Graeme's 'I reckon' Space

Utilisation Rates

Utilisation is the Percentage of Billable Time that is billed to a client. There are generally two ways to calculate this number, gross utilisation and net utilisation:

·         Gross utilisation is billed hours over total possible billable hours over a given period. For example, in the course of a month there may be twenty (20) workdays leading to 160 potential hours. If the consultant bills 120 hours over that period, then the gross utilization is 75%.

·         Net utilisation subtracts public holidays, vacation and sick time from the possible billable hours, for example if a consultant took a week of vacation, totalling 40 hours, then the net utilization would be 100%; 120 billed hours divided by 120 possible billable hours.

Calculated under either method, this number is important to overall revenue and profitability of the organisation. With higher utilisation there are higher revenues and gross profits, since costs such as salary are fixed over a short period of time.

On the surface it would appear that the ideal organisation should strive for a utilisation rate of 100%. This, however, is short-sighted. An organisation needs to provide time for training, sales support, and have resource flexibility to address new sales opportunities.

Very often a PSO will need to present a potential team or partial team to close a sales opportunity. If there is no talent available "on the bench" the organisation will not have the resources required to respond to sales challenges such as this.

The prudent manager works with the sales organisation to forecast upcoming projects and plan staffing and training accordingly.

Formula

Where Available Hours = Total Hours – (Public Holidays + Annual Leave + Personal Leave)

I recently attended an all weekend event called CodeCampOz.  Essentially this is a weekend in Wagga Wagga where IT geeks get together to share knowledge around software development.  Readify was one of the major sponsors for the event this year putting some of our limited discretionary spend into a community event – why?  Well to be completely honest because one of our guys Mitch Denny (the main organiser and facilitator) was prepared to put his own money in to ensure it ran.  Clearly that sort of passion should not go unrewarded so we jumped in.  This typifies the type of commitment to our industry that is unfortunately very rare and I have huge respect for this type of behaviour and also for the guys presenting at the event.  Capital ‘P’ Professionalism.

Anyway I was invited to take part in a panel discussion specifically targeting recession survival for Application Developers and Software Development organisations.  In the hour we had we didn’t get to the end of the initial questions so I thought I’d post a blog entry to short form my thinking for those that are interested.   Here we go:

How does the economic downturn affect your business?
Yes – we are not immune.  The recession has lowered our growth from the stellar growth of previous years.  It has put increased pressure on cost containment and of course cashflow.  Really obvious I suppose but the interesting thing to be is that whilst that is the overall effect in fact each State has performed differently and for differing reasons.  For example NSW and WA have gone very well, NSW against the trend.  We are not a great litmus test for the economy in general.  The good news is that our investment is cash information and control systems is paying dividends despite our customers stringing us out - and we are still experiencing top line growth, and I can’t complain too much about that.

What are the things that you think the business can do to survive the downturn?
In fact many of the things I would say here are things you should always do anyway.  Being in a downturn should not be the reason to do them.  Perhaps a downturn just brings them into sharper focus. 

·         Invest in systems that help you manage cashflow and ensure you focus on good invoicing practises and collections. 

·         Focus on the performance of your people.   There is no room for skiers.

·         Keep running your eye over operational costs to make sure you’ve covered every area that will save you money.  In our case the big expense items are people (see performance), travel and communications. 

 

In business you are either in a growth phase of a retraction phase.  In retraction, think of it as pruning a tree.  If you do it well your tree is ready to growth and blossom well when the spring comes.  If you chop it off at the trunk there is no way it will grow back to its previous beauty.    

What are the things that employees can do?
Once again – the same as you should be doing in normal times. 

·         Focus on your own professional development (like going to codecampoz) and don’t be afraid to invest in yourself.

·         Find out what challenges your business is facing and ensure you help out.

·         Be the most valuable person you can be to the organisation.  No sensible business owner wants to remove great people from their business.

·         Focus on customer service

 

In a downturn what is more appropriate, contracting or fulltime?
We are all contractors really, it’s just that some of us are on longer contracts than others. 

In our industry though the argument for our customers becomes do I want to use professional services or do I want a cheaper contractor to help solve my problems.  Our smarter customers are looking for organisations to solve their problems in the most cost effective way.  (no surprise there is a big focus on reducing cost right now).  Although it appears counter intuitive the real value proposition lies in professional services.  I’m seeing a general trend for organisations to release there contractors and look to professional services to solve their immediate and most compelling issues. 

What do you think are going to be the technology trends for the next 18 months?
From a completely capitalistic point of view ‘I don’t care’!  Yes I know that is a funny thing for a CEO of a software development company to say. Surely I have an opinion.  All change is good – that’s how we all progress and that’s how IT companies make money.  Straight forward simplistic view I know.

 On a more altruistic level, whatever the technology is I’m hoping it in some way addresses some of the many global issues we face.  Whether that is a global financial crisis, terrorism or poverty I don’t have a favourite.  The world needs innovative solutions to its many problems. 

What are your thoughts around offshoring development resources vs. keeping them local?
The average developer is definitely in constant jeopardy of being ‘offshored’.  To believe that the average  Australian developer is in some way better than the average offshore developer is indeed naive just as it was probably naive of the Pac Brands workers to believe that the company could resist every trend to offshore much of its capability.  If you don’t want to be ‘offshored’ .. DON’T BE AVERAGE!  There is plenty of compelling evidence that high performance local development teams doing a great job will outperform its offshore alternative.    

