New Business for IT Contractors
This comment came in response to one of our articles on how to win new business from clients.
Comment from Poster Darren
If you could pull this off, it would be a great position to be in. It would be a real opportunity, therefore, to move away from contracting and develop a real business.
The problem is that whether you were working with teams of cheap developers or doing the work yourself, you still have the same old problem with marketing.
Selling your services directly to clients and presenting yourself as a credible company is still going to be the difficult bit.
Sure you can hire sales and marketing people and start tendering for projects. However, it takes more than that to get on an approved supplier list.
With my current client, the first step in being approved for this list involves them looking at the companies financials.
This would be, however, the show stopper for most of us. That’s because they wouldn’t touch the average contractor company because the turnover is too low.
There’s also the problem that the suppliers list is full of friends of the senior managers. There’s not much, therefore, you can do about that one.
Tendering for Project
Recently a group of contractors tried to tender for a project to get new business. They were prepared to undercut the competition on a development project by about 50%. They would still, however, make a very nice profit.
So, the project managers were happy with this. They knew the contractors were the best people for the job. They’d been working with the business for over 2 years.
The software development outfits they work with are always delivering poorly documented, buggy applications. The contractors, therefore, usually end up sorting these out.
The Client would have made a huge cost saving. They would end up with a better quality system which was delivered on time.
The problem was they couldn’t get on the approved supplier list !
IT Contractor Comments
I would have appealed directly to the Finance Director to get that new business.
Who ran the approved supplier list? Was it HR, Procurement, or IT?
In any case, where cost savings are to be made, you’ll find that the FD has far more power than the other directors, except for the CEO. They can make things happen, even if Procurement and HR are against it.
IT Tool Company
I once called up an IT tool company on December 30th one year. I asked if I could get a good rate to buy the IT tool licences from their company. It was the end of their financial year and a good time to ask. You usually can get a deal then.
The sales people at the tool company said that they couldn’t do me a good rate.
You have to know the dynamics of these things. Sometimes the sales people will be interested and sometimes they won’t.
Sometimes they are interested in getting your sale into this year’s quota. However, sometimes they want your sale in next year’s quota.
It depends on their pay structure and how they have performed this year.
However, I called up the Finance Director and put the proposition to him. This was the second last day of their financial year. He must have a good inkling of what this year’s figures would be that he would have to present to the board.
To him this approach from me must have been like a godsend. This was a godsend to him on the second last day of the financial year.
He told me that there must have been some mistake on the sales team’s part and that he would sort it out. If I could get the invoice signed by close of play on 31st December then I would get my tool licences at the agreed cut price.
He sorted it and I got them.
Identify the Beneficiaries
I think that it is important when you want to tender for new business that you identify who is going to be the main beneficiary of saved costs.
Write down the names, first of all, of those who will benefit from vastly reduced IT development costs. You can start with:-
1) The CEO
2) The Finance Director
3) The Project Sponsor (or customer)
4) The Project Manager.
Those who will be against you may be:-
3) Whoever is responsible for procurement in IT.
As you can see, those who would be open to major cost cuts in the software development area far outrank those who would put some stupid Catch-22 rule in place that prevents the company taking advantage of your proposals.
Bypass Obstructive Middle Management
I was once given the advice at the start of my career that middle management is always obstructive. However, if you managed to get passed them, the top guys were very smart and shrewd. As long as your proposition, or idea, held water, and you had done your homework, they were extremely likely to take it up.
The solution then is to get to those people who would be keen on your new business proposal, either directly or indirectly.
The Project Sponsor is a good place to start. The the Finance Director would be a real bonus if you can get to talk to him or her. Even if you can’t, the Project Sponsor could get to the FD and sell the proposition.
If both of those are on board, you can bet your bottom dollar that the heads of IT, HR and Procurement will not be able to stand against it.
How Acccenture Get New Business
Once, at American Express, I was looking at methodologies for them. I got Andersen’s Consulting (now Accenture) in to look at their methods.
I wasn’t that keen. It didn’t seem to stack up well against the others. My bosses weren’t that keen either.
However, a few days later, I happened to be going to the dining room at the Amex building across the road in Brighton, when who did I see there? Why it was none other than the Andersens guy that I’d brought in. He was coming to see the big boss – the Head of Operations worldwide outside of North America.
Andersens weren’t going to take a chance that I might say no. They went immediately above my head, even though I got them in.
In fact on the first day that I got him in, the Andersens Partner spent more time asking about, and drawing up, the structure above me, instead of concentrating on the problem in hand.
Identify Decision Makers
Contractors can learn form how the big boys do it.
Identify the decision makers. Who most want cost cuts? Like Andersens, don’t take the risk that HR or Procurement will be able to stop your bid because of some stupid Catch-22.
These people don’t have the big picture. They are middle management and they are obstructive.
If you can, get the ears of the top guys. If you have a good proposition that you like, you can be as sure as hell that they won’t see Procurement’s rules as a problem that will stop them getting cost savings. That’s especially in diffiuclt times.
In the new reality, we cannot just be ‘temporary workers’ any more. There will be plenty of them coming in – and much cheaper than us. We have to look for ways to add value, and for ways to take advantage of the new reality.
Partnering with Smallco, India
As regards the small Indian company, you would have to have got in touch with these guys beforehand. There will be a number of those small companies who would just love to be your offshore developers.
It would be a good idea to actually go over there and meet a few of them. You can decide which one (or ones) that you would want to partner with. You may even want to take a stake in their company.
It shouldn’t cost a fortune. You could even swap a stake in your company for it, if you are a bit short of cash.
We are going to have to think of as many ways that we can for us to take advantage of the new situation that we are in.
I hope that this is one that those in IT can give some consideration to.