I don’t want this post to be a rant, because it is a serious question that I want to explore and invite comments on, to really try and find an answer to this problem.
The main underlying question is:
Why should we have to charge £1000+ a day to get the big contracts?
It's not a bad thing I guess if you can keep getting those contracts, but consider the following scenario:
Buying a car.
When buying a car you don’t go for the cheapest because you perhaps want a little bit of luxury (say an air bag and an alarm).
You wouldn’t buy the most expensive car because you know that in this industry you can sometimes pay a lot for essentially the badge on the bonnet.
So you would read reviews, and take test drives and weigh it up and try and find something in the middle that offers good value for money.
So there is a massive difference between the car (and other) industry and the software industry that I would like to try and highlight.
After spending my time in the saddle getting experience working on some very large projects I can confidently say that I know what I am doing.
Some of my systems are now being used in the front line of today's technology, and I am proud to be able to point out different solutions and say "I did that". What’s more, I did it correctly, and it is still useful many years later.
As well as the bespoke software solutions that I have provided with my company, I had written many huge systems while working for other companies.
I wrote the system that automates Sunblest bakeries, so all bread including Kingsmill is made on my SCADA system. Its the same for Quavers crisps, and a lot of Britain’s pasta.
I wrote simulators and emulator device drivers for Hitachi smart cards and micro controllers, so I can say that today's state of technology with the microchip and smart card systems is partly (maybe even largely) thanks to tools that I generated.
I have also had input to the Ministry of Defence and know that systems I wrote for them are still being used today to help defend our country (Details are bound by the official secrets act).
And I wrote some of the tools for the initial Tandem systems that were the building blocks for online banking.
So now that I own my own business, why do I face problems when trying to sell my skills to a large company for a cheaper price than other software houses that have half of our experience?
This is an interesting question at the moment, and I think it can have a lot to do with the first impression given merely by the quote.
When a small business like mine tries to approach a customer to let them know that we are the best people to provide their software system, then we can always hit a problem because we are competing with professional sales staff from other companies. I know that when trying to sell something then, a sales professional is going to be better than a software engineer, but is that really what the customer wants? Problems that can arise from this is that the software engineers cannot actually provide half of the ‘blag’ that a sales person has said to get the job, and this is where projects fall down (NHS and Passport office are prime examples).
So on top of a sales professional knowing to say exactly what the customer wants to hear, what else could be tipping the scales away from small businesses on getting these contracts?
I know that larger software provider companies have many expenses including the following: employing a sales team, an accountant, a secretary, the director probably doesn’t know too much about computers but will take his wage, and the office rental. This will all have to come out of an invoice for work. The actual percentage of software engineers that will be doing the useful work that the customer is paying for probably makes up only 50% of the company expenses.
After looking at some of these larger jobs that have gone wrong like the NHS system, and the Passport office I can see clearly what went wrong, and where the inexperience was. I can probably take a guess that it was a very good sales person / consultant that sold the system to the customer while the actual experience of the programmers / team just couldn’t match the blag. The result of this is there is a system that has cost millions, but is of no use to anyone, and it will end up costing double to rewrite it to a state that it can be used.
Its not just these high profile jobs however, I see it everywhere in the current climate. A leading motor breakdown recovery company has just changed their computer system to automate everything and it isn't working. The offices are still working on paper 2 months after the system was supposed to be commissioned because once going live, the software providers realise that all of the current smaller systems just cannot talk to each other. So in reality - these solutions have sent the business 2 steps backwards.
So to highlight the problem again:
When I am in competition with a sales person giving it the spiel about what his team can do and why he is charging £1200 per day, how can I convince the customer that the reason I am charging under half of that is because I want his money to be spent on the solution, and not the running of all areas of my business.
How can I get the customer over the first impression of us being a small two bit software house, and gain confidence that we have a fantastic customer satisfaction rate?
Finally how can I convince him that this job isn't beyond our capabilities?
Do I just double my prices? I know that when approaching big companies in the past that we have been ignored purely on the quote. One of our quotes was a quarter of another company and I received a phone call telling me that I may not appreciate just how big the system was. The truth was I knew what was involved perhaps more than the sales person that sold them the solution.
Without naming names that was for a London borough community website, and a year and a half later, I still haven’t seen the finished product live. I confidently said I would have it finished mid 2006 if I was to do it.
Another large chocolate manufacturer rejected a quote purely because we didn’t have a permanent office and overheads like the accountants, sales staff, and all of the other things that cost money but don’t produce useful systems or end products.
We always lose out on government solutions, even though we have successfully produced these solutions in the past while working through other companies.
I guess half of this business is actually blag. If you can learn to give a customer a bit of flannel and make out that you are selling a prestige badge (back to the cars analogy) then you will have more chance of landing the work. So double your prices for no reason and all of a sudden the customer thinks "They must be good". It seems to speak volumes over actual reputation and previous work.
I'm not too sure about how to get this perception of badge prestige. Can it be done with image, and a nice website? I think that makes a good first impression, but ultimately you are going to need a bit of the expertise in schmoozing to be able to win over the customer and land that contract.
It perhaps goes to show that the age of getting out there and networking isn’t dead yet, and face to face will always take you higher than online marketing.
I have put down some interesting thoughts here, and I have raised some questions in my own mind while writing this. I will come back to this topic, later on. For now I want to keep trying with the online marketing question and see where I can take us before I jump into the sales world of ‘blagging’.
Please feel free to comment on anything you have read in this blog.
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