Valuing and Tracking the Deliverables

There is a ground swell movement within creative advertising looking to kill off time as a means of determining client fees – and there are many valid arguments and reasons in favour of this. Of course, for many notable agencies, timesheets were never in.

The buzzword is deliverables - however evaluating client requirements in the requisite detail, including the type, number and complexity of deliverables within scopes of work takes some effort, and in a time-based remuneration world, a complete rethink and overhaul of pricing strategy will be needed.

There are some fast-track ways to helping this process.

Michael Farmer, author and respected strategy consultant to the global advertising sector, has researched the concept for many years and has evolved the ScopeMetrics® Unit (SMU) [1], a proprietary measurement index for determining fees, staffing and productivity levels for any given set of client deliverables. 

It’s easy to take advantage of Michael’s research and adopt ScopeMetrics®, and we’ve been delighted to have worked with Michael on systemising his offering.

Yet, whether this particular measure is for you or not, how will you manage the deliverables within your current systems? Does your ERP[2] have the bandwidth to differentiate complexity within the same job type, or string together the multiple jobs that it may take to make up the one deliverable, that are outside set project or campaign groupings?

At Agency DNA, we’ve been implementing and supporting agency solutions, and promoting innovation for over eight years, and have solved the dilemma.

Our BizView[3] powered planning and reporting platform is already making light work of our agency clients’ reporting and forecasting processes.

Connecting to underlying ERP’s[4] and other systems, we’re joining up data, eliminating masses of spreadsheets, and reducing manual data entry points to a handful of key Excel-like templates. Data integrity and “one source of the truth” confidence is firmly entrenched.

With an accompanying SQL[5] database, we’re also holding historic data, pulled from defunct and switched-off systems, to tabulated data, such as the ScopeMetrics® database, allowing it to be easily combined and used in conjunction with live data from new or on-going ERP’s.

Scope of work detail can be compiled directly in the application through simple-to-use grid forms, or uploaded from dare I say, Excel templates we can provide. Alternatively, we can connect your ERP and pull in the relevant data, seamlessly and very fast.

Once in the application, it’s a simple process of mapping the data within what is an Excel-like environment, and in the many cases where the ERP data is deficient, supplementing this with relevant additional analysis.

The outcome is an instant calculation, including sets of deliverables extending to many thousands of rows, and presented in a neat summarised format. The reports can be filtered, by team, client down to deliverable, even shared online with clients – with access controls in place of course.

With the industry focus on finding and developing a new model for client engagement, our application allows you to test the hypothesis of deliverable-based remuneration, see from the perspective of what output your agency (or particular team) can be expected to deliver, the level of resource that should be applied to any or all accounts, and what commensurate fees you should enjoy.

We’ll happily demonstrate this for you.

If you would like to know more about us and how our application evaluates and presents deliverables, and much more, email info@agencydna.com or sign up to https://www.agencydna.com/contact-us/.

 

[1] Refer: http://farmerandco.com/proprietary-metrics/

[2] ERP, Enterprise Resource Management system, see http://www.webopedia.com/TERM/E/ERP.html

[3] BizView Systems AS.

[4] We’ve connected Maconomy, WorkBook and SAGE. Connections to MS Nav, AX and Xero also exist.

[5] SQL, structured query language, a globally standard language and database for programming and managing data.

Chris Lever, Founder

20+ years experience in professional services.  Former Finance Director of WCRS (now The Engine Group) and BLM (now Arena Media), two of the UK's most successful independent advertising and media agencies, assisting WCRS through its 2004 MBO and BLM through a trade sale in 2008.  Whilst the transactions featured heavily in these roles, a key personal driver was a determination to promote finance functions with people and systems capable of handling the change and growth these groups faced under their new ownership structures.  An Australian CPA, Chris is an all-sports enthusiast, although participation is generally now limited to pedaling a road bike.

What do clients want? Give them the reporting they need.

I’ve just read the article from The Drum (http://www.thedrum.com/news/2017/05/15/deloitte-could-move-acquire-engine-group-response-accentures-karmarama-buyout) suggesting that Engine Group could potentially be acquired by Deloitte. That’s some incredible journey for a group I played a bit part in at its inception 17 years ago. Equally, it makes sense in the continuing context of consultancies acquiring creative agencies.

