Opportunities Galore, Yet Problems Multiply?

"Opportunities are like sunrises. If you wait too long, you miss them."

– William Arthur Ward

Obviously, the above quote doesn’t apply to project companies!?

Project companies like IT Services go after nearly every deal. Their businesses depend on substantial budget outlays and spending decisions of their customers. Such decisions don’t happen every day. Every lost deal costs them dearly. Every successful bid means securing additional revenue.?

But what happens when project companies have plenty of opportunities, and they go after them? Is everything fine then? Do growth, profitability, and CSAT scores go north?

Let me narrate a story.

ABC IT Services (ABCIT), a fictitious company, resembles one of our customers. ABCIT employs about 1000 people. It clocked Rs 350 Cr revenue in the last fiscal, coming a long way from its modest start in a short time. Providing cyber security services based on its founders’ strong tech expertise has been its niche.??

Like other companies, ABCIT bids for almost all the projects. Either due to its superior lead generation or simply because of a favourable economic moat, there were plenty to bid for.?

Despite its technical credentials, strong talent pool, and plenty of opportunities, ABCIT faced many problems. Its profitability stagnated for a while and worsened for a couple of quarters. It lost several key deals. It lost some deals due to delays in bidding and some due to higher prices. To make matters worse, it got stuck in a few bad projects with unfavourable risk-reward profiles. ABCIT’s CSAT scores also plummeted.

Something amiss?

ABCIT had implemented the SalesForce CRM system to manage its sales funnel -leads, prospects, and bids. Despite having a reputed CRM solution, the company faced the above issues. Its management realised that something was amiss and rightly decided that they must look for a technology solution. It invited us to have a look.

What we found

We discussed ABCIT’s sales workflows and looked at some data. We talked to its sales people. We also interviewed its project managers, RMG ( Resource Management Group), and finance people.? Here is a summary of various challenges ABCIT’s people faced.

Challenge #1 Too high or too low bid pricing

ABCIT’s sales persons used their ‘own’ Excel sheets to estimate costs because there was no standardised way. They copy-pasted from their old cost worksheets. This caused inaccurate and inconsistent estimations based on outdated data. Not sure their cost data, some sales person would provide additional cushion in their calculations. Its proposals were either too expensive, leading to lost bids, or too cheap, resulting in lower profits or financial losses.

Challenge #2 Rush, delays, and insufficient oversight

ABCIT’s cost estimation took too long because it was done manually. The pricing review mechanism was through emails with long follow up threads. Clearly, ABCIT couldn’t respond in time to the plenty of opportunities it had. Poorly vetted proposals caused financial losses. Important terms and conditions were left out or got poorly written. This created problems during project deliveries, billing, and getting paid. Delays in submitting bids led to missed opportunities.

Challenge #3 Wasted efforts and lost learnings

ABCIT’s proposals had an inconsistent look and feel. Reusing proposals was difficult. Its sales persons had to practically rewrite their proposals every time. Lack of standardization made it difficult to analyze proposals for similar projects or proposals for the same customer. Learning from previous wins and losses was lost.

Challenge #4 Losses and customer dissatisfaction due to slow starts

The projects were slow to start because the right resources couldn’t be allocated for a month or two after getting project orders. As ABCIT’s RMG scrambled to find the required resources, poorly matched allocations were made. Sometimes RMG missed benched resources.? This caused revenue losses. All these factors caused customer dissatisfaction was?

Challenge #5 Poor revenue forecasts

The company often missed even its short term (2 or 3 months) revenue forecasts despite capturing its deal pipeline in SalesForce. ABCIT’s CEO found it challenging to make informed business decisions.

No piecemeal solution

We had seen and provided solutions to solve the above problems. We quickly realized that the above challenges were interlinked.?

For example, wrong revenue forecasts caused problems in allocating the right resources. Multiple versions of cost data led to poor oversight or delays, debilitating wins or lost opportunities.

ABCIT’s growth, profitability, and CSAT scores flattened and went south even when opportunities were galore.

Here is what ABCIT was up against

With deal sizes ranging from Rs 1 to 2 Cr, ABCIT was securing 25 to 30 wins annually. To win so many deals, the company managed 300 to 400 opportunities in a year, or approximately 25 proposals every month. Its 5 sales persons prepared around 5 proposals monthly.?

Preparing every IT services proposal is a complex exercise. Proposal building needs data, collaboration, and approvals. It is a project by itself!?

While a good CRM software does what it is meant to do, it clearly isn’t enough to address problems that arise due to the fact most business workflows cross functions - managing opportunities is not an end in itself.?

A piecemeal solution wouldn’t work here.

Technology to help

There is enterprise technology that helps - end-to-end digitization.? ABCIT’s tech savvy founders were right in their approach.

Advanced PSA software is that technology. Our immediate focus was to establish standardized cost masters approved by the finance department. Another area we decided to tackle was to automate / templatize project cost estimation and approval workflows.?

ABCIT’s story continues

ABCIT overcame all the above challenges. How ABCIT did it comes out in the next edition of PSA Insights.?

Eventually, ABCIT found that it had much more to gain. That shall have to wait for the edition after the next.

If you can’t wait for the full story to unfold and if you wish to get more details right away, or you need a demo of how Kytes helps, please contact us at [email protected]