP to
the account (CUP+DBA cost) is 64%. This is almost the same as the
APS/DCS CUP at 66%. Make sure that your account counterparts
understand the hidden cost of the DBA discount! A list of current
CUPs and DBA discounts is included at the end of this memo.
MID-RANGE APS/DCS
SYSTEM SALE SERVICE SALE
GROSS REVENUE $200,000 $200,000
CUP 49% 66%
CUP TO ACCOUNT $ 98,000 $132,000
LESS ACCOUNT COSTS
- DBA DISCOUNT (15%) $ 30,000 N/A
- ALLOWANCES (ex. 0%) $ 0 $ 0
- OTHER ACCOUNT CHARGES [1] $ 26,000 $ 26,000
= ACCOUNT CONTRIBUTION MARGIN $ 46,000 $ 42,000
[1] OTHER ACCOUNT CHARGES - Selling expense, corporate overhead,
and marketing taxes add approximately 13%.
*****************************************************************
4) How is APS/DCS margin calculated under NMS?
Under the NMS both the account and APS/DCS generate margin dollars
for Digital.
Traditional EIS "PSS District/Unit Margin" is different from New
Management System (NMS) "Net Contribution Margin" - the two are not
directly related.
NMS NET CONTRIBUTION MARGIN is a calculation based on CUP, account
costs (direct selling, discounts, allowances, direct account
overhead), support costs (business unit and corporate) and an
assumption that revenue flows at the same time as the expense. NET
CONTRIBUTION MARGIN is calculated at the Gross Revenue less: CUP,
account costs, and support costs.
Traditional PSS DISTRICT/UNIT MARGIN is based on the actual costs
incurred [labor (salary, fringe, etc.), related delivery expenses
(travel, equipment, subcontractors, etc.), allocations incurred
during the time the service was delivered (telecom, occupancy,
etc.)] and the actual revenue recognized from the customer based on
delivery effort or milestones completed.
New Management System NET CONTRIBUTION MARGIN numbers are a
management reporting tool used by account managers to measure their
success in selling Digital's products and services. Traditional
PSS DISTRICT/UNIT MARGIN is used by district and unit managers to
measure their success in effectively delivering services.
NMS reporting is done separately from fiscal reporting. The fiscal
reporting systems have not changed and still report actual cost
center expenses and revenues. NMS doesn't result in the transfer
of dollars to Digital Services. "CUP revenue" isn't reported on
cost center or other fiscal reports.
*****************************************************************
5) What are the APS/DCS Margin goals under NMS?
"NMS" APS/DCS margin is different from "traditional" PSS margin.
Below is an example showing how traditional and NMS margins are
calculated. This example shows how important both the list price
and service expense are to achieving margin goals under NMS. For
APS/DCS managers both the traditional and NMS methods of stating
results will be important in FY92.
TRADITIONAL NMS TRADNL NMS
PSS APS/DCS CALC CALC
A. GROSS REVENUE 1,000 1,000 KNOWN KNOWN
B. DISCOUNT/ALLOWANCES 100 [1] KNOWN N/A
C. CUP PRICE (@ 66.4%) [2] 664 N/A A * .664
D. NOR 900 [3] A - B N/A
E. SERVICE EXPENSE 500 500 KNOWN KNOWN
F. MARGIN DOLLARS 400 164 D - E C - E
G. MARGIN PERCENT 44% 25% F / D F / C
[1] Under NMS discounts and allowances do not affect the CUP price
received by the services creation unit. To the service
creation unit only the LIST and CUP prices are a factor.
[2] CUP has no meaning in the traditional measurement
[3] NOR has no meaning under the new management system to APS/DCS
*****************************************************************
6) Why is the NMS APS/DCS margin % lower than the traditional PSS
margin ?
Margin under NMS is generated both by APS/DCS and the accounts.
The total profit to Digital under both traditional and NMS
reporting methods should be the same.