There’s plenty of speculation on why this trend is happening, and what is means for clients and the long-term health of the creative industry.

My speculation focuses on client reporting, and why I believe these moves will be for the better.

Agencies are differentiated in many ways, people, culture, scale obviously, but operationally they are similar, and the systems and commercial data challenges mostly the same. Systems are generally in place to capture time, and agency staff grudgingly now accept the need to do timesheets.

In this context, it was also interesting to read Rance Crain’s article in the Advertising Age (http://adage.com/article/rance-crain/stan-richards-sell-path-mediocrity/309003/) on Stan Richards approach to timesheets and the case he makes for them in terms of “if they’re not filled out every day, they will not be accurate, and since time sheets drive every financial consideration, they have to be correct”.

He also brings in the inarguable concept of “respect”. Timesheets are what he requires to operate his business, and his people with respect to that need, comply.     

These exceptions aside, consultancies have always been masters of time capture – in strong competition with lawyers, with their ingrained cultures and disciplines demanding adherence, and reward (or firing) intricately tied to billable hours.

Stan is not selling – for many good reasons, but for those agencies that are selling and to consultancies, it’s likely there will at least initially be more billable hours enticed out of their pools of talent.

This might be better for short term agency profitability, particularly in earn-out years, except that many agencies are already overworked, and scopes of work largely misunderstood in terms of resources and fair pricing for work[1]. So attempts to squeeze more creative juice out of what is not a machine, doesn’t bode well for anyone longer term.  

This however wasn’t my point.

Go beyond the capture of time in agency land, and this is where their system worlds really start to collapse, and will be one of the biggest challenge for consultancies, but with upside for clients.

Clients of course want optimal results for their marketing spend, more bang for their buck and all the associated analytics that go with that.

However, they also want plain, straight forward reporting of what is being spent and where, and this is where agencies typically fail.

Many agency systems either on their own, or in the stacked combinations deployed, struggle to produce the information to satisfy agency’s own internal reporting needs, let alone for how their clients want or need their relevant information.

The networks, faced with the challenges of global client account management, thousands of discrete jobs with resourcing, production, media and material elements to keep track of, every client demanding a different set way of billing to suit their systems approval/payment processes, have spent millions in customising systems.

And yet sadly, they still simply can’t get the data out - or if they can, it’s typically jockeyed in and around multiple spreadsheets, losing data velocity and costing ever more money to compile.

I had a conversation this week with the head of brand at a major consultancy, saying how her large network agency couldn’t provide her with the basic information she needed to understand how her budget was being used. Knowing the agency, and the system they have in – this is no surprise.

Admittedly agencies are increasingly bolting on business intelligence tools, and are making brave attempts with dashboarding and distributed reports – except their challenges remain with data integration from multiple sources.

Consultancies on the other hand are filled with systems experts, with the Big 5 even now offering their own systems applications for specific sectors, such as retail and financial services, so it’s not beyond them to crack the nut of developing integrated system reports on client marketing spend.

In this competitive upward spiral, my take is agencies should take note of what consultancies are doing and mimic them, if not fully their cultures, at least their approach to their systems strategies and the importance of getting data in and out, and proactively to their clients.

Clients will be delighted, and everyone will be better off.

About Agency DNA

I established Agency DNA in 2009 as an agency-focused business systems consultancy. I have a Big 5 background, deep agency and systems experience, and we now have the people, the systems and the vision for delivering the integrated solutions that agencies need, not only for their own reporting, but also for their clients.  

 

[1] For an in-depth view on this, I suggest reading Michael Farmer’s aptly titled book, “Madison Avenue Manslaughter” (http://www.madisonavenuemanslaughterbook.com/).

 

Corporate Performance Management Software in Hot Demand

A rising demand for cloud-based Corporate Performance Management (CPM) software is lifting the awareness and availability of CPM software within the marcoms sector, according to business systems consultancy Agency DNA.

In fact, Gartner predicts that the Worldwide Business Intelligence and Analytics Market (including CPM) is to reach $16.9 billion in 2016 and expected to reach $20.81 billion by 2018, equating to a compound annual growth rate (CAGR) of around 8.28%.

