June 7, 2010
Rethinking Sales And Delivery Systems For Integration
by Tom Stimson
If you could generate a complete
design and cost estimates with the
push of a button and only had to
choose which profit to go with,
wouldn’t you spend more time trying
to win higher margin jobs? Instead,
the proposal process is so expensive
and time consuming that you end up
selling on price instead of your craft.
Don’t blame the sales person or
market conditions for this problem.
Your biggest obstacle to higher profits
is not shrinking margins, nor is it
hiding in invoices from suppliers or
installer timecards. The thing that
keeps you from making the money
you have earned is process. A competitor
seems to make a profit when
you can’t because their process
allows them to make money—and
yours doesn’t.
What keeps companies from
addressing this problem is denial.
The sales and design process used
by many integrators is a sieve. There
are multiple points at which profit
can leak out, and the longer a project
stays at one point in the process,
the more leakage there will be. Your
business might be losing profits to
this metaphor if you are seeing more
than one of these symptoms:
■ A steady backlog of proposals
that keeps designers from working on
confirmed business
■ Dependence on the “big kill”
project to keep top line revenue on
track
■ Installation beginning without
proper documentation
■ Rack-building or
extensive programming
on job site
■ The service team
has to complete many
installations
■ A tendency for
certain people
(ok, salespersons)
to hold
onto information
instead of sharing it
If you track
an order through
your system from
sales opportunity to
finished installation
and study the handoff
points, what you will
often find are bottlenecks of
over-utilized resources. These
are called constraints. Design, engineering,
estimating, drafting, and
programming are the most common
constraints, but in many companies
installers end up backlogged as well.
Over-dependence on hourly workers
shows up in overtime costs, but when
your CTS-D logs 70-80 hours every
week, you want to believe it’s because
they are a workaholic and a perfectionist.
In reality the overworked
engineer is a highly inefficient use of
intellectual resources—a constraint.
The cure for constraints is counterintuitive.
Your engineer will probably
tell you that he or she needs a
lot of dedicated, undisturbed time
working on one project at a time.
They are mistaken. The right way to correct constraints is to dole work
out in smaller batches. Design engineers
shouldn’t be working on every
aspect of the proposal, especially if
they have 10 projects to bid in the
queue. If you break down the proposal
process into tasks, you might
find that your expensive engineers
are spending a lot of time doing
clerk-ish things: looking up part
numbers, finding prices, compiling
lists. Sometimes they even do things
they are unqualified to do, like labor
estimates. They are not alone. We
find corollaries to this in sales, project
management, purchasing, crew
scheduling, drafting, programming,
and even accounting.
Whatever the size of the organization,
there is an inherent resistance to
breaking down tasks for two primary
reasons. First, it appears these efficiencies
it will actually involve hiring
more people and hence, added cost.
In general this is not true because
while a constraint is in play, someone
is waiting. Most companies have
the resources in place to support
more efficient processes. The second
objection to reducing constraints is
theoretical. The AV sales-designintegration
process is traditionally
linear: Each person hands off a completed
(or not) task to the next person
in line. By breaking down tasks
into manageable pieces, the process
changes such that a person may touch
a piece of the project many times during
its life cycle. This is how we overcome
the first concern too. You don’t
need more people; you do need them
to do different things.
Realigning tasks helps ensure that
each one is completed, and it also
allows more tasks to occur simultaneously.
A person that only looks
up prices at a particular step will be
much more efficient at it than someone
that also has to decide which part
to use. A project manager might do a
more realistic labor estimate than an
engineer. And a lead tech will probably
do a more thorough site survey
than anyone that is doing it now.
I said earlier that shrinking margins
weren’t the problem, but they
are a symptom. For example, the
longer a proposal loiters around the
sales pricing stage, the lower the
price will go. The net result of a more
efficient sales and delivery system
is the opportunity to go after more
jobs at higher margins. Mistakes are
reduced because more people touch
the project even before the job is
won. Productivity will be up because
employees will become accustomed
to quickly finishing tasks.
The first step is to admit that
you are addicted to the notion that
someone else is responsible for your
shrinking margins.
Tom (T.R.) Stimson, MBA, CTS,
(tom@trstimson.com) is president of
The Stimson Group, a Dallas-based
management consulting firm. He
is the 2010 president of InfoComm
International, and a member of NSCA
and InfoComm’s adjunct faculty.
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