Leadership is a subject that always interests me.   You can’t buy it and I don’t think it’s easy to build in someone either however the basic traits of leadership live inside many people and sometimes it’s just a matter of learning how to unlock it.     At Readify we have become pretty good at recognising people that have leadership traits and we hire almost exclusively people that have those traits.  Many of them don’t even know it themselves when they join us.   I don’t undervalue how hard it is to recognise these traits however I reckon the real trick is to figure out how to unlock leadership in your people.  

Of course there is no silver bullet but as an organisation you can do it – it does however take time and it does mean you have to invest.  It costs us PLENTY in time and dollars, and we wouldn’t do it if the returns were not plenty as well - but don’t expect the returns to just arrive in wads of cash.    The type of leadership I like to see encourages others to lead and as more of our staff learn the traits of great leaders, I’m seeing those around them learn as well.   I don’t think in a consulting company like ours you can have too many leaders because they all lead in different ways for different reasons.  I reckon I’d like to bottle what we have now.  As high maintenance as it can be sometimes -  it really works for us seeing our staff lead in technologies, business, community and citizenship!

I was at Re-mix today and there was a buzz around about David Burela and his incredible team’s entry into the Imagine Cup for Australia.  Insiders were telling me he was a shoe-in, others were telling me it was in the bag for David.   After all, the project has the endorsement and approval of the leader of the National Party (for Australia) and the head of the Farmer’s Federation of Victoria.

 

David actually got to demo the product at the lunch session for Remix and captivated the attention of the complete room for the time he was talking about it.

 

We all know that the ‘fat lady has to sing’ and at the time I left she wasn’t singing, but she was warming up.   The upshot was – by unanimous decision – Readify’s David Burela and his team are the AUSTRALIA WINNERS OF THE IMAGINE CUP AND ARE ON THERE WAY TO PARIS!

 

Multiple people at Microsoft believe that David’s team didn’t just do a “university project” but came up with an incredibly viable business proposal that investors will be interested in.

 

The project incorporates Silverlight and Virtual Earth as part of its system – two big buzz technologies for Microsoft at the moment.

 

David’s team won out over three other finalists who were being coached by the mentor who led last year’s team to victory.

 

His whole team was immediately interviewed by Tony Sarno, Editor of APC Magazine. Tony was also one of the judges and was incredibly excited about it. 

 

A huge congratulations from Readify David. 

Maybe its on the back of a mining boom (thats not news to anyone) or maybe its just the right time for Readify but what a great time for Readify to launch a Perth office.  Andy Lamb has hit the ground running and already it seems Readify is making a name for itself locally.  We have scheduled a mini series of our 'ever popular on the East coast' RDN series - starting with:

 

 

Seriously, if you have not seen these guys present you've really missed out.  I'm even going to fly over for it - so see you there  :) 

 

I know that some people believe that travelling on business is really 'just a junket', however lets just look at it a little more closely.

 

1. If you are from Australia, the US is not just around the corner.  So really who does enjoy the process of catching a plane and the absolute boredom of sitting in a plane for 16+ hours in a very small chair with no leg room?
2. You are away from your normal connectivity.  Getting your laptop online is not so much of a technical issue these days and global roaming for your phone works, albeit expensive,  however your normal work mode is completely disrupted so you cannot expect to be as responsive to your business demands. 
3. Nobody has actually come up with a resolution for the time-zone problem.     One day ahead and 6 hours back does not leave you much room to be engaged with staff and customers. 
4. Travelling back from the US you find the two days just disappears behind that cramped little seat and that dam time-zone thing again. 
5. I miss being around my family.  Actually, in order of priority - that is No.1. 

 

I try to make sure I'm getting value from my investment in time and money.  If for some reason I don't feel like I'm getting value  - I'm going to stay home.

 

Scorecard for this trip to the US - 8.3/10  - guess that means I'll be going again! 

A bit like a high performing sporting team, sometimes we get caught up in highly complex activities or even an extraordinary workload.  Sometimes you just have to make sure you are doing the basics right to be successful.  For example:  

 

We work in an environment whereby we are all pretty remote from each other most of the time.   It creates a massive reliance on getting the communication right.  Whether that be email, TXT, IM , phone or anything else – we must treat each other as a very high priority and ensure that we are using the right medium for the right purpose.  In our environment we all have the right tools in order to stay connected – in fact we have an equally important issue about when we can turn it off.  In general during business hours:

 

·         We do not encourage people to be online without starting Office Communicator.

·         We expect phone calls to be return on the same day the message is left. 

·         We expect that an email will be returned ASAP – and if it’s likely that it will be a couple of days before a clear reply can be sent then it is expected that a quick return email stating the date they will have a reply is a polite thing to do.

·         It’s not silly to follow up an email with a phone call.

·         If you are ‘off the air’ for an extended amount of time – announce it, leave an out of office reply, change your presence awareness etc.

 

The other area I think that we need to ensure that we have right centres around relationships.  As a management team we are constantly busy – what we find is that we can run out of time to ensure that we are finding time to:

 

·         Reach out proactively to our customers

·         Meet with our staff face to face

·         Attend and support community/industry related events

 

Seems so obvious that I’m sitting here wondering why I’d bother to blog about it.  I reckon, like a highly tuned sports person – sometime we forget to ‘watch the ball’.