Tired of playing the lottery with your technology projects?  If so, then we can show you what it’s like to work with a Firm of The Future…forget about the lottery and work with certainty.

This past January at the international VeraSage conference, I was talking with Ron Baker about how we can more effectively get the message out that the only way for a business to know that a software consultant knows what they are doing is by having that consultant provide them with a fixed price for every project.

Ron provided a wonderful insight.  The most effective way to demonstrate the absurdity of a particular idea (in this case, the billable hour) is to ridicule it.

Greg Kyte, who is a VeraSage Fellow, CPA and professional stand-up comedian, and I started working on a video lampooning the practice of billing time.

The result is Bob’s Barbecue.  It is the first in a series of videos which will depict all of the many ways that the billable hour is harmful and risky for your company.

AccuForce and Aries team members worked collaboratively to scope the projects, breaking them into smaller projects to fit their budget and timeline.  Our first project was to redesign the General Ledger chart of accounts.  Due to many of the accounts being set up incorrectly from the start,  financial statements were not accurate.  We provided AccuForce with a fixed, budgetable price for the project and agreed on a timeline for completion of the project to coincide with their producing year-end financial statements.

Future projects include providing ongoing technical support, a MAS 200 upgrade which will allow them to take advantage of new features such as PositivePay for Bank Reconciliation, and eliminating manual entry of payroll transactions by using MAS 200′s Visual Integrator module to automatically import those transactions.  These projects will allow AccuForce to run their business more effectively and efficiently.

“AccuForce Staffing Services, LLC is a world-class, technology-forward staffing company committed to helping individuals find the careers they desire and assisting companies find the kind of employees to make their business a success by concentrating on talent and fit.”

The Aries Webinar Series is a monthly educational webinar series which will focus on technology and general business subjects relevant to small and medium-sized businesses.  You can view the schedule for upcoming webinars along with a description of the topic by visiting the webinar section of our website.

These webinars will be presented by Aries team members and by featured guests.  Some of the future topics are:

• Sales tax audit challenges and solutions to protect your company
• 17 things you should be doing right now to reduce outstanding accounts receivable balances
• Do you want to increase cash, profitability, sales and company value?  Learn from Johnny Gates, a partner with www.b2bcfo.com, how he has helped small and medium-sized businesses achieve those goals.
• How can my company benefit from an internet marketing strategy?  Chad Barr, president of CB Software, will demystify internet strategies and explain how internet marketing, if used properly, can be a valuable and cost-effective tool for your business.
• Are the costs and stresses of managing your network, workstations and servers keeping you awake at night?  Hosting and managed networks may be the answer.  Brian Strong from Claris Networks will talk about how to reduce those costs under control and get rid of the stress of dealing with IT issues.

Here are the details for the first webinar:

Sage is continuing to take steps to simplify our product portfolio. We’ll now begin to phase out Sage MAS 90 and 200 Extended Solutions, which were created to address specialized needs of unique businesses. This phase-out process includes incorporating the main features and functionality of many of the top Extended Solution titles into the core product. That additional functionality will be delivered over the next several releases and product updates. This benefits our customers in many ways:

• Adds more value for Sage MAS 90 and 200 customers — most popular features and functionality will continue to be incorporated into core products over the next few releases and product updates
• Reduces “nickel and diming” — customers will see reduced maintenance charges on their annual renewal date when their Extended Solutions titles are no longer added in, resulting in a lower cost of ownership

Customers who own titles that will be retired, and not incorporated into the core product, will begin to see those Extended Solution title(s) drop off their renewal notices. As of November 1, 2010, we will no longer support any retired Extended Solutions titles. Please make note that the 2009 year-end updates will be the last year-end updates for those titles.

Customers who own the select group of titles that contain features and functionality that will be phased into Sage MAS 90 and 200 ERP over the next few releases will continue to see their title(s) on their renewal notices. Also, they’ll continue to receive support until such time as the features and functionality are incorporated into the core product. Once their title has been incorporated into the core product, they will see that title drop off their renewals.

To Summarize:

• Sage will continue to sell a select group of Extended Solutions titles that are compatible with Sage MAS 90 and 200 version 4.3 (contact Amy Shaver for a list of these titles).
• When the main features and functionality of those titles are incorporated into the product, the customers will no longer be charged M&S.
• Customer’s who own the retired Extended Solutions titles will see them removed from renewals.
• For new sales of the retired Extended Solutions titles, customers will purchase them directly from their reseller, working with a Source Code development partner, and not from Sage.

Feel free to contact Amy Shaver with any questions regarding your Sage MAS 90/200 Extended Solutions.  We will continue to keep customers updated as we receive information.

