[Search for users]
[Overall Top Noters]
[List of all Conferences]
[Download this site]
| Title: | US_SALES_SERVICE |
| Notice: | Please register in note 2; DVNs in note 31 |
| Moderator: | MCIS3::JDAIGNEAULT |
|
| Created: | Thu May 16 1991 |
| Last Modified: | Tue Sep 03 1996 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 226 |
| Total number of notes: | 1486 |
41.0. "US Advisory" by HAMSTR::MURPHY (Sue Murphy MKO2-2/D14 dtn:264-0723) Tue Oct 15 1991 15:09
Attached is a US Advisory with lots of good data and reference material
for all field functions needing to understand how P&Ls fit into NMS.
Subject: U.S. COUNTRY SUPPORT CENTER ADVISORY #24 1
****************************************
U.S. COUNTRY SUPPORT CENTER ADVISORY #24
****************************************
This is number twenty-four in a series of U.S. Country Support Center (part
of U.S. Finance) advisories. The purpose of these memos is to communicate
information to all U.S. Country organizations regarding our processes (such
as the budget and forecast processes), systems and tools.
As always, the goal of this advisory is to be a valued communication tool
for U.S. Country. Because true communication is a two-way process, we
welcome your input. Please send your comments, questions, and
recommendations via All-in-1 to: USCSCADVISORY @MRO.
We hope you find these advisories valuable and informative.
DIGITAL CONFIDENTIAL
- 1 -
***********************
SUMMARY
***********************
This advisory is dedicated to information regarding July FY92 actual
Account P&L's in the NMS Phase 2.1 format. It contains important
messages from U.S. Country management, and the changes and enhancements
made to your P&L's as part of NMS Phase 2.1, including revised cost per
person rates. Although you may not directly support an account, this
advisory is interesting and informative reading for all of U.S. Country.
TOPIC PAGE
July Actual P&L's - NMS Phase 2.1.................................... 3
o July FY92 actual Account P&L's are now available on the Account
Workbench. IMPORTANT: They are preliminary, and will be restated to
reflect: (1) anticipated format changes, and (2) possible increases
to the Sales and Sales Support effort lines due to underreporting of
effort, which may impact the margin shown on your July P&L.
Status Report on the July Account P&L's.............................. 4
o From U.S. Sales' Management Communication #107, written by Tony
Wallace and Bob Nealon. Explains the changes and enhancements
made to the P&L's as part of NMS Phase 2.1:
- Product/Service CUP's lowered across the board by 2 points;
- Product CUP's expanded to be reported by "Product Family"
(Service CUP's still by Line of Business);
- CPP methodology changes (from US average to location-specific)
Sales BUPDate #1 (Don Zereski, U.S. Country Vice President).......... 6
o Important messages on management guidelines, new and detailed
BUP's, and guidelines for deal evaluation.
- Product Family BUP Listing begins on page 11
Direct Selling CPP Rates for Blue-Line Account Groups................ 21
o Details the July, August and September FY92 CPP rates that will
be used for each Blue-Line Account Group.
DIGITAL CONFIDENTIAL
- 2 -
**********************************************
JULY FY92 ACTUAL ACCOUNT P&L'S - NMS PHASE 2.1
**********************************************
July FY92 actual Account P&L's are now available on the Account Workbench.
Please note the following important information:
Our P&L's are preliminary and will be restated for the following
reasons:
FORMAT: We are having active discussions with Corporate regarding
the final NMS P&L format. Modifications will be made in the near
future to meet these requirements. There will be extensive
communications and related training prior to implementation.
SALES EFFORT AND EXPENSE: Direct effort by account used for July and
August actuals was supplied by the Effort Tracking System (ETS). The
effort was underreported in total by 15-20%. The expense shown on
your P&L may be understated, and therefore margin may be overstated.
Preliminary P&L's will be restated for undercounted effort during Q2.
SALES SUPPORT EFFORT AND EXPENSE: Direct effort by account used for
July and August actuals was supplied by the Software Business System
(SBS). The effort was underreported in total by about 15%. The
expense shown on your P&L may be understated, and therefore margin
may be overstated. Preliminary P&L's will be restated for
undercounted effort during Q2.