The NMS account generates an account profit, margin, by buying
products and services from product and service creation units and
selling them using economical staffing levels and profitable
pricing levels.
NMS APS/DCS ("PSS") service creation units generate profit by
delivering services at an expense level less than the CUP charged
to the accounts.
*****************************************************************
7) When is the "EIS/PSS Business Practices Guide" to be updated to
show NMS rules?
The Business Practices most impacted by the NMS are ones involved
in setting customer prices. Business Practice 107 (Allowance
Review and Approval) has been updated to support account manager
allowance approval. The Signatory Matrix is currently being
revised to support the NMS changes.
*****************************************************************
8) Does Sales have to pay BUP prices for Sales Support from EIS or
will it still be charged the way it was in FY91 ?
Planning for APS/DCS personnel used as sales support ("windfall")
and sales support used for revenue generation ("reverse windfall")
is based on the expense rates for the individuals involved.
Complete details are available in advisory #12.
*****************************************************************
APPENDIX
DBA Volume Schedule for comparing product and services costs for your
accounts.
Aggregate Dollar Category A
Value ($thousands) Discount %
0 - 499 0
500 - 999 5
1,000 - 1,499 7
1,500 - 2,499 9
2,500 - 3,999 12
4,000 - 5,999 14
6,000 - 9,999 16
10,000 - 14,999 17
15,000 - 24,999 18
25,000 - 39,999 18.5
40,000 - 64,999 19
65,000 - 99,999 19.5
100,000 - 149,999 20
150,000 - 199,999 20.5
200,000 - more 21
*********************************************************
ACCOUNT INFORMATION PROGRAM PHASE II - DETAILED CUP RATES
*********************************************************
These following rates are applied to CLP or gross revenue $ to calculate CUP
for actual account P&L reporting, both for FY91 and FY92. The rate applied is
determined by the part # assignment -- that is, a disk will always be assigned
a 42% CUP, regardless of whether it is on an order with a 6000 or whether it is
ordered as an independent option. The use of these rates will yield a more
accurate account margin when analyzing a specific opportunity for FY92.
CUP Rate
Systems (% of CLP)
9XXX 47
6xxx 49
4xxx 44
MV3XXX, II 49
VAXFT3000 53
PDP 52
DECst200/300(PC) 42
RISC SYST 46
RIscstation 47
VAXstation 46
Options/Peripherials
Continuing Bus Group 45
Clusters 47
Disks&subsystems 42
Intel/SCO 50
Low end communic 51
Memories 25
Netwk & communicatns 47
New Soft grp 46
PC options, SW 57
Other software 42
Open Syst Software 42
Tapes and optical 37
Video and printers 55
VMS 38
Other "Product"
CSS 56
3rd party Hdwe&Sftwe 85
Services
PSS 66
CT (customer train) 71
DAS 61
DCSS 72
DTS 62
FMS 78
HPS 62
NWSS 67
RCS 67
SPS 72
Distribution:
JIM KOCH @MRO
CHARLIE MERRILL @MKO
KEN GRAY @UPO
DAVE DANIELSON @MKO
KEN ZIMMERMAN @MRO
WAI-YAN SUN @MRO
ELDEN SAATHOFF @MRO
JOHN ODONNELL @MRO
JOHN NADWAIRSKI @BUO
KEN MCDANIEL @MKO
DON HOUSE @MRO
BRENDA FERRIERO @MRO
CAROL EHRLICH @MRO
DAVE DOXEY @DDD
ANNETTE BAKSTRAN @MRO
FELIX CHOW @MKO
|
| 13.4 | | ALOSWS::KOZAKIEWICZ | Shoes for industry | Fri Aug 16 1991 12:56 | 45 |
| I detect an undercurrent in the preceding memo (mainly from the
discusions on margin) that, as far as EIS is concerned, NMS is nice for
account managers but it really isn't what they need. Sort of
reinforcing the destructive we vs they behavior.
Now, that may very well make sense from a strict accounting viewpoint.
