Accounting & Product Manager

Recently, I ran across a question from a Product Manager: how should I develop a COGS model for software products? That question makes me ponder - how much of accounting that a Product Manager should know and if having accounting knowledge is an advantage or disadvantage?

Back to the COGS example, one of the answers was "taking the developers' time and allocating back to the products". That's a rather dangerous approach. Accounting dept. would be all over that answer since most of the time the salary of the developers (i.e. time) would fall under Payroll Liabilities account. COGS in definition is the direct fixed cost making that product.

May be the question above was to figure out the gross margin of the products with various pricing scenarios. If this is case, PM should be able to figure out using a rough COGS and Expense model from their cost and/or accounting dept's. That brings back to my thinking earlier - should PM understand accounting?

My bias is YES. PM should have some level of "managerial accounting". Just enough to be dangerous... Accounting is not that hard but it is tricky, especially when dealing with cost accounting. Coming from an engineering (hardware and software) background and having working with several consultants with formal accounting training, accounting is a lot less complicated than writing code or designing a board but it can get confusing quickly. Though knowing some accounting principals, I was able to create several business plans and launched a division in a process.

Slick Screen Capture - SnagIt

(Disclaimer: I have no business-relation with TechSmith. Just a pleasantly surprised user)

I just purchased a really slick screen capture utility, SnagIt, from TechSmith. This utility got several Editor's Choice from PC Magazine and Best of Year 2003 award. You can read more about the indepth review from the magazine.

My first impression is that SnagIt integrates with MS Office so that w/in PowerPoint, I can quickly capture a screen with a consistent size. Of course, I can do this with Ctrl-Print Screen or Alt-Print Screen and resize when I paste into PowerPoint. It can become a very tedious work for a large document.

Furthermore, SnagIt has a very powerful touch up tool for a captured screen with drop-shadow, jagged edge, etc.  Things that I have to open a photo-editing software program to do it.

The price is right - $40 for a single user and I bought 10-user pack for $200. Try it out!!!

Btw, if you don't want to shell out 40 bucks, Gadwin has a very nice screen capture that used to be free. Not sure if they charge for it now.

Product Management Gone Wary

This is a great article to illustrate how product management has gone wary. If companies focus too much about beating competitors, they lose sight of what and how their products should serve customers. Check it out: Show Me The Money.

I got into product management awhile back because I wanted to create products that people want but I found myself getting caught up in beating competitors instead of defining customer-driven products. This article reminded all of us that companies should think more about their products and customers.

Highly recommended...

To Integrate or Not To Integrate

I had a lively discussion w/ one of my colleagues today about business system integrations. This is an age-old thorny issue that organizations of any size will have to deal with sooner or later because it could work out beatifully or it could be a disaster that send people out on the streets looking for jobs.

I believe the integration comes down to three issues:

1. Best-of-breed approach
2. Integration-capability among systems
3. One integrated system

In an ideal world, I would pick number 3. Matter of fact, we are a solution provider for a hosted front- and back-office system, NetSuite. This is a very good system for majority of small- to mid-size businesses out there. We use it ourselves here for our business operation. Where else can one find an integrated full-featured CRM/ERP/E-Commerce package for under $10K a year for five users and not have to worry about upgrading hardware infrastructure? Other huge benefits: hosted applications minimze the need for IT staff and downtime for upgrades. Though there are areas that NetSuite can't or won't touch. MRP (Manufacture Resource Planning) is one example.

On the other hand, I have been in an organization where number 1 is a preferred approach. Let's get the best of breed and worry about the integration later. My last company couldn't get SAP to talk to Dominos database and try to force-feed Dominos/Notes into an SFA (Sales Force Automation) application. The integration was a nightmare and I, the product manager, sufferred since I had no visibility into my pipeline. The comapany (a public company) ended up doing a lot of forecasting in Excel using piece-meal information from various groups. I didn't think it was very efficient.

I think the best approach should involve a well-thoughout requirement stage where:

• Use multiple systems if absolutely have to. For instance, using NetSuite for CRM/ERP and an appropriate MRP system.
• Best-of-breed is not needed if the best software does not allow easy integration. Most companies out there rarely use all functionality of the system anyway.
• Define modules clearly and spell out the touch points (integration) between systems. The less touch points, the better integration will be. Thankfully web services are coming. They will simplify the integration task quite a bit.

Most the points above are nothing new. It's all common sense yet most people tend to get emotionally involved and forget to look at things more subjectively. Maybe integration project should include a warning: Subjects appeared to be emotional...

Thoughts and comments?

Your customer's customer

Since I was in the semiconductor networking industry, my customers in this post were engineers designing switches and routers.

One of the roles that product managers do is to define the future/strategic direction of the product line(s). How would a PM do that? Most will answer "by talking to customers and looking at where the markets are heading". That was precisely what I did in my previous company - talking to my customers (lead engineers/architect) in their early cycle of defining their next generation of products, pouring thru market research studies, and looking at general market reaction. Talking to customers is good though I always felt that something was not complete. This is why:

• 80% of the time, my customers did not have the long term vision of their products. They were told that this is how their next generation of products will be.
• Depending on who I talked to, I might get a glimpse of what my customers may build few years from now but where did they get the information?

What if I approach my customers from a different angle?

