Understanding commercial issues for an IT consultancy business by cqe15118

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									Understanding commercial issues for
an IT consultancy business
Leeds Source-IT
Alison Marshall
4 November 2009
Workshop overview

Understanding the market and marketing issues –
how to get customers.
The economics of consultancy – how do people
make money?
Contracts and legal issues – how to make sure
you get paid for what you agreed
Working with clients – do’s and don’ts
Section 1

Understanding the market and marketing issues –
how to get customers.
The economics of consultancy – how do people
make money?
Contracts and legal issues – how to make sure
you get paid for what you agreed
Working with clients – do’s and don’ts
Core competence

Strengths
What can we do
better/faster/cheaper than the
competition?
What specialist equipment,
contacts, know-how, intellectual
property do we have?
Weaknesses
What is going to limit what we can
offer to our customers/
Source-IT core competence

Strengths




Weaknesses
The competition

Who are our main competitors?
• Think about solutions that solve the
  problem in a different way, not just
  direct competition.
How do we differentiate ourselves
from them?
SWOT Analysis

Strengths                 Weaknesses
Internal - core           Internal - limitations
competence, brand,
relationships etc.



Opportunities             Threats
External – factors that   External – competitors or
create new or grow        changes in the external
existing markets          environment
 Our brand?

 What does it signify to a customer of Source-IT?




http://www.leeds.ac.uk/identitymanagement/
Targeting

Who are our target market?
How do we reach them?
Which of the ways of communicating are right
for Source-IT?
Do we need different plans for different market
segments?
Section 2

Understanding the market and marketing issues –
how to get customers.
The economics of consultancy – how do people
make money?
Contracts and legal issues – how to make sure
you get paid for what you agreed
Working with clients – do’s and don’ts
How do IT consultants make
money?

I want to earn an equivalent of £30,000 per
year.
I want to have 5 weeks holidays.
I will work 5 days per week, 8 hours per day
on average.
Costs

My costs will be:
Salary = £30,000 + 11% NI = £33,300
Premises, heat and light etc. = £8000
Travel to customers, stationery, advertising, marketing
literature, telephone etc. = £3000*
Computer – hardware and software (per year) = £2000*
TOTAL COSTS = £46,300




*sometimes businesses separate out ‘start up’ costs to cover
initial set up costs, which reduces the ongoing annual costs
you need to cover. In this case, you need to think how and
when you are going to get a ‘return on the investment’.
Daily rate

After deducting 25 days holidays, 8 days
public holidays, I will work a total of 227 days.
I expect to need to spend 0.5 days per week
doing business admin and 0.5 days per week
on sales and contract negotiation.
Hence I have 182 ‘fee earning days’.
So I need to charge £46,300/182
= £254 per day.
Variations

Start up and operational costs
Companies with several employees – eg. 2
consultants, plus an administrator, plus a sales
person.
Work from home (or the beach?), earn less/more,
work longer/shorter hours? Think about your
marketing strategy, who your customers are etc.
Source-IT daily rate

We will operate a daily rate of £295 for costing purposes (but
will charge on a task basis, payable on satisfactory delivery).
This is made up as follows:
Consultant fee = 7.5 x £17 = £127.50
NI = £14.03
Legal fees to Consulting Leeds = £29.50
Space and other charges to SoC = £15.98
Branding fee to University = £14.24
Support costs = £15.00
Marketing costs = £28.85
Management time (including sales and negotiation) = £64.90


We have some margin for negotiation – eg. can offer a discount
to internal clients as we don’t need to pay the Consulting Leeds
costs.
Section 3

Understanding the market and marketing issues –
how to get customers.
The economics of consultancy – how do people
make money?
Contracts and legal issues – how to make sure
you get paid for what you agreed
Working with clients – do’s and don’ts
Intellectual property and
confidentiality

Simple messages -
The customer is going to make money from the
software we provide.
They cannot do this if their competitors can see
the code or know the algorithms used etc.
However, we have some ‘background IP’ which
we may want to use on other contracts.
We protect them and us by agreeing terms.
Legal and contracts

A contract states what each person is going to do (eg.
consultant does work, customer pays).
It is legally binding – if either party breaks the
agreement, they can be sued.
Professional indemnity insurance – protects the
consultant if something goes wrong as a result of their
work
Legal fees – if the customer defaults on paying
We use Consulting Leeds to cover all the above (see
http://campus.leeds.ac.uk/kt/consulting.htm)
Further work – look at the Consulting Leeds customer
terms and conditions and the Leeds Source-IT
consultant agreement – look at how these cover the
above.
Section 4

Understanding the market and marketing issues –
how to get customers.
The economics of consultancy – how do people
make money?
Contracts and legal issues – how to make sure
you get paid for what you agreed
Working with clients – do’s and don’ts
Contractual relationship

                     The Client
                     User requirements discussed with Royce



 The Contract
 Signed agreement of tasks, pricing and schedule




                                     Source-IT team
                                     Delivering the work
Key points

The relationship is with Source-IT, not with any individual
The person who is responsible for negotiating terms with
the client is Royce
The client is the person who is paying your fees
So….
• Act in a professional manner to reflect and represent Source-
  IT’s reputation
• Be polite and courteous at all times to the client and to your
  team colleagues
• Don’t agree to do any task for the client that has not been
  agreed with Royce
• All communications need to go through Royce.
Golden rules for client meetings

Preparation
• Check what you had agreed to do for the meeting!
• Get any demo ready in advance, set up on your laptop or on the
  computer in the meeting room
• Bring pen and paper to take notes
The meeting
•   Turn up on time
•   Be professional and business like
•   You are there to answer technical questions
•   Make sure you understand what you have been asked to do – ask
    questions to clarify if you need to
After the meeting
• Check you know what actions you have been given
• Update Redmine
Client demonstrations

Set up in advance and then DON’T DO ANY
MORE WORK ON THE CODE
Show only what you know is working
Have your questions for the client ready
Be honest if you are behind, but don’t draw
attention to problems unnecessarily.
Mission statement

Leeds Source-IT’s mission is to provide robust,
reliable and quality assured software
engineering solutions to external SMEs, other
organisations and to University research
groups.
Source-IT Objectives

Profit – To be self sustaining and cover all direct and
indirect staffing costs, including those payable to University
of Consulting Leeds Ltd space and support services.
Growth - To grow the business to a level that it will support
a full time manager within 2-3 years.
Strategy - To meet the University’s strategic objectives to
increase enterprise activity (Theme 9 of the Leeds Strategy
Map), to increase the number of staff involved in enterprise
and to enhance the student experience (Theme 10) and
provide an exceptional learning experience (Theme 8).
Key factors for success


Quality and excellent project management at all stages.
Clarity and shared understanding of client requirements.
Full documentation and a commented code repository for
all projects to ensure that follow on work can be
effectively undertaken, if necessary by different
consultants.
Task based pricing and payments to consultants and
clear agreements on timescales.
Clear marketing messages to differentiate ourselves from
the competition.
Final thoughts

Do you agree with our business strategy for
Source-IT?
Do you have any ideas to help get business for
us?
Would you want to set up your own consultancy
one day?

								
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