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The Public Utility Fiasco

Another Story for the Record Books

The Lesson - Can the people I am with do the Deal. After this fiasco i always try to do a smaller deal first and get paid to be sure they have authority and desire to execute.

These stories both good and bad should send up success or warning signs for you to learn from experience.

I was called into a local utility company that had a problem with missing equipment and also not knowing where the equipment was when it was needed elsewhere.

I built a solution that I let them run for 4 months live and they came back and said the solution was worth about $200k per month to them across all their sites and operations.

It basically managed all their tools, equipment, vehicles, projects and more.  Think of a complex blockbuster video that tracked everything and they could find it and scheduled it without disruption.

They loved the solution and said ok how much and I told them how about $150k and 50k per year which was a bargain. They were also to be my reference site as part of that pricing.  They said expect a PO very soon. Remember they were live and it was working.

HERE COMES THE NON BUSINESS PEOPLE

Their IT guys show up for a meeting and say well what is this written in? we don't know if it will fit our long term strategy and we need to do a study.

I pulled the software the next month. It took them a few years to come back with an RFP and i never answered it. They went with the Status-Quo company for 30-50x what i was charging.  Within 6 months of installing the package (took another 2 years)  the status-quo company discontinued the product.

What is the lesson here..

Always look at the money. I was saving them 2.2 million dollars per year for 200k year one and 50k thereafter. This made their operation more efficient and put millions back on the bottom line. 

The IT people do not think like business people and need to learn how to think that way. I asked one of the top IT guys what happened and here is the response that gets laughs everywhere.

  • Wayne what Happens if you go out of business?
    • You save 2 million per year until I do and then go back to what you used to do or copy what i did with part of that 2 million and replace it.
  • His Response was we can't think like that
    • Mine was well if I give you 200k each year will you give me back 2.4 million
    • How do you think and why?
  • They left tens of millions of dollars on the table providing a mediocre working environment for their employees.

Moral of the story was the big, safe bet was the worst bet in town. Their CEO I know would have gone with our solution but i was working through a third party and did not want to start world war III.

My Lesson was find out who has power to do the deal and what obstacles may still be in the way.

The lesson for all IT people is to  think about value and money before status-quo. If the solution timeline and price are similar go status-quo for CYA but if a solution can save millions tomorrow and your choice is years away turn your brain towards maximizing gain and minimizing risk.



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