DIGITAL CONFIDENTIAL
- 3 -
***************************************
STATUS REPORT ON THE JULY ACCOUNT P&L'S
***************************************
The following memo is from Tony Wallace, U.S. Finance Manager, and Bob Nealon,
U.S. Operations Manager. It was published by U.S. Sales Communications on
September 12 as Management Notification #107, "Status Report on the July
Account P&L's."
"The purpose of this memo is to give you a status report on the July Account
P&L's and explain a series of major changes and enhancements.
A process of phased software releases has been and will continue to be used
to update and enhance the Account P&L Reporting System. This assures
consistency in budgeting and actuals reporting, coordination of
communications, and minimizes confusion.
The next major release is complete. It includes a number of changes which
are very positive.
Here is what you can count on. The July P&L's are available today. The
August P&L's will be available for your use on Sept. 16. Thereafter, there
will be a monthly P&L release on each Monday of the third week, after the
end of the fiscal month.
The changes and enhancements that are included in the July actuals reporting
are:
1. Product and Service CUPS will be lowered across the board by 2
points.
2. Product CUPS will be expanded to be reported by "Product Families."
Services CUPS will still be by line of business. This means that
there will be about 240 product CUPS. This break-out will be much
more meaningful when looking at specific competitive bidding
opportunities compared to todays high level average CUPS.
3. The Cost Per Person methodology used for charging a Direct Sales
person and Sales Specialists will change from using the U.S. average
to a location specific cost per person. This is a major step in
differentiating costs due to regional cost of living (salary,
facility, travel, etc.) differentials.
DIGITAL CONFIDENTIAL
- 4 -
************************************************
STATUS REPORT ON THE JULY ACCOUNT P&L'S (CONT'D)
************************************************
In order to make a fair comparison of actual performance against budget,
each Account P&L budget will be restated in an automated way to reflect the
changes shown here. This restatement will be available in September.
The Account Business Units have been operating at full speed for almost 2
months. You are now making business decisions on how to price to your
account, allocate account resources, use alternative selling channels, and
how to bring these business factors together to make a profit. Over the
coming months more tools will be developed to help you improve your account
profitability and contribute to Digital's bottom line. The U.S. is now on
the road to improved profitability, you are the driver, and the journey has
just begun.
DIGITAL CONFIDENTIAL
- 5 -
****************
SALES BUPDATE #1
****************
The following memo by Don Zereski, U.S. Country Vice President, was
published as "Sales BUPDate #1" on September 12.
******************************
THIS MEMO IS FROM DON ZERESKI
******************************
To: Account Selling Teams US Team
Operations Managers US Sales VP's
Field Finance
cc: Jack Smith
Subject: "Sales BUPdate #1"
Contents:
o MANAGEMENT GUIDELINES
o NEW AND DETAILED BUPS LISTED
o GUIDELINES FOR DEAL EVALUATION
The purpose of this memo is to give you more information about the
"BUP" cost in your P&L. Over the past 7 months, the BUPs have changed
as PCUs have advanced their benchmarking. We have heard a tremendous
amount of feedback from you about BUPs and decision making in NMS. We
want to communicate BUP information and NMS business advice to help you
with your issues as you work towards profitable growth.
MANAGEMENT GUIDELINES:
BUP rates should never be the cause of a "NO BID" decision. If you
face such a situation, contact your Account Portfolio Operations
Manager to discuss alternatives. BUP competitiveness will continue to
improve as our best-in-class benchmarking process and tools mature.
As needed we will contact the appropriate PCU/SCU to discuss BUP
revisions and will ensure timely response. If a BUP changes during
a quarter, all account P&L's for that quarter will be restated at
the new BUP, to assure the account manager that they will get the
lowest BUP possible.