I used to work in EIS and I still take an active interest in the
internal workings of project pricing and definition in order to best
serve my current organization. I understand 'where they're coming
from.'
B U T
I thought one of the main goals of NMS was to provide a common set of
terms and measurements for the managers of the triumvirate of business
units in the company. Although it's acknowledged that those terms and
metrics don't constitute a balance sheet, I had presumed that they were
carefully chosen to foster certain kinds of behavior on the part of
managers. This would include encouraging them to take responsible
risks, to be accountable, to add value, and to be responsive to their
customers (internal or external) needs. Especially to add value.
My opinion is that the NMS is a very straightforward way of focusing
the managers attention on what's really important for Digital and our
customers. The problem that I've often had with EIS is that their metrics
have tended to foster a kind of behavior which maximizes margin at the
expense of value. I have the feeling that sounds very negative and I
really don't want to overstate the problem. Nonetheless, I firmly
believe that the biggest problem overall with EIS is the overemphasis
of internal concerns (margin, revenue, expenses, accounting, invoicing,
etc.) and the inattention to the product (what do customers want,
adding value, differentiating our service offerings, training people).
So, if EIS managers are not held as accountable to NMS as the Account
and Integration Business Units, I can't see how the needed behavioral
changes will happen, and that we won't end up with the same metric-driven
problems we have chronically faced. If the failure to add value is not
as painful as the failure to make margin (better: if the rewards for
adding value are not equal to the rewards for making margin!), nothing
will change.
I hope I'm wrong. Am I?
Al
|
| 13.5 | Help needed | ALOSWS::KOZAKIEWICZ | Shoes for industry | Tue Oct 22 1991 12:58 | 50 |
| I have a couple of questions regarding account P&L's, NMS and how they
factor into the decision making process when it involves EIS business.
My need for this information is precipitated both by a number of
opportunities I'm currently involved in and the new EIS business practice
around allowance review and approval.
Question #1: Under the account P&L, when we sell EIS we get credit for
the revenue at MLP, get hit with expenses for the CUP and any allowances,
and simple subtraction will yield a first order profit or loss result.
Under 'normal' business conditions this is a fairly straightforward
transaction - we take in more money than it costs us to deliver the
service and we make a profit.
However, sometimes it is necessary to bundle custom services into a
product sale in a manner which is entirely transparent to the customer
and which, in essence, looks like we 'give away' the service. As an
example, we're currently working on a $12M opportunity which would
require about $450K of EIS to perform certain integration. For sound
business reasons, we would not want a separate line item in the
proposal calling these services out. Overall, the deal would be
profitable if we allowance the EIS item to $0. Given my understanding of
NMS, the local EIS organization should still recognize revenue at the
CUP rate even if we do a 100% allowance. The local EIS manager,
however, does not see how this would work as he only gets credit for
'real' revenue. So the question is: is the system 'broken'? Shouldn't
the NMS work for all positive numbers and not just those which result
in a positive margin by the 'old' metrics?
Question #2: Although the account teams now have complete control over
EIS allowances, EIS maintains control over Terms and Conditions. I see
this as a major problem due to the fractionalization is causes within
Digital. Will we see a single Operations-type function for all of
Digitals products and services any time soon?
I really need an answer to question #1. If we continue to operate
using the assumptions we have traditionally been bound by, Sales will
be under increased pressure to use Sales Support in delivery roles or
consider the use of outside contractors in order to sell solutions
customers are willing to buy. More fundamentally, it forces a shift
away from selling and towards delivery in the Sales force. This may not
be entirely bad, but I think that in many instances it would be to
Digital's benefit to capitalize on the strengths of our existing service
delivery organizations rather than attempt to 'reinvent the wheel'.
Uncertainty over how the new metrics work and integrate are currently
standing in the way of attaining that goal.
Let me know what I can do to help.
