Archive for Budget
What Michael Jackson’s Billie Jean Says About Software Spending: The Chair Is Not My Son
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I’ve always thought that Michael Jackson, belting out the chorus of Billie Jean, sounds like he’s saying, “The chair is not my son.” Of course, he’s actually saying, “The kid is not my son.” The same kind of confusion – misinterpreting words – applies in most big organizations, particularly when it comes to runaway IT spending, and is driven by different internal political agendas that lead to a waste of money.
I’m a big proponent of using out of the box thinking to reduce IT budgets, which are an incredible boondoggle at most sizable companies, including law firms. In fact, Greg Lambert from 3 Geeks and a Law Blog has an intriguing post up on encouraging open source software use in law firms right now. But pursuing budget saving alternatives is not as easy as it may seem.
There’s a fundamental internal political obstacle to surmount in encouraging companies (including law firms) to use open source software and other lower cost opportunities. I remember attending a worldwide meeting once for an organization that employed me, and after a presentation by our senior technology expert, he asked for questions. I asked whether we could radically reduce our IT budget by going to lower powered computers exploiting browser based software and open source applications. He brushed off the question. A number of our IT experts came up to me afterward and explained that, while they would love to pursue this approach, the IT department’s power base depends on the size of its budget, so IT leaders will oppose an approach that reduces the budget and thereby reduces this power. Since then, I’ve paid a close eye to the organizational dynamics that can create perverse incentives which prevent efficiency gains.
What I failed to understand when I asked the question, is that when I said, “Let’s reduce the budget and save the company money,” the IT executive heard me say, “Let’s reduce your power base, stall your career, and let non-IT experts waste your resources.” For that reason, he wasn’t interested in a good opportunity.
Instead, he was too focused on telling everyone that the chair was not my son.
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Top 10 Sales Contract Deal Killing Mistakes Made By Sellers
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Here’s my list of mistakes sellers often make that torpedo sales deals. Check out our sales agreements here, or dive into our comprehensive sales agreement that covers almost every key sales contract issue here.
(1) Insufficient Understanding of Customer. Do not fail to take the time to understand the customer and the specific business needs the customer has, in particular, focusing only on explaining your products and services without trying to guide the customer as to how a particular product/service can solve her problem. As TechCrunch recently pointed out, make your sales explanations simple.
(2) Focus on Customer’s Budget, Not Customer’s Needs. Do not focus on how much the customer has in the budget or wants to spend. Instead, focus on the customer’s pain, and explain how your good/service will alleviate her business suffering. This will do a much better job of motivating the customer to meet your price.
(3) No Hard Deadlines. Do not show an unwillingness to agree to hard deadlines for delivering products and completing services, making it likely that the customer’s project will not come in on schedule.
(4) No Clear Fees. Do not show hesitance when asked to agree to a definite price that can’t be increased at a later date, making it likely the customer’s project will come in over budget.
(5) Unclear Customer Responsibilities. Do not do a poor job of explaining what the customer needs to do to be able to incorporate and fully use the goods/services (such as necessary platforms or site preparation).
(6) No Access to Key Stakeholders. Provide access to everyone on the seller’s side who needs to sign off on the deal. If you are missing your key people, this results in unnecessary emails, numerous contract versions, and fruitless meetings. The best situation is where all necessary stakeholders on both sides get on the phone, review the contract language, agree on revisions, and close the deal.
(7) Long Contracts. Do not send unnecessarily long contracts which mean more work for everyone in reading, revising and negotiating the language. Even the most complex deals can usually be covered in a relatively short number of pages.
(8) Unclear Contract Language. Do not send contracts full of ambiguous language which are not clear as to exactly what is being purchased, at what price, following what deadlines, and specifying the customer’s duties, if any.
(9) One Sided Contracts. Do not send contracts heavily weighted in favor of the seller, so that time has to be wasted and legal fees spent negotiating a compromise version.
(10) Not Moving the Ball Forward. If you send a customer an email, it should only be to elicit specific, necessary information, or to fully respond to a customer’s request for information. That’s it. Any other email wastes the customer’s time. If you have a conference call, you should have a prepared agenda acceptable to both parties and you should have everyone on the call ready to accomplish all agenda items. Too often, a key person is not available, or an essential stakeholder is unprepared to discuss and execute a key topic. Avoid this.
These mistakes make negotiations interminably long, or cause them to fail, mainly because the seller spends so much time creating complexity that the seller is unable to clearly describe the deal. By not answering key questions at the outset, the transaction costs for deals end up being too high. In particular, legal fees are greatly increased because the lawyers have to spend so much time tunneling through the complexity. Also, the more complex you are in describing your deal, the more you give the lawyers to argue over, which means more time and more money.
Instead, focus on keeping everything simple.
If you enjoy this content, add me at twitter.com/JasonAnderman, thank you.
