It’s 2018.
Sam is the owner of a software company.
He has been fairly successful in selling and delivering projects for some large corporations.
His team now has 42 people.
One problem he needs to solve is that the quality of the delivery depends too much on his personal involvement.
After many sleepless nights, talking with people in the industry and countless audiobooks listened, he decides that what his company needs is to implement a predictable, scalable delivery system.
He chooses Scrum.
How much is this going to cost him?
What follows is the heavily redacted and simplified journey that Sam takes.
Step 1.
Receiving multiple rate cards from training companies and agile coaches.
He knows how much they charge for a day of training, for various implementation programs, for an hour of a particular expert’s time.
Step 2.
Making a shortlist from all the possible options, he asks for their price.
Now he knows how much he will have to pay to work with any of them.
Step 3.
Getting a project quote.
He now has the budget for each alternative – how much he has to pay for their services in his context, including timing and deliverables.
Step 4.
Doing an internal analysis.
He tries to figure out how much the entire initiative will cost him, by taking into account:
- All the time that team members will spend in training and learning, and the opportunity cost of not billing that time on customer projects
- Any extra costs incurred in the future from changing the team structure, for example by adding other roles they don’t currently have
- How much the tooling and infrastructure will cost (software applications, workflow changes)
Step 5.
Making a decision.
Is it all worth it? Should he pay the cost?
If this whole exercise is successful, he expects to be able to grow the team from 42 to 60, maybe 70 people and still be able to deliver the same level of quality, but with a lot less involvement from him over time.
This would free up a large portion of his time for other priorities.
The value for him of doing this is measured in the additional profits that the company can make by growing so much.
First question for you: from your experience, at which level in this pyramid do you think most vendors are trying to sell and convince clients?
> Rate Card
> Price (for a project)
> Budget
> Total Cost of Ownership
> Economic Value
Second question for you: at what level are you selling?
When you present, give arguments and motivations in front of your potential clients, what vocabulary and language do you use?
WHAT THIS MEANS FOR YOU
The higher you go in this inverted pyramid, the better for you and the more chances you have of getting the project.
The more you talk about your rate card, your price or even the budget, the higher the risk that you are missing a big part of the customer’s picture and their decision will be based on factors and data that you are not seeing, not taking into account and not using in your story.
PS.
Based on your reactions to last week’s challenge, I guess you liked it. The correct answer was survivorship bias and the prize goes to New York.
Here is another challenge for you: which are the 3 generally accepted functions of money?