Why projects go over estimates

A couple of days ago I mentioned the story of a project (not mine) that went more than 6 times over estimate.

How is this even possible?

As with everything, there's not just one reason. But I'll tell you one reason that really matters:

In a competitive marketplace, where one provider looks pretty much like the next, providers are heavily incentivized —whether they know it or not — to present the lowest estimate they can.

And because it's “just an estimate,” there's very little risk to them when it turns out their estimate was too low. ”Sorry, we’re almost done, we promise.”

In other words: low estimates sound competitive, while putting very little risk on the provider.

But the risk is still there. The unknowns are still unknown.

And if the risk isn’t being carried by the provider, would you care to guess who carries it?

All the best,
A.

Why do they think you're awesome?

Do you know why people are joining your organization? Do you know which of them are joining for which reasons?

If you're asking them — or observing them closely — then you probably know. And if you're not, then you probably don't.

People join an association for lots of different reasons: professional development for themselves, business networking, a sense of belonging, giving back to their industry, building their reputation as industry leaders, making the world a better place.

Understanding their motivation is a critical component of tailoring your outreach. Of turning casual contacts into active members. Of raising one-time donors into committed financial partners. Of turning passive members into your biggest fans.

Here's the thing:

Providing basic services might allow you to keep enough members to stay afloat.

But knowing what motivates them, and stimulating that motivation, is what will turn them into true fans of your work.

All the best,
A.

The second rule of custom development

Yesterday I pronounced the first rule of custom development: “Do not write custom code for open source CRMs.”

After you live with that for a while you might decide to take the training wheels off anyway. Rules are kind of for kids, right?

So we have the second rule:

2. If you feel you must write custom code for your open source CRM, make sure you know exactly why you're doing it.

Knowing why doesn't just mean pointing to a feature you'd like to have.

It means naming a business goal, a real goal that has numbers and units, and references tangible benefits or business value that will be worth the effort and expense of what you're about to undertake.

Here's the thing:

You can do anything you want with CiviCRM. But just because you can, doesn't mean you should.

All the best,
A.

The first rule of custom development

When you're running an open source CRM, you can do pretty much anything you want with it. If it comes down to it, just find a developer, and change the code.

Before you go down that path it's good to know the first rule of writing custom code for open source CRMs:

1. Do not write custom code for open source CRMs.

This rule will save you much trouble and expense. Because once you’ve written that custom code, it’s yours to maintain, forever. For example:

• Does it break when you upgrade the CRM? You get to fix it.

• Does it show up with a bug somewhere down the road? You get to fix it.

• Does it interfere with some extension you install later? Yep, you get to fix it.

If you don’t like the First Rule, you might like the Second Rule a little better. More on that tomorrow.

All the best,
A.

Transformative changes

It's pretty easy to think about small incremental changes. But knowing which changes to make is no small matter.

A boxer on her way to the top does not get there just with a better pair of gloves. She doesn't even get there with more hard work.

She gets there by choosing the right coach, someone who can spot the holes in her game, and help her stay on track to make the most of her unique strengths and weaknesses.

If you’ve got specific business goals to achieve—say you want to cut your staff workload in half, or double membership renewal rates — don't get sucked into fiddling with incremental improvements to your tools. Get some strategic advisement so you can make a real plan to address your unique weaknesses, play to your strengths, and move substantially toward those goals.

All the best,
A.

Meeting planners and strategic consultation

Ever hire a meeting planner?

Even if you're used to being the meeting planner yourself, pulling in an outside expert can give you a world of insights that you can incorporate into your own work.

Once you have a good plan in place, you'd probably want to rely on staff and volunteers to make everything work according to plan. That gives you a cost-conscious solution for implementing the plan, with hands-on help from people who know and care about your mission, your people, and your organizational culture.

It's the same for managing your CRM system.

Here's the thing:

Hiring expert advisors for high-level planning is where the big wins happen. And putting your own people on the day-to-day implementation gives you both cost savings and fine-tuned control of the experience you're delivering to your members.

All the best,
A.

Predicting costs

Most purchases have a very predictable cost.

Whether you're buying an apple at the local grocer or a skyscraper in downtown Manhattan, you can expect to have a clear idea of the purchase price before you agree to the transaction.

This obviously offers some huge advantages over the alternative. Imagine committing to buying a new home for your family based only on an estimated final sales price: We estimate the cost of this home at $500,000, but that's only an estimate, and we won't know the real price until several months after you've signed the closing documents.

Yes, there are business arrangements that work like this. And a highly educated buyer might be willing to take on the risk. But it’s a substantial risk.

I'm not a real estate investor, so I can't tell you lots of stories from that angle.

But I can tell you that in the world of software-related business services, going far over the estimate is very, very common.

If you want an example, take a look at this blog post from a buyer who committed to a project on an estimate of $7,000, and ended up with a cost of $46,000, and a bunch of regrets.

Believe me, I understand how uncertainty and pricing competition puts pressure on providers to avoid fixed-fee pricing. Really unpacking this topic is more than I can do in a short email.

