Solutions360 core story 2010

2010

Why survive

when you can

thrive?

The Five Alternative Ways

for Technology Integrators

to Reduce Costs

2Solutions360, Inc.

Areas Covered

• Growth in technology integration services and displaced IT resources

is resulting in heavy market saturation.

• Technology expansion and trends in Converged Communications is

resulting in new companies entering the market place.

• These two factors have created a bid-based industry where margins

are reduced and the cost of labor has increased.

• The five alternative ways for technology integrators to reduce costs.

• The ten things technology integrators must do to succeed and thrive.

3Solutions360, Inc.

Technology Integrators have grown

dramatically in the last few years

• The VARBusiness 500 solution

providers grew an incredible

24.3% in 2007.

• The 2008 VARBusiness 500 is

worth $377.76 billion. That is

slightly larger than the GDP of

Saudi Arabia.

• In 2008 the top 500 solution

providers increased revenue

26.4%

Source: ChannelWeb 2008

4Solutions360, Inc.

Worldwide technology integration and

service will be growing rapidly

• This year past, 113 companies debut on the VARBusiness 500 list, the same number as in 2007.

• 359 from the VARBusiness 500 experienced revenue growth.

• BlueWater Communications (VARBusiness 500 No. 467) was the fastest-growing company on the list, with revenue that increased 1942.3 percent.

Source: ChannelWeb 2008

5Solutions360, Inc.

Let‟s take a closer look

at what is driving the growth

6Solutions360, Inc.

Unfortunately, many specialty trades and

general contractors do not always survive

600

800

1000

1200

1400

# o

f busi

ness

failure

s

1992 1996 2000 2004

General contractors Special trades

Source: Dun & Bradstreet Business Failure Report

7Solutions360, Inc.

Being an „industry veteran‟ doesn‟t

guarantee existence either

0

10

20

30

40

% o

f fa

ilure

s

1992 1996 2000 2004

Represents # of years in business

Less than 3 yrs 3 - 5 yrs 5 - 10 yrs More than 10 yrs

Source: Dun & Bradstreet Business Failure Report

8Solutions360, Inc.

“Those who do not remember history are

doomed to repeat it” –George Santayana

• Historically, the number of specialty contracting businesses that fail have remained fairly steady at about 1000 per year.

• Statistics show that older businesses have a much higher rate of failure than newer businesses.

• However, these numbers have been steadily worsening and are not expected to improve in the future.

9Solutions360, Inc.

Converged IP Growth has become a

double-edged sword

• IP Convergence has been creating

opportunity for many integrators.

• IP Convergence has also created

opportunities for large contractors to

enter this specialized field.

• To survive tighter margins many

vendors have also been offering value-

added services.

10Solutions360, Inc.

Skilled labor costs increase

• IP Convergence requires more

certifications and highly skilled labor.

• The cost of these specialized skills are

rapidly increasing.

• Compliance requirements are changing.


Bad news in payroll…

• In 1997, electrical and specialty

contractors payroll was $21.7 billion

which represented 34% of their gross

revenue.

• By 2002, the same contractors were

paying out $29.1 billion which

represented 36% of their gross

revenue.

• With industry specialization, the

burden rates for staff are increasing

at an unprecedented rate.Source: US Census Bureau, 1997 & 2002


Margins are slimmer than ever

• With increased competition, the high

cost of labor and tighter prices from

vendors, profit margins have greatly

been impacted


Meanwhile, there are five alternative areas

for technology integrators to reduce costs

1. Project Accounting

2. Employee utilization

3. SLA effectiveness

4. Real-time financial visibility

5. Overstaffing



• The scope and complexity of new projects is on the increase, putting greater risk on profitability.

• A lack of accurate and timely financials reduces the access to larger and more affordable funding.



• Lack of visibility prevents you from proactively adapting to changes.

• Maintaining real-time project profitability is imperative.

• Challenge of reconciling projects. (accuracy, timeliness and revenue realization)



• By increasing visibility and reducing the effort of accuracy, you are freed to maintain effective project delivery at greatly reduced costs.


2. Employee Utilization

• Time billing is difficult to capture accurately or in real-time.

• The “true” time expended by all employees is unknown and often not recovered in billings.

• Time Billing invoice disputes are a challenge to resolve with poor data.


2. Employee Utilization

• The easiest way to increase revenue is to bill for more work you have already done.


3. SLA Effectiveness

• Lack of SLA visibility increases

operational costs when incorrect

service or tech is dispatched.

• Increased SLA agreement violations

reduce contract renewals.

• Replacing a client is 6 times more

expensive than keeping them.


3. SLA Effectiveness

• Challenge of contract renewals

results in errors and lost revenue.

• Lost profit due to inaccurate SLA

billing (T&M, Block Time, preset

rates etc.)


