7 errors system integrators make while interacting with clients
Hey everyone!
My name is Vladimir Chivilideev, PMO Head at Customertimes, and I am excited to explore the critical topic of avoiding management errors as a vendor in this article.
In the dynamic landscape of project management, system integrators play a pivotal role in delivering successful outcomes for organizations. But technical projects are not easy for both parties, and navigating the intricacies of tech project execution requires a keen understanding of potential pitfalls that can jeopardize timelines, budgets, and, ultimately, client satisfaction. By shedding light on some common management errors, we aim to empower sellers with insights that can safeguard project success and foster stronger client relationships.
As we delve into these key lessons, we will unravel activities and best practices essential for steering projects toward triumph in this ever-evolving struggle.
- Selling to the customers what they don’t need
The first mistake happens before the project even starts — it lies in the inherent need of the SI to win the deal no matter what.
Often, presale happens in a hectic environment when the seller is charming, and the buyer pretends to be charmed. In an attempt to win the client over, the SI unleashes the prepared arsenal of stunning demos and low-end estimations to undercut the competition.
On the one hand, this is how the market functions, where the most competitive solution and price wins. Conversely, this creates a false semblance of ease of the project’s scope for the client and launches a downward spiral of failed expectations.
When the sales team brings a lead, the delivery team is railroaded into providing a vision for the service or the solution. From the get-go, they answer the “how’s” instead of the “why’s.” That’s why it is crucial to involve a technical team that, as a matter of first priority, verifies that the customer really needs the solution or service provided by the vendor. Even if you can potentially sell a million-dollar solution, sometimes it is more beneficial in the long run to opt for a lighter and cheaper but more logical one that will serve as an MVP.
This fosters ethical professional working relations with the customer and may ultimately bring more business value by helping the SI penetrate other areas of the customer’s IT infrastructure or via recommendations.
2. Going seriously “under” during presale to land the deal
To explain this, we must dip into economic theory, specifically George Akelrof’s hypothesis. The theory, also known as the “lemons problem,” explores the impact of information asymmetry on markets, particularly in the context of used car sales. Akelrof argues that when sellers possess more information about the quality of a product than buyers, a market for that product becomes plagued by adverse selection. This occurs because high-quality goods (referred to as “peaches”) and low-quality goods (referred to as “lemons”) are indistinguishable to buyers, leading them to be wary and unwilling to pay a premium price. As a result, the market is dominated by low-quality goods, causing a downward spiral where the presence of lemons erodes trust, and buyers are increasingly reluctant to engage in transactions. This illustrates how diminishing trust may stem from information asymmetry, resulting in a market saturated with suboptimal offerings and hampered economic exchange.
As price remains the main deciding factor for clients in choosing prospective sellers in a competitive market, the SI are often incentivized to “go under” their usual margin level to close the deal. They may also opt to involve less senior people to do the job, thus increasing project risk and even potentially leading to project failure. You can see how the Akelrof analogy fits into the picture.
Again, the market’s competitive nature is, in essence, a good thing that forces sellers to be at the top of their game, but it’s essential to be open about the trade-offs for lowered prices. What is even more important is to know the boundaries that can only be crossed at the expense of quality or scope and be open about that if there is any chance of building a long-lasting business relationship. In fact, this goes both ways as it is not uncommon to see clients launching RFPs for the same scope 2 or 3 times until finally, they are ready to choose a more expensive “peach” rather than risk swallowing another “lemon”.
3. Rushed statement of work
The bigger the client company — the slower the gears that grind within its bureaucratic machine. It is not uncommon for a decision and approval of the purchase of a solution to take upwards of a year for a large bank. This decision-making process is sometimes discounted or not considered at the project’s inception. This leads to tight schedules, sometimes dictated by internal stakeholders’ KPIs rather than realistic constraints. And the first thing that suffers in this hectic situation is the presale process when the RFP schedule is so tight that the customer needs an estimation yesterday.
As a result, the SI’s understanding of the customer’s needs can be half-baked — the assumptions are not made clear enough, and together with error 1, this leads to the statement of work being written vaguely and leaving a lot of room for interpretation on both sides. This must be bypassed at all costs, and doubly so for fixed-bid deals.
To avoid that, a proposal for a separate discovery phase can be put forward — either a paid endeavor or a free one — depending on SI capacity and offer size. If it’s not an option, then a clause in the agreement should allow the price to be reconsidered in specific brackets after the design phase so that neither the client nor the vendor is pressed for time and forced to make rushed decisions.
4. Trusting customer to know what’s best
When the project finally begins, the first several weeks are akin to the honeymoon when both parties are hopeful, impressions after a dazzling presentation are still fresh in memory, and neither is yet burdened with the mundane day-to-day requests for documentation. As is often the case, the initial stages of the project are most crucial and either make or break it, so one of the first things a good project manager can do is assess the client’s internal knowledge of what they need. If either of the first 3 errors were made, it is also likely that the client needs to be more mature in IT project implementation to dictate the full scope of requirements.