DIGITAL CONFIDENTIAL
- 6 -
*************************
SALES BUPDATE #1 (CONT'D)
*************************
Third-party outsourcing of alternative products solely on the basis
of BUP issues should only be undertaken after direct consultation with
Ops and the PCU/SCU. Your Account Group Operations Manager and local
Third-party Business Manager can facilitate the discussion about BUP
revisions and/or outsourcing.
BUP CATEGORIES:
We are eliminating the CUP (Country Unit Price). We will use the
term "BUP" for simple communication with PCU's and SCU's.
The Business Unit Price (BUP) for a product or service is the cost
charged to the Account Business Unit for use in the New Management
System (NMS). These prices charged by the Product or Service Creation
Units (PCU/SCU) are based on benchmarking against best-in-class
competition. They are expressed as a percentage of U.S. List Price
(the list price to the customer).
As implementation of NMS and BUPs progresses, finer levels of
categorization are being introduced. Initial NMS activity centered on
planning and budgeting. BUPs used for this purpose (e.g. the Account
Planning Model, APM) have been set for very broad categories (VAX
Systems, Options, Software...) and have been based on average system
values.
However, reporting of actuals and evaluation of specific deals require
applying BUP factors to each customer quote or invoice line item.
There are now 231 separate categories of products and services, each
with its own BUP value. Attachment B lists them all. Please notice
that there is significant variation of BUP percent among the many
categories that make up the broad planning categories you are currently
familiar with. For example, VAX Memory has a BUP of 25% but the broad
planning category "Options" has a CUP of 45%. Obviously, decisions
about memory sales should be made in light of the more detailed
category information that will be used in Account P&L Actuals
reporting.
By September 16, 1991, these BUP VALUES WILL BE AVAILABLE THROUGH THE
ACCOUNT WORKBENCH.
DIGITAL CONFIDENTIAL
- 7 -
*************************
SALES BUPDATE #1 (CONT'D)
*************************
TOOLS FOR EVALUATING DEALS:
1. THE PRIMARY NMS TOOL TO DATE HAS BEEN THE ACCOUNT PLANNING MODEL
(APM). THIS IS A HIGH LEVEL, YEARLY PLANNING TOOL AND SHOULD NOT
BE USED IN INDIVIDUAL DEAL EVALUATION. YOU WILL GET WRONG
REPRESENTATION OF ACCOUNT PROFIT BECAUSE OF THE HIGH DEGREE OF
AVERAGING.
STOP USING APM FOR DEAL EVALUATION.
2. IN OCTOBER, A FULL BLOWN NMS PROFIT EVALUATION TOOL (SIMILAR TO THE
FAMILIAR OPERATIONS PROFIT MODEL USED FOR MANY YEARS) WILL BE
AVAILABLE.
3. UNTIL OCTOBER, BUILD YOUR OWN SIMPLE P&L ACCORDING TO ATTACHMENT A
USING DETAILED BUP DATA IN ATTACHMENT B.
DEAL EVALUATION GUIDELINES:
HERE ARE SOME SIMPLISTIC, NON-EXHAUSTIVE STEPS TO HELP YOU.
A) IF YOUR PROPOSED DEAL MEETS YOUR BUSINESS GOALS (1/2 PROBABLY
DON'T):
1. CONSIDER MAKING IT EVEN MORE PROFITABLE
2. CLOSE THE SALE
B) IF THE PROPOSED DEAL IS UNDER YOUR GOAL OR UNPROFITABLE:
1. DOES IT FIT WITHIN YOUR PORTFOLIO OF DEALS FOR THE YEAR?
YOUR ACCOUNT MARGIN GOAL IS AN AVERAGE OF MANY SALES
SITUATIONS OVER THE YEAR. FOR EXAMPLE, YOU MAY PLAN TO SHOW
A LOSS ON AN INITIAL SALE IN ORDER TO REAP PROFITABLE ADD-
ON SALES AND SERVICE LATER IN THE YEAR OR IN FUTURE YEARS.