But here's the thing:

By offering only an estimate of cost, and anchoring the final price the number of hours they may spend on a project (and BTW, the “hour” is an incredibly arbitrary metric), the provider is simply shifting that risk onto you.

A price is a price. An estimate, sadly, is not.

All the best,
A.

Simplifying

As if on cue, the day I wrote to you that Simplicity is sophistication, a client reached out for advice on reducing complexity in their user permissioning model. Looking at it together, we saw pretty quickly that they could easily eliminate 14 user roles and over 22,000 inactive users from their system.

That’s over 3100 permission assignments they can now stop thinking about. And instead of managing over 22K users, they’ll have 12.

They’ve got that in the schedule for this week, and they're now on their way to a permissioning system that they can actually understand and manage.

So it’s worth asking:

What can you do to avoid excess complexity in your new projects? Or to streamline your existing systems so you can actually understand what's going on?

Whether da Vinci said it or not, simplicity really is the ultimate sophistication.

All the best,
A.

Tools vs. strategy

Imagine someone who's trying to get in shape, so they buy a new treadmill. But that doesn't do it, so they buy a Bowflex. But that’s not doing it, so they buy something else.

One gadget after another, and they don't feel any more fit than they did at the beginning.

Turns out, they weren't actually using any of that stuff more than once or twice a month.

Here’s the thing:

It's not always a question of whether you've got the right tools. Often it's a question of whether you have the right strategy, and whether you're implementing it consistently.

All the best,
A.

P.S. Hat-tip to list member Andrew A., who mentioned this analogy in a recent conversation. Thanks Andrew!

Segmentation?

Quick question for you:

How much are you making use of segmentation in reaching out to your people?

I get the feeling this is an opportunity that a lot of organizations are overlooking, so I'm curious how you might be making use of it.

If you could, please shoot me a quick reply with a short answer.

And, if you have questions about segmentation, please ask in a reply email, and I may be able to dig into this topic a little further on the list.

All the best,
A.

5 types of costs for your CRM project

When you’re considering a significant improvement to your CRM system, you may have more costs to consider than just the fee you’d pay to make it happen.

Here are five that I have encountered in my years as a consultant:

1. Time cost

The time that you and your employees will have to devote to managing and participating in the project.

For example: You believe that a highly customized member engagement workflow will get you a 30% increase in member acquisition and retention, but you find that the project requires your membership director and their staff to spend 2 days per week participating in the design process.

2. Technical switching cost

The technical effort of moving from one system to another, or to modify related systems to support the changes.

For example: You know that moving from an expensive SAAS CRM subscription to an open-source CRM could save you tens of thousands of dollars every year, but you find that making the switch will require you to set up or alter a number of related online services, such as outbound email providers, payment processors, and e-commerce integrations.

3. Human switching cost

The effort and mental stress of changing your staff’s (and possibly your members’) way of using the system.

For example: You want to design and implement more robust security and permissioning policies to accommodate the growing complexity of your organization, but you find that doing so will require significant re-training of staff, more time for member support to handle questions about the changes, and possibly dealing with frustrated staff members who can’t do things the way they used to.

4. Opportunity cost

The cost of doing one thing and leaving another for later. What other projects are you delaying or giving up in order to take on this new improvement? What other needs that you’re aware of are you assigning a lower priority than the project you’re undertaking?

For example: Instead of spending time and money on moving away from your expensive SAAS CRM provider, you could spend those resources on other aspects of your organizational mission. You have to choose something, and it’s important to acknowledge that you’re prioritizing one thing over another, and to understand why you’re making that decision.

5. Sunk cost

The time, money, and organizational good will that you’ve already spent on a failed solution to your problem. The value of that investment can create a strong desire to “stick it out” so your prior investment doesn’t feel “wasted”.

This is the classic “sunk cost fallacy”, and it should be regarded as a fallacy. But it’s a very human response that often creeps in anyway.

For example: The Development Director who’s already convinced their board to approve hiring an offshore team to build a custom donation management system – promised for delivery in 6 months, 2 years ago – may not find it easy to chuck that out and start over with someone new.

Here’s the thing:

Improving your systems is going to take some effort and expense, and it’s not always about the fee. As you’re planning to make these improvements happen, the more explicit you can be about naming the other costs, the more easily you can prioritize and execute to reach your goals.

(Speaking as a strategic consultant and CRM implementer myself, I also know that the more you can share about these other costs early on in the process, the more your consultant will be able to help you address them and still get a win for your organization.)

All the best,
A.

What are the costs?

When you’re looking to make improvements to your CRM systems, you’ll want to think about the actual business value you’ll get from those improvements, and you’ll want to think about what it will cost you.

We can assume you won’t undertake the project if the expected value is not greater than the expected cost.

But be aware — the “costs” here are not only the fees you’ll need to spend if you hire someone to help you.