For a business, implementing a new software system is just as invasive, complicated and risky as it is for a human to go through triple bypass open heart surgery.  In both cases, the patient could very well die!  Many businesses have been put out of business by software implementations gone sour.

I posed this question to several of our MAS 90, MAS 200, MAS 500 and Abra customers:  If a Microsoft (or any other software) representative called or came by your office today and offered you their software for free, would you be interested?  The answers are a unanimous NO.  Just like the kids in the Lio cartoon below, they are not interested in open heart surgery for their business even if the doctor gives it away for free.

Would you go to a doctor who discounts or offers a buy one/get one free surgical procedure?  I don’t think many of us would be interested.  So, why would any business purchase a software implementation based on price?  Especially when that software becomes such an integral and vital part of that business that it cannot live for long without the software functioning properly.

I seek out the doctors who have new patient waiting lists of several months.  They’re the best ones and they are almost always the most expensive and the most successful.  The same goes for technology consultants.  Do you really want to work with software from a consultant who isn’t busy and can only compete based on price?  Sounds like a recipe for disaster to me.

And notice how many customers Dr. Lio brought in with his free offer.

What also caught my attention are the markings on each and every one of the brownstone bricks.  Since there obviously were no electronic time keeping systems in the 19th century, the stone masons kept track of their time on an honor system.  For each day of work they completed, they would imprint one star into a brick.  The church elders were confident that none of the workers would cheat on their time because they were working on a church.  Who would dare to pull a scam on God, right?

Unfortuntely technology projects are not churches.  Time sheets and billing by the hour are fertile territory for cheating.  Rarely are time sheets accurate which means that you rarely receive an accurate bill from a consultant who bills by the hour.  In almost every situation, a consultant is compensated based on the number of billable hours she or he generates.  Where does that put you if you are their customer?  In a very unholy position!

How do you avoid being in this predicament?  Insist on an up-front, fixed price for every project before you move forward.  The consultant should be focused on your desired results and should not care how long it takes to accomplish those goals.

In the past few summers, I don’t remember too many musicians being willing to provide the type of access that is being offered this year.  I guess I’m getting old but every year I get closer and closer to shelling out big bucks for the VIP tickets at Bonnaroo.  The thought of sleeping in a tent for 4 days with no shower just doesn’t seem very appealing.  Of the VIP ticket packages highlighted in the Rolling Stone article by Christopher R. Weingarten (How To Rock Like a VIP:  Five Pricey Packages Competing for Summer Tour Bucks), I would make No Doubt my first pick with a close second pick going to Fleetwood Mac.  The Mac could move up to first place if I get to meet Stevie Nicks instead of Mick Fleetwood!

According to another article from Rolling Stone by Chris Harris (VIP Tour Packages In Demand, Despite Slumping Economy), people are willing to pay premium prices for extra conveniences like an earlier parking spot, taking their picture with the band and open bars.  A former manager for Aerosmith, Keith Garde, says that it’s only a matter of time before these VIP packages start offering fans a chance to play with the band.  Talk about the experience of a lifetime and if you’re a big fan of the band, you’re probably willing to pay just about anything for that opportunity.

Just as many artists are looking to make sure that ticket prices are kept as low as possible.  Other bands are making sure to play longer set lists and make the concert spectacle greater than ever.  Still others are approaching their concerts from a reunion angle.  Want to see the original lineup of Phish and No Doubt for what could be the last time?  Well, here’s your chance.

For a list of the summer’s 20 biggest tours, check out this article from Rolling Stone: Summer Tour Preview.

Setting ticket prices to sports events requires that one hope for the best but prepare for the worst.  Teams want prices high enough to cash in if they play well, but need them to be low enough to draw fans if they falter.

But because teams set their prices months before opening day and resist changing them later, they have trouble reacting to the unexpected, like the weather, winning and losing teams or, this year, the ferocity of an economic downturn.

The San Francisco Giants are experimenting with a possible solution – software that weighs ticket sales data, weather forecasts, upcoming pitching matchups and other variables to help decide whether the team should raise or lower prices right up until game day.

How many of us have reexamined and rethought our pricing philosophies lately?  I think the current economic conditions present a great opportunity for all of us to look for more creative pricing strategies.

Pricing is definitely an art and not a science.  Therefore, it can be an experimental endeavor and we can’t be unwilling to risk making mistakes along the way.  Most of us have never really thought about pricing as a core business competency.