Al
|
| 13.6 | Ahhhhh, metrics and measurements ! | ODIXIE::GEORGE | Do as I say do, not as I do do. | Tue Oct 22 1991 16:42 | 24 |
| RE: .5
>> ... the local EIS organization should still recognize revenue at the
>> CUP rate even if we do a 100% allowance. The local EIS manager,
>> however, does not see how this would work as he only gets credit for
>> 'real' revenue. So the question is: is the system 'broken'? Shouldn't
>> the NMS work for all positive numbers and not just those which result
>> in a positive margin by the 'old' metrics?
A very thought provoking note. As a result I have gone back through
some NMS memos and found the following in a document titled "NMS
Questions and Answers for the APS and DCS Service Creation Units" and
dated 18-Jul-1991:
"NMS reporting is done separately from fiscal reporting.
The fiscal reporting systems have not changed and still
report actual cost center expenses and revenues. NMS
doesn't result in the transfer of dollars to Digital
Services. 'CUP revenue' isn't reported on cost center or
other fiscal reports."
Perhaps the only reporting that can be "trusted" by your EIS manager
is the fiscal system rather than the NMS system.
Steve
|
| 13.7 | EIS Questions | SUBRFM::LANDRIGAN | | Thu Oct 24 1991 14:01 | 22 |
| Al,
Interesting questions in note .5
#1 Since the beginning I am my cross-functional counterparts have completely
accepted the "sales sets the selling price" premise of NMS. We have done deals
just like you described where we showed the customer "free" consulting and our
EIS Manager has had no problems, so we are all assuming that she is comfortable
with getting her "revenue" as a function of the CUP charges. I will ask her
when she returns from vacation next week if that is still the case in light
of the .6 response.
#2 Likewise we have one Operations organization locally, run by myself as the
Accounts Group Operations Manager (Bob Nealon's organization). Each of the
Account Set Managers works issues with the delivery organizations and our
contracts people to set acceptable terms and conditions to the customer and to
DEC. I mediate whenever necessary.
Give me a call if you want to discuss further.
regards,
bl
|
| 13.8 | Another Approach | SANFAN::WRIGHT_KE | Vacillate...or don't | Sat Oct 26 1991 21:50 | 5 |
| What would happen if you allowanced in other areas the $450k and
included the EIS piece? Same $450k comes to Digital, and at a higher
margin.
Ken
|
| 13.9 | Local Ts&Cs for International Company? | SUBWAY::DILLARD | | Sun Oct 27 1991 18:10 | 15 |
| I'd be very interested in hearing if and to what limits local
organizations might be able to change the standard terms and conditions
for service delivery.
Having been invloved in some large EIS opportunities that were slowed
by legal issues over Ts&Cs I can see the business advantage of being
able to negotiate these locally. Unfortunately, given some of the
changes customers have asked us to make, I can also see considerable
risk to Digital if local teams aren't VERY careful.
I've been advised that in some cases restrictions that individual
customers have requested for singel deals might have in fact served to
restrict Digital doing similar work ANYWHERE.
Peter Dillard
|
| 13.10 | Margin: Yours? Mine? or Digital's! | ALOSWS::SCHICKEDANZ | There ARE no guarantees... | Mon Oct 28 1991 10:28 | 17 |
| re: .8 "Another Approach"
>What would happen if you allowanced in other areas the $450k and
>included the EIS piece? Same $450k comes to Digital, and at a higher
>margin.
Therein lies the entire falacy of the old "my margin is better than your
margin" approach to business. If you haven't changed the Cost of the solution,
and you haven't changed the total Revenue from the deal, then the "net" to
Digital is the same, regardless of who's "pocket" the margin goes into.
EIS should claim success & profitability if their BUP-rate under NMS less their
costs shows a profit for Digital.
Just my 2 cents.
- Andy -
|
| 13.11 | Reply to notes 13.4;13.5;13.9 | CARTUN::FARINELLI | | Wed Nov 13 1991 15:09 | 56 |
| Responses to 13.4, 13.5, 13.9
Regarding 13.4 . . .
