Don't Neglect Your Operations in Favor of Sexy Projects

One of the key challenges of any management position is balancing the demands of your current business mandate with the initiatives you are undertaking to improve or expand your operations.

I typically divide my responsibilities into two broad categories: Operations and Projects.  This seems simple but it's worth defining what I mean here.

Operations generally refers to the administration of existing business functions you're charged with overseeing.  You want your ops to run as smoothly and efficiently as possible, and you need to create scalable and reliable processes to execute your day to day operations. You've designed your workflows carefully, you've got measurement and quality controls in place to make sure everything is running properly - and when there's an issue it can be identified and rectified.

Projects refers to a discrete deliverable designed to significantly enhance or expand the operations of your business.  You may need to add an offshore component to your team. Perhaps a new software system needs to be installed. Or you've been tasked with taking on a new business currently managed by another org.  All of these are projects. And taking them on can come at a cost to your current remit.

It can be tempting to devote your time to project work at the expense of overseeing your ongoing operations - projects are exciting, capital intensive, highly visible and politically potent. Pull off a seven figure expansion and you'll be the talk of the firm!

But be careful you don't neglect your current operations that require due care and attention. Of course, senior management doesn't care that your plate is already full when they "volunteer" you for a big project! So how do you manage?

It can be tricky. Some recommendations:

1. Ensure your existing operations are scrupulously documented! I can't recommend this enough: you need to ensure your staff have documented all your operations and that you have reviewed the documentation for any errors, gaps or inconsistencies. 
2. Communicate early and often - make sure management already has a keen awareness of what you're already doing. Look, it's likely that since you've been tasked with a new project, they already think highly of you! But make sure management is well versed in the ops you're already running and the resources required to do so. They'll be more amendable to providing you with additional staff (FTEs or contingent) to execute the new project. 
3. Delegate - before it's too late. Take careful inventory of your daily tasks. Are there duties that you're holding on to that could be delegated to a trusted line manager? Don't delay in addressing - you may be called upon to take on new responsibilities at any time. 
4. Value benchmarking - everyone wants to grow their business, and with it your stature and influence in the firm. This is natural, but be honest with yourself: are their operations you're engaged in that could be wound down? A big project in the wings could be the opportunity you need to shutter a low-value operation and reallocate resources to a new initiative. 
5. Make it hurt - I don't recommend this approach unless all other avenues have been explored. But sometimes, you need to push back and show management what the cost is to taking on a new project. Unless you communicate this effectively, management will assume all costs are sunk! You need to show, not tell, how the new responsibilities will impact current operations unless you get more resources (people or money). 

You should always be open to taking on new projects or assuming responsibility for new businesses, but be mindful of how this affects your current responsibilities. Have your operations and your people primed for potential disruption if your attention is required elsewhere. 

- Kevan Huston

A Vendor's Fiscal Year End is Your Friend

You can never get enough intelligence when negotiating with an information service vendor (or any vendor).

One negotiating lever that may not be top of mind: your counterparty's fiscal year end.

Wait, what?

I wrote about the exploding offer bluff in which vendors will try to incentivize you to sign an allegedly discounted offer that expires at the end of the month (or quarter). In my experience, in most cases these tactics are bluffs you can call and not worry about the "discount" not being offered the next period. You can take your time and make sure the product or service meets your requirements and the vendor passes all due diligence flags.

But there is one instance when a time-based discount really is exploding and that's the fiscal year end. You can use this to your advantage, particularly if the deal is a renewal and your contract expires a few months after the vendor's fiscal YE.

How? Suppose you know the service is one you'd definitely like to renew. Let's say your contract expires 3/31 and the vendor's fiscal year end is 12/31 (as is common). Why not reach out in December and see what kind of incentives the vendor can offer for an early renewal, and one that they can book before their year end?

Here's what I like to do:

Under the pretense of budget forecasting, contact the vendor and say you'd like to lock in a renewal now while you have budget flexibility.

A vendor will always be willing to renew, but if they can actually modify the renewal such that the contract begins before their year end, they may well adopt a more flexible negotiating posture. In this case, if the contract were repapered to start in December they can book the revenue (or a portion thereof, depending on accounting treatment), before the new year.

So take them up on it! But ask for a 15-month contract with three free months. You'd be surprised how often a vendor would go for this - or at least a reduced rate that gets you a month free.

Our illustrative contract negotiation might look like this:

Current: 4/1/2012 - 3/31/2013. Cost: $60,000 or $5,000 per service month.

Expected Renewal: 4/1/2013 - 3/31/2014. Cost: $66,000 for 12 months or $5,500 per service month.

Alternate Renewal A: 12/31/2012 - 3/31/14. Cost: $66,000 for 15 months or $4,400 per service month.

Alternate Renewal B: 12/31/2012 - 12/30/2013. Cost: $60,000 for 12 months or $5,000 per service month.

Alternate Renewal C: 12/31/2012 - 3/31/15. Cost: $132,000 for 27 months or $4,888 per service month

Now you may not believe you could get a 20% reduction in your monthly cost, but I have personally negotiated deals this favorable, and all because we were able take advantage of the fiscal year end lever.

Even if you can't get three free months, there are going to be other concessions you can extract, monetary or non-monetary. Maybe you could counter with a flat renewal if you agree to move the contract period forward (Alternate Renewal B). Or perhaps you can get a flat two year renewal - that would make certainly make the three free months more palatable to the vendor (Alternate Renewal C). The options are endless, but you'll never know what you could get if you don't ask! In this case, a vendor would be very tempted by Alternate Renewal C.

Always look for unorthodox levers when you're preparing to negotiate. At the very least, you'll have negotiating points that you can relent on and then characterize this as a concession to get other, more desirable levers.  A fiscal year end sweetener is an unorthodox lever, and may just work if you play your cards right.

- Kevan Huston