It’s all of the time, effort, expense, and mental stress that go along with making changes. Things like:

• Time cost

• Technical switching cost

• Human switching cost

• Opportunity cost

• Sunk cost (a classic “fallacy”, but still a real consideration)

If you’ve considered all those, and still think the improvements are worth undertaking, plow ahead. But if you haven’t, you might want to give them some thought first.

All the best,
A.

Simplicity is sophistication

You can build really complex workflows, reports, segmentation, and tracking in your open-source CRM.

The tools are there. It's awesome. It's a ton of fun.

But are you going to use them? Once you’ve built them, will you be able to recall in your own mind at any given moment how they work and what they mean?

If you're not really going to make use of them, where’s the value in building them at all?

Here’s the thing:

A simple system that you know well, understand fully, and use frequently will generally have more business value than a complex system that you rarely (or never) use.

Keep it simple, if you can.

And when you decide to go for something more complex, make sure you know why.

All the best,
A.

P.S. The aphorism “Simplicity is the ultimate sophistication” is often attributed to Leonardo da Vinci, but that’s probably not quite right.

Ice bucket challenge

Long-term vision, perseverance, and dedication to a mission — those count for a lot.

Remember the ALS ice bucket challenge?

Even if you do, you probably haven’t thought about it in a long time.

But the ALS Association has been thinking about it.

Just recently the FDA approved the first ALS treatment funded by the ice bucket challenge. Over 8 years since the grass-roots viral awareness campaign netted it millions of dollars in donations.

Here's the thing:

You may not be lucky enough to have a global viral sensation sending millions of dollars your way.

But you do have a mission, and you have people who believe in it.

Perseverance and smart long-term planning can help you get there together.

All the best,
A.

Are duplicates limiting your growth?

A few duplicate contacts here and there probably won't hurt you, and it can be counterproductive to obsess over squeezing out every single duplicate.

But if 10 or 20 percent of your contacts are duplicates, each with their own records of event participation, membership, and payments, you're going to run into real problems as you try to manage and report on their engagement with your mission.

And good segmentation — in order to get them to the next level of engagement — won't be very easy either.

Deduping is not always fun. But it's an important part of good data hygiene, and it's essential for making your CRM effective in furthering your mission.

All the best,
A.

Flossing your data

Most people don't get very excited about flossing daily. But we do it because we know the value adds up over time. And the cost of skipping that simple routine is not pleasant.

Cleaning out duplicate contacts is something like that.

It's not always fun, but it's important, and it gets easier when you make it a routine practice.

All the best,
A.

When free software isn’t free

Yes, CiviCRM is free, as are Drupal and WordPress. Free to use, and free to modify as you need.

But as with everything, it's worth taking a moment to count the total cost of ownership, compare that to the actual value you're getting, and make sure it's worth it. And then, to prepare for healthy system maintenance by budgeting appropriately.

Ownership costs of for open-source software could include:

• Security maintenance

• Hosting fees

• Bug fixes

• Staff training

• Member support

And that's just to work with it out-of-the-box. If you want to customize it, or use it in creative ways that are unique to your organization, you'll naturally have some custom development cost as well.

Here’s the thing:

Most organizations who rely on open-source software are very happy with it. I love it and my clients love it.

If you’re making sure to count the cost of ownership, budgeting for good maintenance, and making smart value comparisons, then you’re in a good spot. If not, slow down a moment and consider what you’re trying to achieve.

All the best,
A.

Building trust

When you’re starting off with a new service provider – or looking to select one – how do you know if you can really trust them to deliver the goods?

Fortunately, there’s something pretty simple that you can start measuring from your first interactions:

Do they actually do what they say they will do?

• If they said they would get back to you by Tuesday, then did they?

• Are they on time for meetings?

• Did they send that additional information that they promised?

Watch for such things from the beginning, and then let that inform the trust you’re willing to place in them.

There’s no good reason to bet the farm on someone who may not have the integrity to handle the job. As with everything, consider what you’re hoping to achieve, and start looking for early indicators as soon as possible in the process.

One more thing:

If they do well early on, but the relationship is still too new for you to trust them with a massive project, it’s okay to ask if they’ll start out on something small. How small? As small as necessary to fit within your trust and comfort level, however you measure that for yourself.

All the best,
A.

One question

The shift to value-driven thinking from the old feature-driven thinking can be a hard one. It can take some time.

But one thing you can start now is simply to ask yourself a question anytime you get a new idea for a feature:

What's the actual business value that I will get from this improvement?

The answer should have a number and a unit. It could be hours of staff time saved, or a percentage of membership sign-ups increased, or even a percentage of how much easier your life would be.

You don't have to change everything at once, but just asking yourself to put a number on things can give a whole new perspective to your work.

All the best,
A.

Did you figure it out yet?

Hey, you know that thing you were wondering about? Did you look it up in the docs —any luck? You have somebody you can ask about it?

Don't let it linger just because you don't know who to ask. If you were wondering about it, there’s probably a good reason to find out.

All the best,
A.