Don’t mistake — the customer must always be the beneficiary of the provided service, but depending on their maturity, they need to be more or less guided in the implementation process. The project manager needs to be delicate but open with the customer about his view on their IT maturity, and if he finds it lacking, a firmer approach to requirements gathering, elicitation, and challenging has to be taken.
Depending on the client, you may be surprised — some may welcome a more rigid architectural approach as long as it provides the required business benefit in the end. If a guided approach is met with resistance, then more attention has to be given to proper documentation of the solution — as a precaution as well as for solution consistency. Finally, this has to be raised at the steering committee meeting if potential risks with the solution stability are foreseen.
5. Communicating only with one key client stakeholder
Sometimes, the project team gets too comfortable communicating with a single contact on the client side. He is always agreeable, sees reason, and takes it upon himself to sort the problems with internal stakeholders, and it’s usually a good thing. Until it isn’t.
We must remember that, just like in your company, the client’s internal views on the project, its progress, and sometimes its purpose may differ. That’s why you need an SH power-interest matrix always to know whom to keep in the loop, appeased and happy.
Higher-level steering committee meetings are also a must on projects of all sizes to verify that the team is on the right track.
6. Continuing the project no matter what
The seller must know when to stop if they aim to produce quality products and have long-lasting, mutually beneficial relationships with the client. It may be tempting to continue billing for gold plating or when the client steers the ship in the wrong direction, but such an approach will most likely hurt more down the road — both in client goodwill and the vendor’s own reputation.
A less serious case of this error is when the client receives the ready solution and is content with it but continues making changes using the leftover budget. For the SI, this means a busy team and a continued cash flow, which is good. Still, at the same time, this means that sometime in the future, when the market conditions or company expenditure policies change, they may not have the budget for essential things OR they start seeing less and less “bang for their buck” in the provided services.
Thus, when the gold plating starts, the seller has to at least make the customer aware of the situation and refocus the team’s efforts. Not only does it directly show expertise, but it also raises the bar of honesty for any competitor thirsty for a piece of the business cake — something in very short supply on the market.
A far more frequent scenario is when the project is sidetracked, delayed, or otherwise impeded by extraneous circumstances. The client may be unsure about their own requirements; the solution relies on third-party software that they can’t do work properly; the customer had a change of CEO that may drastically change the direction of work, or worse — the proposed solution is actually not that suited for client needs. These things have to be highlighted on the steerco level before being brought up on one of the customer’s project “kill-gates” if they have them. A farsighted engagement manager has to understand the repercussions of these changes and propose a plan of action before the client makes a preliminary decision. That’s why it’s extremely important not to sugarcoat the actual project status (at least internally) and use proactive metrics (for ex., earned value management) to get wind before the storm.
7. An angry client is not the worst client
It is a common understanding that a discontent client could be bad for business. Escalations and uncomfortable steering committee meetings are not the best incentives for future collaboration, but at the same time, these things are effective points of contact with a client who cares about the result. With proper management and due diligence on the vendor side, escalations can be turned into opportunities to show that the team can handle stress, and steerco meetings usually end on a positive note because each party hopes for a swift and efficient resolution.
A more troubling sign of a deteriorating relationship is silence. The team may continue working on the project and reporting results to their favorite stakeholder on the client side (see error 5), who may have a vested interest in the project’s success but little authority as to its continuity. The team may even conduct intermediary demos but receive scant feedback and a customary “thank you”. Sometimes, we may scratch that off due to the busy schedules of decision-makers, and the absence of feedback may even be interpreted as a positive sign that the team is on the right track, but a lot of times, it’s a sign of a much more disturbing tendency to opt out of the contract.
Therefore, it is extremely important to have an ear to the ground and request feedback from decision-makers to avoid the “echo chamber effect”. It is better to receive critique now than a cease-and-desist letter further down the road.
Another thing to keep a close track of is the account receivables situation. Some in-house decisions take a lot of time to process, and late payment or absence indicates bad tidings that a vendor can see in advance and do something about it before it is too late.
In conclusion, it is worth saying that each individual contract is a unique case with its own problems and constraints, affected by market conditions, interwoven with existing communication history, and compounded by the vendor’s risk tolerance.
Still, the key message of this article is the need to foster trust in business relationships. If a contract is a stick the two parties held by the ends, then the trust they build is a rubber band. The stick is rigid and will break before it bends, while the rubber will stretch and contract, allowing both parties the necessary flexibility to adapt to the uniqueness of each individual business interaction.
Just remember not to stretch the band too much.