YES - CLOSE THE DEAL
NO - STEP 2
DIGITAL CONFIDENTIAL
- 8 -
*************************
SALES BUPDATE #1 (CONT'D)
*************************
DEAL EVALUATION GUIDELINES (CONT'D)
2. CAN THE CONFIGURATION/PRODUCT/SERVICE CONTENT BE BETTER
ADJUSTED TO REFLECT THE VALUE REQUIRED BY THE CUSTOMER?
CAN YOU REDUCE CONTENT? CAN YOU ADD IMPORTANT CONTENT AT A
LOW INCREMENTAL PRICE?
YES - CLOSE THE DEAL
NO - STEP 3
3. CAN THE PROPOSED NET PRICE BE ADJUSTED?
YES - RERUN P&L
NO - STEP 4
4. DOES THE BUP APPEAR TO BE UNCOMPETITIVE? DO YOU HAVE
SPECIFIC COMPETITIVE BID INFORMATION?
YES - CALL OPS TO INITIATE FEEDBACK PROCESS
RESULTING IN
A) SETTING A NEW BUP, ALLOWING YOU TO CLOSE
THE PROFITABLE DEAL
B) A POSSIBLE OUTSOURCING PROPOSAL
C) YOU DON'T GET AN ANSWER YOU LIKE
(SEE BELOW)
NO - INITIATE ACCOUNT INVESTMENT
RE-ANALYSIS DISCUSSION WITH
YOUR MANAGEMENT RESULTING IN
A) PLAN TO CLOSE THE DEAL
B) DECISION TO NOT BID
OTHER COMMUNICATION TO WATCH FOR:
1. QUARTERLY CHANGES TO BUP BASED ON BENCHMARKING AND YOUR
FEEDBACK.
2. LOOK FOR ANNOUNCEMENT OF PET V1.0 (PROFIT EVALUATON TOOL)
3. NMS "RATE CHANGE" MEMO FROM BILL VANATTEN.
GOOD, PROFITABLE SELLING!
DON
DIGITAL CONFIDENTIAL
- 9 -
ATTACHMENT A
Account P&L Worksheet
1. Gross Revenue @CLP(product) ________
and/or gross service revenue
2. BUP (use rates in attachment B times
gross revenue in line 1.) ________
3. MBU value added -- 7% of BUP on line 2 ________
4. Direct selling --
Months direct selling effort____X $12.1k = ______
+ Selling expense in Acct cost center. ______
Total direct selling
5. Sales Specialist
Months sales spec. effort_____X $9.8k =
+ CS sales spec. ratio times CS revenue =
(see Budget Advisory #8 for rates.)
Total sales specialist
6. Discounts -- as they apply to this sale ________
7. Allowances -- as they apply to this sale ________
8. Loan and Demo -- the expense of consignment
equipment used for this sale. ________
(see Budget Advisory #14 & #17.)
9. Direct Account Overhead -- 2.3% of Gross revenue
as shown on line 1. ________
10. Business unit support -- 4.8% of Gross revenue
as shown on line 1. ________
11. Corporate support -- 0.5% of Gross revenue as
shown on line 1. ________
12. NET CONTRIBUTION MARGIN $--line 1 minus line 2-11.
13. Net contribution margin %--line 12 / line 1.
DIGITAL CONFIDENTIAL
- 10 -
ATTACHMENT B - PRODUCT/SERVICE FAMILY BUP LISTING
Below are the Q1, FY92 BUP factors for products and services.
There is one factor per product family -- for example, for the
9000 - 4xx system, the BUP factor is 44%. Each product number
falling into the 9000 - 4xx family will have the same factor. A
fully configured system sale will not be priced using one BUP
factor, but will have as many factors as there are unique part
numbers on the order.
If you are evaluating a deal, and are unsure which product family
the part you are pricing falls into, you have several options.
You may look up the part in the CIC reference information,
available on all CIC systems. The menu path for this is
RI-PR-PC. Or you may call the product operations manager who is
responsible for the product in question, a list of whom are
attached.
Due to the confidential data included in the rest of this memo I have
deleted the remainder. If you need this information call your
Finance manager who receives this communication on a regular
basis.
- 24 -
| T.R | Title | User | Personal
Name | Date | Lines
|
|---|