Notes

Business Growth - AFAB Is really a Four-Letter Word, So Say Focus Instead
AFAB (A-fab) noun:

1) a sale of "anything for a buck" to be able to generate revenue and keep billable employees busy

2) a small business situation which can impede company growth, differentiation and/or profits

3) in more mature firms, an indicator of lack of focus on specific product or service offerings

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Nevertheless, you define it, AFAB (anything for a buck) is a condition, which typically impacts a business at some time or points in its life cycle. It is essential to recognize when your firm is suffering from AFAB so as to take corrective actions. Failure to take action will impact your firm through lower gross margins, increased opportunity costs, and insufficient brand and services differentiation. Even better, learn the indicators (e.g., flat revenue growth or always needing different skills to staff projects) in order to avoid the condition whenever possible.

The remainder of the article addresses business growth and where AFAB can occur, AFAB's causes, symptoms and treatment, and the benefits from minimizing AFAB in your firm.

Business Growth and Maturity

The growth cycle of an IT professional services firm encompasses four phases. Many firms never experience the full cycle, which will not say they are not successful. It just means they probably did not reach their full potential. Also, it is possible a firm can jump into the marketplace with a distinctive offering and rocket through the growth cycle. This example would clearly be an exception.

read more of growth generally occur in the next sequence:

1) Business Initiation

In this phase the business enterprise is just starting out either from scratch with some type of business plan or seeded by one to two initial accounts you have previously presold. Attention is directed at marketing and sales activities and quality of project delivery. Scope of services is based on what your team knows best, but to continue to drive revenue you sell what you rationalize you can deliver, even when you have to use third party contractors.

This is the most common scenario for AFAB. It is easy to justify, and it can help you generate revenue to fund the business. On check here , you may commence to develop some long-term client relationships. On the downside, you have trouble differentiating yourself, since it is hard to define everything you do in terms other than the breadth of technologies you use. To prospective clients, you sound like everyone else. In addition, you typically undervalue your services based on the price it is possible to command.

2) Practice Development

You now recognize that there are some patterns to your technology work. You have specific concentrate on certain vendors and their products, which means you decide to raise the firm's depth of experience in these few key technologies. Practice managers are assigned to lead the development of solutions, the management of individuals of their practices, development of partnerships (e.g., product vendors and training companies), and ultimately the profitability of the practices themselves.

It is in this phase that the firm starts to become known for its technical expertise. Most, or even all, of the company's work is performed in the neighborhood market. Your technical expertise begins to narrow down the competition some, but differentiating the firm continues to be quite difficult.

3) Business Expansion

This phase is characterized by growth into business solutions and/or geographic expansion. Just as you recognized technical specialization in the earlier phase, your firm now has a pattern of performance in industries (i.e., verticals) and business functions (e.g., sales, recruiting, etc.). The intersection of a technology and something or both these other areas allows you to focus in on specific business solutions. For each one you assign a practice manager as you did for the technology practices.

These business solutions commence to supply the firm real differentiation. You narrow the field of competition down significantly and may commence to command higher fees for the work you deliver. In addition, as you master these more unique offerings in the local market and are recognized for your expertise, you are afforded the chance to take them to regional and national markets, especially those you view to be underserved.

4) Continuous Improvement

Your business is growing, profitable, differentiated and known available on the market. The competition is targeting you. It is advisable to constantly re-evaluate all areas of your organization from service offerings to marketing and sales to delivery to operations. Typically, both biggest areas requiring focus are adjusting your offerings to meet market needs and improving efficiency in delivery and support services.

This is usually a time when you're able to more confidently introduce new ways to provide offerings to your existing and target clients such as managed services (e.g., application support or network infrastructure) and SaaS (i.e., software as a service).

AFAB is prevalent in the first phase, Business Initiation. Additionally, it may occur in the other phases co-existing with specific practices or business solutions. In a few circumstances, AFAB can be justified on a temporary basis. For instance, if your firm is exclusively projects-based and you are experiencing the down side of the "roller-coaster" sales effect, then you might need to do something to improve utilization by accepting work outside of your normal scope. In this instance, keeping a continuing eye on resource allocation is vital in order to minimize enough time AFAB is prevalent.

Causes of AFAB

There are many reasons AFAB can surface in your organization.