For us, it was whatever Sage somehow magically decided was retail price for software plus an hourly rate for our services that our customers certainly did not have any input in determining (who would dream of such a thing!).  That wasn’t much of a strategy and was certainly more prone to mistakes because it was basically a random approach to pricing.  We were saying: one size fits all.  I don’t know of any two companies that are exactly alike so that strategy couldn’t possibly have worked.

At the Giants level, implementing pricing software to assist with setting prices probably makes sense.  However, for most of us I think pricing strategy will still be set by people.  I like the idea of establishing a pricing group within the company and involving people from different areas of the company (not just the sales department).  I think it is valuable to include people who are outside of your company.  We continue to take this approach by asking customers how they would like to do business with us.

An economic downturn is the perfect time to introduce innovative thinking into your business and innovative pricing is the most powerful change you can make.

The Knoxville businessperson stepped up to the airline ticket counter and asked to buy a ticket for a flight to Atlanta.

“No problem,” said the clerk, “but before I issue the ticket, I should remind you of the new way we charge for tickets.  This year we have adopted a ‘basic rate’ of three dollars a minute for our flights.  The clock starts when you check in at the gate and stops when you pick up your luggage.  We mail you a bill about two months after the flight.”

“Well, I guess that’s okay,” commented the businessperson.

The clerk continued, “Remember, we call it a ‘basic rate’ because we sometimes adjust that rate up or down if the flight is very empty or very full.  Too, we may multiply that rate if our expert pilot finds a tailwind.  We also adjust the rate according to what you will be doing in Atlanta.  You look like a businessperson, so I’ll assume it’s very important that you get there by plane, so we quadruple the basic rate.  Another thing, how much is your annual income?  You see, if you earn a great deal and it turns out the plane crashes, we will have to pay more on your spouse’s damage claim, and we have, of course, to consider that increased risk of the airline.”

The astounded businessperson choked, “But how much will this trip cost me?  How do I know you don’t slow down on purpose?  How do I know your bill will be correct?”

The clerk stared down over the end of his nose.  “I can see you’re not familiar with the complexities of airline work.  There are so many things we just can’t know in advance – the winds, traffic delays, the weather, the routing.  Airlines are a business, and we have to make a profit to stay in business.  Now don’t worry, we’re very honest and sensitive about all this billing business and I am sure you’ll be pleased with our fully itemized bill when you get it.  If there’s any question just call.”  Then the clerk whispered, “But just so we understand each other, if you don’t pay the bill in full and promptly, you’ll never fly on this airline again.”

“Oh,” grunted the Knoxville businessperson, “is there anything else I should know?”

The clerk smiled thoughtfully and murmured, “On your flight there is a new copilot in training, and we charge an additional 50 cents a mile.  Copilots are really very important, you know, to carry the pilot’s charts, to fly on clear calm days, even to land the plane if the pilot is busy with other matters.  Too, if you fly with us again, your copilot may have become your pilot.  Wouldn’t that be great?  One other thing, if the copilot uses computerized flight routing there will be an additional $75 charge.  But of course computerized flight routing is almost standard charge with technologically advanced airlines.”

“But I just wanted to get to my meeting in Atlanta and come home.  Now I don’t even know if I should fly at all,” groaned the businessperson.

The clerk smiled again.  “Mature passengers come to understand that flying is just a cost of doing business.  They never know how much it costs ‘til we bill them.  But then, there’s really no choice, is there, since that’s just the way it’s always been done?”

“No,” conceded the businessperson, “I guess not.”

And then the businessperson tried again.  “Why can’t you just give me a fixed price and I’ll decide if I’ll go or not?”

The clerk frowned.  “But we can’t do that.  That wouldn’t be fair to you.  We might overcharge you and then you’d be unhappy.  Or we might underestimate and then the airline would lose money and couldn’t maintain the planes, and we certainly don’t want that.”

And so the Knoxville businessperson came to hate airlines and took his revenge by regaling acquaintances at cocktail parties about the new pitfalls of airline travel.

Adapted from Richard C. Reed Billing Innovations: New Win-Win Ways to End Hourly Billing. Chicago: American Bar Association, 1996.                                                                                                                        

The idea of airlines charging for their time seems ridiculous, right?  However, that is exactly how most technology and software companies want to treat you.  You are expected to accept uncertainties regarding the price and timeline of a project as if it is a normal part of running your business.

These companies want you to believe that you are paying them to spend time working on a technology project.  However, what you really want is knowledge and experience that will be put to work solving your business issues and making your company more competitive and more profitable.

There’s no reason to come to hate technology and software companies.  Rather it’s a matter of working with a company who is more interested in your company than simply covering their rear ends by hiding behind billable time.