Agency DNA highlight’s the main factors that are contributing to the growth of market within the Marcoms sector:

·         Rising demand for self-service CPM tools

·         Increased need to enhance business productivity

·         Greater need for visibility into business processes

·         The need for change

Rising demand for self-service CPM solutions

Agencies are realising the importance and value of integrated data and Agency DNA believes that where expectations will be looked to be met this year is above the transactional data layer of ERP and project or job management systems, and in the planning, forecasting and general reporting level where Excel still reigns.

As such agency teams are looking toward self-service cloud analytics tools, and within the sector systems such as BizView are leading the way, being smart but simple to use business planning systems (CPM), fed from structured and better connected ERP systems, and delivering real value across several areas.

 

Cloud systems allow companies to use software which is cost effective and can be scaled within the business. Low maintenance costs, less dependency on internal IT personnel, limited hardware infrastructure, easier and faster implementation of IT solutions are factors that drive the adoption of cloud software.

Increased need to enhance business productivity

Agencies are continually focusing on improving overall efficiency and in today’s increasingly competitive market, companies want and need agile analytics.  They need the right data to get to the right people, quickly and seamlessly. 

Within an agency, at the CRM and ERP levels, control and visibility over transactional data, job budgets, time, resource utilisation and accounting, has never been more important, especially as budgets are squeezed.

Currently within agencies a lot of reported data is still downloaded from an ERP or accounting system into Excel, and then PowerPoint to produce charts and commentary.  With the rise of sophisticated tools companies will stop trying to gather every bit of data in Excel and then spend hours of manual time each month to produce standard management packs.  Finance teams can connect to each data set where it lives and gather every byte of data they require in one clever system.  Saving valuable resource time whilst distributing accurate and adaptable packs is revolutionising reporting.

The account teams across agencies are becoming more sophisticated.  They require more intelligence and deeper analytics. When it comes to pipeline and demand planning, Excel is still heavily used even if the ERP combines resourcing within their core management functionality.  Traffic Managers attempt to match resources to a job and execute smart decisions as to when a freelancer should be brought in.  Again much of this information is extracted from an ERP or resourcing systems and put into Excel, which of course instantly out of date.  Given a self-service BI tool accurate decisions can be made in an instant in real time.

Greater need for visibility into business processes

Gartner says that as analytics has become more increasingly strategic to most businesses and central to most business roles, every business is an analytics business, every business process is an analytics process and every person is an analytics user. 

As such Agency DNA believes that scorecards should be the norm.  Scorecards would be a revolutionary step within many agencies with all the key metrics collated and presented.  The lack of scorecards is usually a function of disorganised data and the complexity of extracting and collating it.  With a smart BI tool this process is much easier and the possibility of collating this data a reality.

The Need for Change

Both data and the information it gives are changing the conversation in board rooms.  Agencies are beginning to visualise their data to uncover insights, drive growth and profits. 

However they are held back whilst still being heavily reliant on Excel-based business plans and reports because informed decisions are hard to make using data that is outdated and often unreliable. They require agile analytics.  

To deliver trustworthy analytics, collaboration between departments is essential and giving them empowerment with self-service BI tools they can easily connect, visualise and share their data is crucial.  Also, as more millennials enter the work place their expectations for data tools and analysis is strong.

As managers become more sophisticated in the analytics they expect to see, using just one or two systems is not enough.  The latest cloud ERP systems outperform the legacy systems, however they still lack the reporting and analytics capabilities. 

By layering a self-service BI system over the top of an ERP, companies will be able to analyse more data faster.  They will come to rely on it just like any other crucial business system

2016 is the Year Business gets Intelligent

I sense 2016 will be a year where expectations are met. Not necessarily that things suddenly and substantially improve, but the way we think and go about things will.

Last year was one of achievement. Marcom and media agencies saw billings growth and moderate profits made; cautious new hirings and people confidently moving jobs; M&A deals were done with some new records set. Businesses have answered fundamental questions of themselves, they’ve survived and if not thrived, have changed or are changing for the better.

One question being answered relates to systems, and agencies are realising the importance and value of integrated data. At the CRM and ERP levels control and visibility over transactional data, job budgets, time, resource utilisation and accounting, has never been more important, especially as they continue to be retained as custodians of a wider cross section of their client’s budgets, and quite rightly aim to still keep a reasonable margin for themselves.

