Risk Maturity Designed into the Performance Model
Total revenue in most organizations rarely exceeds 30% of overall strategy,
Emerging or new product offers and Advanced technologies as defined by the way the organization reports to the SEC.
These two market phases, are driven externally and not subject to rules made up by anyone within the company. If necessary, make this an executive layer of the organization.
Decide on the method you want to use to enable better cash flow, either the hard way with activity based costing.
- If you think of hours in a day, as one type of activity measured in hours by task in an ABC model.
- Summary by revenue behavior in another simpler model
I prefer the 2nd option.
Let me try to simplify the subject, starting with the customer types in the risk model. Only a handful mostly headquartered in the US, larger and globally distributed.
These are the typical audience for new market offers in the definition of the technology market segments.
You are not dealing with 70% of your organization, typically your distribution and channels are not setup nor qualified to take on the risk models.
A select group of system integrators, SELECT the key word. In the US the threats become greater a risk.
Assume the US has the hardest customers with the greatest competition in the Western Region, if you can go to market in this region, your other regions will be a sub-set of the experience.
Your best chance of building an experience that meets all regional variations.
Your resource and experience levels will be consistent with the market by region.
Your government resources and the technologies purchased in the eastern region are greater, you need more resources with the skills to meet those demands.
Each type of resource category has a different invoice handling model.
- We will look at the setup of items, as components in an offer type at the program level for the categories of labor types.
- Quantity 1 = offer groups resources into types by total effort to execute
- Based on the invoice type
- Based on the rule using the following billable milestones
Ideally, a 30/30/30/10 revenue recognition rules enable the best cashflow acquisition of an expense when planned well, meets the execution of the project to bill upon the effort in the same period.
- Your total project includes both hardware, software and resources as a component in the execution of a system.
- You must assume the standard break fix contract isn’t going to be one that applies to the risk categories.
- Pro-active support would prevent any liability expense or threats that your innovation could introduce into a customer of equal size of your own organization if not greater size.
In this model, you have the largest dollar transactions a million dollars each would be average versus 100’s of smaller valued boxes.
- Beyond the project start and finish, you are not talking about the normal service arrangement.
- Something breaks you cannot simply expect to send a replacement part
- Your going to have a resource onsite at that customers location for the first year, you may increase the resources onsite based on how well you do.
- This resource will be a grade 10-12 expense against the project or the product development cost?
- On the upside, you also have sustainable service dollars as a higher percentage of the product shipped on the original installation.
- 30% of 1 million for a single service contract
You are on the hook for both the integration with the customer and existing equipment they own. This is true, if the customer invest in the pre-sales consulting services.
The equipment list was developed for this work in a unique customer engagement, scoped and milestone based billing rules apply. This would be the most mature customer, with invested design and accountability transfers in this context. Your company owns the solution.