Thank you for sharing your concern that the former EIS organization
may have an internal focus and may not be sharing the NMS driven goals
that Accounts and other groups have today. One of the objectives of
the recent merger of EIS and CS was to increase responsiveness and
simplify the interfaces for our customers and the Account Portfolios.
Each Account Vice President (Level 3 Manager) now has a single Digital
Services (DS) manager responsible for all of the services business of
that portfolio. This will help ensure that sales and services have a
common perspective and priority set, namely the Digital customers
represented by the portfolio.
It is true that DS still measures the business by using traditional
accounting techniques. Traditional accounting is still the only method
that can be used to report profitability to the company and the
financial community. Our management needs traditional accounting to
run the business, but that does not preclude a common behavior within
Digital with a focus on the customer.
Even today the DS organization is reviewing our measurement systems to
take full advantage of our new alignment. The concept of team goals is
very much the philosophy of our goal setting and measurment process and
it will help to encourage the teaming goals that your note advocates.
As more information regarding DS measurement is determined, I will
include it in this Notes file.
Regarding 13.5....
RE: question #1, I would like to clarify a few points. Under the Account
P&L EIS receives credit for revenue @ CUP rate applied to MLP; EIS gets
hit with actual service delivery expenses; EIS P&L does not have
allowances.
The overall issue is to ensure allowances are booked correctly, ie.
when it relates to a particular piece of business the allowance should
be applied to that business. This helps ensure a tracking of 'true'
pricing of products and services. Otherwise, it is very difficult to
do any analysis of where we are competitively priced and where we are
not. This is especially important in determining 'best in class'
pricing.
RE: question #2, the reply in 13.7 answers this. Also, for more
specific information regarding EIS terms and conditions, please refer
to the EIS Business Practices Guide. This is available through VTX in
the Information Base.
Regarding 13.9 . . .
Please refer to the EIS Business Practices Guide and the Customer
Program Approval Process (available on VTX under US Sales Policies and
Procedures) for information regarding authority to negotiate
non-standard terms and conditions.
Regards,
Corinne Farinelli
US DS Strategic Planning
|
| 13.12 | | ALOSWS::KOZAKIEWICZ | Shoes for industry | Mon Nov 18 1991 22:15 | 15 |
| re: -1
Well, here is the nut:
If the local EIS manager carries a set of "traditional" accounting
measurements on his/her goalsheet, what incentive do they have to
deliver business booked with unattractive (to them) allowances?
I go back to my original thesis in .4 when it was still an abstract
concept to me: If Digital Services does not embrace NMS despite it's
flaws and take it on faith that behavior which is right for Digital will
produce "real" profits, I cannot comprehend how anything will change.
Al
|
| 13.13 | It's still a good question | SWAM2::MCCARTHY_LA | Martians are stealing my underwear | Tue Nov 19 1991 11:48 | 28 |
| re .12, Al,
� If the local EIS manager carries a set of "traditional" accounting
� measurements on his/her goalsheet, what incentive do they have to
� deliver business booked with unattractive (to them) allowances?
If I understood .11, the EIS manager sees "list" price for the purposes
of doing their (EIS') OldMgmtSys P&L books. In theory, the EIS manager
can't see the difference between "good" and "bad" business when it
comes time to deliver. Of course, the Level II EIS (or, as of today,
DS) manager may be able to see it. In any case, this could only apply
to things that have a list price, eg, packaged services or T&M
consulting.
This is not at all unusual, at least in EIS. Most customer programs and
projects must keep at least three sets of books - one for Gross
Margin-type (ie, local, account) management, one for PBT/SCM-type (ie,
country, subsidiary, PMO) management, and the *real* set of books that
tell the program/project manager the true financial state of the
project/program (or, Projam :-)
But remember, the first situation is only temporary. I have been led to
believe that the second situation is at least recognized as being a
problem.
Keep the faith, but don't stop asking questions ...
- Larry.
|