Being in the Business Initiation phase of your firm's life cycle (where AFAB is a normal occurrence)
Not defining your scope of services and just let's assume that over time it will define itself
Lack of attention to business planning and analysis of results - you are busy working in the business and unable to dedicate the time essential to focus on the business
Unassigned billable consultants on the bench
Relatively lean sales pipeline
Having an excellent management team, but lacking someone with the knowledge to proactively manage your services portfolio
Symptoms

The indicators of AFAB are numerous. The issue is having controls in place to recognize them immediately. Among the symptoms are:

Revenues are flat or are growing at a decreasing rate over time
Each project you sell is really a one-off (i.e., unique where you haven't done the task before) or is another variation of prior work - there is little repeatability in delivery
You never seem to have the right staff to fill the available project roles
Gross margins are flat or decreasing due to increasing cost of delivery - you are using more alternative party consultants at an increased than budgeted cost
Sales cycles remain relatively long and key opportunities are bunched together under the same sales stage or two
Qualified lead generation is inconsistent (e.g., limited marketing activity) signaling another roller coaster wave in the sales cycle
Treatment

Eliminating AFAB and avoiding future business plateaus require diagnosis of the problem, treatment and preventative measures designed along three concepts:

1. Focus

Review historical home elevators projects (i.e., numbers and revenue) to identify patterns of technologies used, industries served, and business functions and issues addressed
Review historical client information (i.e., numbers, revenue, industries, company size, buyers, issues, amount of time as litigant, etc.) to recognize an ideal target account profile
Factor in current sales pipeline activity and knowledge of the areas (e.g., pending changes in technology, potential marketplace changes, etc.)
Refine your services portfolio to add the offerings that best support the direction you set for the company
Identify and assign practice managers to lead each area in further development of solutions, management of their consulting teams, development of partnerships, sales support, service delivery, client relationship management, and producing favorable financial results
As elementary as it sounds, it is surprising just how many IT services firms usually do not perform an analysis of these projects and clients to see this important information.

2. Alignment

Assure that the company management team is in sync on the direction of the business enterprise and decisions made around your services portfolio
Provide clear definition of goals and objectives to the business enterprise areas that will support the practices, especially marketing and recruiting
Communicate the newly refined business strategy internally, then to the marketplace when ready
3. Metrics

Enhance your monthly performance dashboard to include indicators of a potential AFAB situation (e.g., growing usage of third party contractors)
Manage the sales pipeline to notice the ebb and flow in new leads, delays to summarize opportunities, etc.
Develop performance reporting for each practice to improve the manager's ability to run his/her business
Each one of these three areas (i.e., focus, alignment and metrics) requires ongoing attention within leadership's responsibility within the business enterprise.

Great things about Minimizing AFAB

While AFAB has a place in the business enterprise Initiation phase of a company's life cycle and may be justified at other times on a temporary basis, you must develop the discipline to control AFAB to a minimum, which means understanding how to say "no", a distressing thing to do. The potential benefits of preventing or limiting AFAB by developing solutions addressing specific industries, business functions and technologies in your firm include:

Enhanced differentiation of your service offerings
Greater opportunity to work with client executives once you sell business-oriented solutions
Increased repeatability of projects and work components
More efficient projects, thus lower costs of delivery
Reduced risk on projects
Better pricing opportunities based on differentiation
Increased revenues
Improved gross margins
More efficient on-boarding of new consultants
These benefits are real and do not require significant incremental investment in your organization.

Do you have problems with AFAB?

Jay has over 30 years of management, business, & information technology consulting experience. He has enabled successful change in more than 140 clients capitalizing on growth opportunities in service offerings, sales & marketing, operations, and mergers & acquisitions. As a former partner at Accenture, Jay has worked in both large & small IT services environments. His experience crosses several industries with a particular concentrate on services companies & healthcare.

From a leadership and management perspective, Jay has:

* Built and led national, regional & local IT consulting practices of $5M-$95M in revenue.
* Led the stabilization & turn-around of two local IT consulting practices.
* Planned & built strategic vendor alliances & major account programs.
* Formulated & implemented growth strategies for over 20 companies.
* Served as interim CIO, interim CFO & interim CAO for three clients.

Currently, Jay is CEO and Consultant at Crescent Solutions LLC, a management consultancy focusing on growth strategy initiatives. He computes of Houston, TX. [email protected]
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