However I believe where expectation will be met most is beyond this transactional data layer in the stratospheric planning level where Excel still reigns. This is the kingdom of business intelligence, and is manifesting in smart, yet simple to use business planning systems (CPM's) fed from structured and better connected ERP systems, delivering real value across several areas.

Firstly, corporate performance and making the production of usable performance data much easier and quicker. Currently most reported data is downloaded from ERP system to Excel then Power Point to produce charts and commentary. Some systems are OK, essentially databases with lots of self-select fields, but most have exports that are heavily manual into Power Point. Think of the effort to produce your standard “killer” charts each month, and wish that could be automated, month after month. Smart BI systems have interfaces which make this process much easier, have impressive and easily distributable visual dashboards; the better ones allow projective analysis and 'what if' scenarios.

Next is scorecards. For senior managers or as a summary of the above, scorecards would be a revolutionary step within many agencies with all the key metrics collated and presented. These rarely exist in my experience, the lack usually a function of disorganised source data and the complexity of extracting and collating it. Smart new BI tools make this process much easier and the possibility a reality.

Pipeline or Demand Planning – some cloud ERP’s now nicely combine resourcing within their core job management functionality, but I still see lots of excel charts and "hand balling" of data as project delivery forecasters (traffic managers) attempt to match resource need to supply, and execute smart decisions such as when not to bring on a freelancer. Mostly these are exports from an ERP into Excel and then heavily manipulated, and are out of date the instant they are downloaded and are offline to any new projects being set up.

Client performance – an area where formal reporting is not a typical area of agency systems delivery with intelligence on this front again compiled from hand balled data in Excel. What we’re talking about here is not job or client profitability, but the specific data driving clients own decisions, against which agencies are increasingly needing to be proactive. Collating and getting decent data out of the multitude of TV and digital campaign responses, social media traffic, news and financial bulletins, PR, anything which is likely to drive a need for response is difficult, but the urgency and immediacy of need remains.

Having a business intelligence system delivers these with the additional advantages of automation and simplification, simply summarised as:

  • saving expensive time on non-added value analysis

  • giving more transparency to data and making it available to many

  • if it’s easier to produce, reports can be more frequent (weekly rather than monthly).

Ideally business units or departments would have their own scorecards with the ability to drill into the detail. Raw data would largely come from the ERP, dynamic links allowing the production of pipeline planning, for example, likely alone making for a positive business case. 

Beefing this up into a full commercial scorecard where pipeline demand plans, client performance and commercial performance are all rolled into one, accessible place, is the expectation that should be set, as can now be met, viz. bottom layer ERP control, top layer CPM accessibility and visibility. 

Summing this into a set of 2016 resolutions then might look like:

  1. Get to see your business performance graphically on a day to day, weekly and monthly basis.

  2. Develop non-Excel based business plans which are integrated with your ERP.

  3. Future proof your financial system - for example will it allow you to seamlessly migrate to IFRS15 reporting (by January 2018).

  4. Ensure you get value for the money you pay your system vendor for support and maintenance.

  5. Give consideration to a cloud system as a viable option to the system you have loaded on your servers, and is perhaps three versions out of date.

  6. Assess the extent to which Excel pervades your business for reporting, and make a conscious effort to reduce this dependency.

  7. Understand your processes and streamline them where you can. Only enter data once.

  8. Have your Finance team work less hours, but make them more productive (with better systems!) 

Expect more, get more.

I wish you a prosperous and enjoyable 2016.

A version of this post first appeared in Red Hat Recruitment’s “The Club” – 15 January 2016 (see http://www.redhatrecruitment.co.uk/login/)

Chris Lever, Founder

20+ years experience in professional services.  Former Finance Director of WCRS (now The Engine Group) and BLM (now Arena Media), two of the UK's most successful independent advertising and media agencies, assisting WCRS through its 2004 MBO and BLM through a trade sale in 2008.  Whilst the transactions featured heavily in these roles, a key personal driver was a determination to promote finance functions with people and systems capable of handling the change and growth these groups faced under their new ownership structures.  An Australian CPA, Chris is an all-sports enthusiast, although participation is generally now limited to pedaling a road bike.

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