How a Tech Services Firm’s Nimble Juggling Boosted Business Performance
By Ron Lear, Director of IP Development and Chief Architect of CMMI Products and Services
If you’re in a services business, you know all too well that winning a big contract is only the first step to success. The biggest challenge: delivering contracted services that meet or exceed customer expectations—while generating a profit.
Successfully managing big services contracts is a juggling act: It requires delicately balancing multiple requirements, from recruiting personnel and teaming with other suppliers to managing cash flow and addressing customer concerns. Make missteps in any one of those areas, and the jubilation over landing a big contract can quickly turn sour as the project degenerates into a money-losing nightmare.
In my experience, that’s as true in government contracting as in the private sector. Many suppliers can write impressive proposals that win government contracts. But winning business is an extremely dangerous game if you can’t deliver services successfully. Indeed, there’s a saying in government work: It’s better to lose a winner than to win a loser
—meaning it’s better not
to win a deal if the contract terms are so demanding that you’ll end up losing money and reputation.
That’s why it’s so crucial to optimize your business processes for managing and delivering services.
Optimizing Service Delivery with CMMI
Lately, I’ve been sharing the experience of one leading technology services supplier I know that achieved that goal by turning to CMMI (Capability Maturity Model Integration)
The supplier was already achieving growing success in U.S. Government contracts, but wanted to build momentum and drive its business to a higher level. To do so, it used CMMI V2.0 Services, an integrated platform of global best practices for improving business performance. The best practices in CMMI Services have helped companies win customer loyalty, increase quality and cut costs by optimizing the way they design and deliver new and existing services.
Notably, the supplier used a major new feature introduced with CMMI V2.0: a performance report that helps organizations focus their process improvements on key business objectives, and then measure the impact of those improvements on business performance.
The tech services company realized that to further improve service delivery, it needed to focus on half a dozen closely linked business objectives spanning the entire cycle of winning and managing contracts. Those objectives included teaming with other suppliers and recruiting individuals to win contracts and meet service delivery expectations; optimizing billing to maintain a steady cash flow; and gaining higher customer-satisfaction scores that could lead to future business opportunities.
Building High-Performing Teams
Effective teaming and recruitment processes are particularly important because government contracts often mandate highly specialized skills and the involvement of specific types of subcontractors, including small businesses. To win contracts and deliver services, it’s vital to be able to translate those details into specific business and personnel requirements, then quickly team with other providers and hire any additional people needed to build the right portfolio of expertise.
One challenge is that government agencies often mandate skills and experience that typically command high salaries in the marketplace—but the agencies then impose salary caps on the contract that make it extremely challenging to recruit the right people while leaving enough margin to make a profit. Using CMMI, the company implemented tools that enabled it to find additional candidates with the right skills and security clearances, integrated a new applicant tracking system, and instituted a series of formal reviews to more closely monitor teaming and recruitment progress—and take corrective action when needed.
Relieving Cash-Flow Headaches
Even if a supplier is meeting service delivery expectations perfectly, invoicing and payment issues can create cash-flow headaches. A common problem in government contracts: if even a single line on a subcontractor’s invoice is inaccurate or disputed, a customer may reject the entire invoice, dragging out a nominal 60-day payment schedule into a 90- or even 120-day process that strains the cash resources allocated to the project.
Using CMMI Services, the company adjusted its processes to identify errors sooner and track them better. With the improved process, the company is able to send invoices to customers earlier than required by the contract, which provides more time to review and fix errors before they cause payment delays. The company also closely monitors and analyzes payment trends to spot potential issues before they flare into bigger problems.
Increasing Customer Satisfaction Drives Future Business
To help build its relationship with customers and win future business, the services supplier also focused on capturing customer feedback and improving customer satisfaction. Its performance in most areas was already rated as exceptional in 80 percent of projects. But to maintain an edge over competitors, the company wanted to push that ratio still higher, to 85 percent.
With CMMI, it identified several process improvements that enabled it to increase its score while continuing to gather accurate customer feedback. First, instead of a “shotgun” approach of surveying all customers, it zeroed in on the contracts that were most important to the company. Second, it focused on customers that were receptive to providing feedback, so it wasn’t forcing surveys onto people who didn’t want them. Finally, it implemented a CMMI approach for gathering anonymous feedback without involving the project manager, who was typically provided by the supplier, but so tightly integrated into customer teams that they were reluctant to provide critical feedback, fearing it might endanger their working relationship. The CMMI improvements also provided a relatively painless way for the company to collect frank and accurate feedback that it could then use to further improve its service delivery.
As a result of the company’s process improvements, it achieved all the key business objectives that it defined in its performance report, including increasing customer satisfaction. It continued to successfully deliver big services projects and to grow revenue accordingly.
Managing the many aspects of building and delivering services profitably is a difficult challenge for any business. With help from CMMI V2.0, any services firm can master the juggling act required to meet that challenge.