Since most companies will build what they think the market want, they would have spent time to determine their customers' future needs. If I go direct to the horse's mouth, chances are I would get the same information. And if I beat my customers to it for the information, I would appear much more credible to pitch my strategic plans to my customers. In my case, I would need to talk to several service providers out there (phone, ISP, and others) to understand their pain and their plans and present back to my customers, the companies that selling equipments to the service providers.

What could be a more fitting than talking to another PM of my customer's customer? The PM should know where his/her product lines are heading. That'd give me several years of headstart to define my own product lines. The best part is that the PM has done the market research already and I can use that as a benchmark when I start my own market study.

It seems to be a logical way to get better information for the product lines yet in my last company, I didn't see too many PM's took advantage of this approach. Was it because logistically, it'd be impossible to meet the customer's customers. Or was it because it does not make sense?

I would love to hear your comments on this?

Customer Service

I am currently on the tail end of a week-long trip at a client site deploying the business system for them. Everyone has been very happy so far w/ the system and our service. I am a true believer in providing the best service to our clients. The system is a great system but without the right service, it wouldn't go far.

As with every US companies out there touting the best customer service (Qwest with the latest tagline - Spirit of Service - as an example), what does that really mean? Well I experienced the best customer service tonight at a local restaurant in this town. I highly recommended it if you are ever in Fresno, CA. It's called Jasmine Garden - a Vietnamese restaurant - across the street from Fresno State.

They made me feel very welcome, especially when I was eating alone. As I noticed more customers walking, the waitstaff person/host greeted some people by their first names. Some were surprised because that was only their 2nd time visited the place. The regulars were treated as part of their families. He was very friendly, sincere, yet professional. The food was very good. It made the overall experience a pleasant one.

Yes the waitstaff person does have a gift to remember his customers but he gets it. Customer service is what bring his customers back. He knows that he has a repeat customer in me when I come back in town. And he also knows that he's one-degree of separation away from his next customers. I am writing this post about his restaurant, am I not?

I think big companies should be able to provide 1st class service like this little restaurant. They need to train their customer service staff to treat their customers better. How many times that I tried to contact customer service, especially for tech-related products, I was treated like I did something wrong? Product managers wonder why they are losing their customers. They may want to look inward on how their customers are being treated? CRM software are matured enough to allow this kind of tracking. Don't look at the solution providing to their customers? Look at how customer service staff is asking from their customers in the intial contact.

To close out this post, cell phone companies, are you listening? I think cell phone is one of the greatest evolution product, but I agree w/ this article. It's a service that I love to hate. I switched several services but it's still same old, same old. I am hopeful that someday I may have a customer-driven cell phone company.

Portal and Intranet for SMBs

Recently I had a conversation with a friend of mine, who has over 14 years of experience in IT/system admin and a very good script writer. One of his specialties was deploying applications to desktops across the enterprise using scripts. We talked about various tech things as usual and had a little chat about Portal and SMBs.

I had some interest in the Portal market the last couple of years since at my last company, I was struggling to get any useful information out of my company’s intranet. Before I left the company, my IT friends told met that they were evaluating several Portal software packages. They were ready to plunk down over $200K for the project!

Anyway, the Portal software market seems to be ready for prime time. What I mean is that Portal software is “affordable” and within reach for small to mid-sized businesses (SMB). SMBs don’t have to pay in the high 5-figure or 6-figure licensing fee. Matter of fact, I can get Microsoft SharePoint Portal Server or Hummingbird Portal (with basic components) for less than $30K for 20 users of less. I know there are others out there, Plumtree, Vignette, IBM Websphere, BEA, but most SMBs either can’t afford it or don’t have the money for supporting staff (I’d probably get a phone call from one of these guys to argue otherwise). This is not the point that I am trying to make here. The main point is that most people out there don’t understand what Portal can do for them.

Go to some of the websites above and prepare to encounter a barrage of value propositions for these products. It’s great for someone that knows the values of Portal but try that on a non-technical manager/decision maker and you’d probably get a blank stare. So I asked my friend what he thinks about Portal and how would I go about to implement one? His takes on portal: “It’s just a front page w/ a bunch of links that are useful for my everyday work.” He went on to say that he wouldn’t buy a Portal software. “It’s a waste of money. I would just create a bunch of pages and link them together.” A light bulb went on in my head (which does not happen very often). Here’s the guy that would have to implement and/or support a Portal if his company decided to license one. Yet he has no buy-in from it whatsoever. OK some of the readers may argue that he’s a tech guy and wouldn’t understand the business values of a Portal. Well I think this is a perfect opportunity to educate the non-believers, right?

So I sat through a presentation and demo of Hummingbird products and talking about information overload! I took the presentation and sent it to one of my colleagues and she couldn’t make heads or tails of the products. Microsoft was the same way… Mind you, I am 100% proponent of Portal. I just think that software companies may spend more time to refine some of their messages for the masses.

1. Can it help the company to run the business better – through higher productivity, more efficiency?
2. Can it increase the moral inside the company with appropriate information to motivate employees?
3. Can it position the company with the next growth curve?

C-level execs love to hear the 3 points above and these 3 points can be easily spun for the masses. For instance, this is how I told him:

1. What if the Portal allows him to find a document somewhere in the file server that has over 1000 other documents by not just the file name but by the categories that the document may belong to. How about specific search on information, such as search only on government-related stuff?
2. What if the Portal shows him that this month trouble tickets have been down and his staff spending less time supporting customers?
3. He can now very easily integrate variety of other systems with the Portal with the use of web services thus allowing his company to be more nimble.

What are your thoughts? Please let me know. Thanks for reading.