4. Real-Time Financial Visibility

• Lack of Real-time billing for service

work.

• No consistent and accurate progress

billing on projects.

• Manual audit trails


4. Real-Time Financial Visibility

• Too many “touches” required for an invoice.

• Lost and inaccurate time sheets.

• Lost revenue due to the traditional slow process of project reconciliation.


5. Overstaffing

• Technology integrators are often over

staffed.

• Over-staffing is a symptom of trying to run

a business with two distinct operational

models:

• Continuous operations of post sale work

• Vs. Finite time / budget sensitive

projects.

• Not acknowledging the differences can

mean big losses in productivity


5. Overstaffing

• 95% of most single business systems

cannot support these two business

models of a technology integrator


These 5 Key Factors can mean trouble for

your business

• An outbreak of low priced, so-called

„competition‟ requires greater

internal control

• Your customers and prospects can

begin to perceive no difference in

value, service, or quality

• They of course may gravitate

towards the lowest price …


Your dreams of growth or

exit strategy are under attack!

• When customers and prospects do not recognize the value of your high standards and quality, there is no loyalty

• When price is king there are no profits to be had

• A business that does not stay profitable does not stay in business


Remember, you need to separate

yourself from the other guys…

• Everyone in your industry is pitching

how great their products and services

are and how they have the lowest price

• But in order to seize control of your

market you must also be

organizationally strong and lean

• You will need to revisit your business

processes and your business systems


Why Integrators Are Different?

• Two Business Models under one roof:

• Service / MAC / Break-Fix

- A continuous operation

• Project Implementation

- Specific start / finish and budget

Service Projects


What has occurred?

• No SINGLE system was available

• Multiple data systems and spreadsheets were required

• The 5 key factors effecting technology integrators is amplified


The challenge of multiple data

systems and spreadsheets

• “Organizations must gain control of

spreadsheets if they are going to use

information to operate more

efficiently and compete more

effectively.”

• “Without centrally defined metrics

and a single version of corporate

information, organizations can no

longer compete effectively.”

Source: Wayne Eckerson, May 2005 | SearchCIO.com


High Cost of Multiple Systems

• Duplicate data entry

• Data corruption

• Increased training

• Complicated vendor relations

• Greater IT support


The Purpose of Technology

Technology

Process

People

Technology enables process to achieve measurable outcomes


Integrated Data Systems – ERP/CRM?

• ERP/CRM?

• “Fully” integrated – what is that?

• Data silos

• Cumbersome Reports

• Drill-Down


Managing Business Processes

• Document processes

• Manage by exception

• Roles and responsibilities defined

• BPM


Business Process Management

(BPM)

• Process management

• Workflow management

• Activity management

• Software & data management


The 10 things technology integrators

must do to succeed and thrive

1. Establish Business Process

Management (BPM), it‟s more than

workflow.

2. All business intelligence in a single

location.

3. Establish an efficient workflow and

communication system.

4. Empower sharing of business

intelligence.




5. Shorten billing cycle of service

work by technicians.

6. Better management of inventory.

7. Real-time visibility of projects.

8. Improve job costing and progress

billing.




9. Automate recurring billing.

10. Empower staff to become more

customer centric.


The cost of doing business

is skyrocketing!

• Payroll, capital expenditure, rental

equipment, and material costs are

now making up 75% of gross revenue

• These factors are all increasing

exponentially

• This disturbing trend is expected to

continue

Source: US Census Bureau, 1997 & 2002


Trends within the industry are making

tough times even tougher

• Equipment vendors are offering

smarter self-service technology

• Vendors have started competing for

service dollars


These trends require companies to change

the way they operate

• When customers see no difference in

value, service, and quality they

gravitate towards the lowest price

• When price is king nobody profits

• A business that does not profit does

not stay in business


Where do you start?

• Find out where you are today?

• You need an effective strategy


Developing a well defined strategy is a

huge key to long term success

• Appoint a Software Selection

Committee

• Avoid applications that do not

understand technology integrators

• Clarify if you are dealing with a VAR

or direct with developer


Learn to work and plan

smarter…not harder

• What are your strategic objectives?

• Growth

• Acquisitions

• Divesture

• Understand best practices, develop

policies, procedures and training

tools to follow these practices


Introducing Solutions360

• Solutions360 is a software

development firm that specializes in

end-to-end professional services

automation applications for

technology integrators.



• We possess over 20 years of

experience in field service and low

voltage construction industries



• Solutions360 knows the obstacles

facing your business and has

developed a SINGLE solution to help

you achieve your business goals.


Contact Solutions360 Today

(800)450-7748

www.Q360.com

Solutions360 core story 2010

Technology

Transcript of Solutions360 core story 2010