Hello people,
Today, I am here to share some very important takeaways from a webinar that was conducted on 6th august 2022 by Tabish Bibikar. The topic of the webinar was “Revenue profit and leakages in software companies.”
For every software company, revenue profit and leakage is critical. Leakages in the revenue can occur from various factors and we might not be able to see them clearly.
In the webinar, the panelist Rahul Chaudhari discussed various ways in which leakages can happen and also the after effects of revenue leakages.
Let’s begin with the “Timesheet.”
Timesheet is not liked by everybody, but it is mandatory. Employees feel they are being policed every time by filling in the timesheets but it is not the truth. Timesheet provides guidance to the organization. If the employees could realize that their billable hours are contributing to the red line in the profits, they definitely would want to fill the timesheet without any complaints.
Let’s say there is a per hour billing project and 50 resources are allocated to the project. You want to know if there are burnouts and people are allocated 100% while these resources are working only 5 hrs/day insted of 8hrs/day. You are hoping everybody is getting billed for 30 dollars/hour, when the finance team churns the data, the management is in for a big surprise. Billables don’t match the profit expectations.
The revenues will be going down and the profits will hit phenomenally, which is why to an organization, the total number of available hours is a real asset and timesheet is of utmost importance.
Rahul also discussed the need for systems. He said and I quote “We need systems. We had timesheets, HRMS, performance appraisal systems, CRM and everything is made for some or other work but they aren’t integrated. Data in different systems is a concern. Pulling data from one system to another is difficult. While there are great systems, many systems are not meant for users to be at ease. There are so many processes, so many hidden menus which users hardly use. It is not easy for people to change. What the users actually expect from these systems is that by using these systems, their effectiveness should increase multifold, eg: 10x. The question that begs attention is, are these systems, simplifying the daily life of its users?
If you need to make a difference, trust one source of truth which is meaningfully integrated. CEO’s have a lot to think about, they have to think about people, profit, growth, hiring and so many more. Integrations and making it deliver is the last priority to jump into and invest time.”
When he quoted one source of truth, all I could think about was our product- Whizible whose tagline itself is the “Single version of truth”.
Integration is a big devil to deal with and it is costly. Getting the time sheet data and waiting for it to download so that the client can review it and then it being sent to the finance team can impact the cash flow of the organization and it will be the last thing which anyone wants.
After this intense discussion, participants asked about why we shouldn’t update data in excel and why is timesheet better than excel?
Rahul answered to this question very correctly. He told the participants in the webinar the challenges that an organization can face in excel.
For large organizations, there are hundreds and thousands of people who need to update their tasks. If they do so in excel, no one knows when the data is last updated which can lead to a huge cost difference. Also, everyone will have different data and to collect that data and merge it and then send it to the finance team will consume so many hours of decision making and we can not risk our time. And the most important flaw that excel can carry is typing errors by employees. One wrong formula and it can all go in vain.
Rahul discussed how wrong formulas consumed hours and hours of their time in just correcting them. He said and I agreed. Excel might have its benefits, but it is not suitable for a software organization. CEO’s need unbiased, complete and real time data which excel can’t provide.
Now, where else could there be a leakage?
There could be a leakage in the difference in your expected billing based on your order book and your actual bill but this is just the post-mortem of the report. How we can solve it preventively ?. To explain this, Rahul gave an example, which goes as follows. He mentioned about identifying the leave patterns within the organisation. All organisations keep a ‘leaves’ buffer to their billable hours and the interlinked profits. But if the employees take more leaves than desired for any reason, then this impacts billable hours, project deadlines and hence the revenue recognition and profits. Therefore, to plus such a dynamic leakage, it is important to have a process and system in place that gamifies leaves management and compensation with true data.
The webinar also talked about resource management. The pain point for software organisations is that they are unable to close their vacancies quickly. “To close your vacancies quickly, you got to try and shorten your recruitment cycles by consciously working on our internal processes the way you do it”- says Tabish.
You must ensure that you are creating forecasts in a timely manner. There is no point in going and finding people after the project has come into execution. In my opinion, resource demand management should be a primary function as allocating right person on every project requires planning, research, knowledge of competencies of resources inhouse as well as the ones being recruited. Resources can literally make or break the project.
Also, deciding whether to hire expensive or cheap resources is subjective, if it is not related to project allocation. If it is precisely related to project allocation then basic arithmetic can help you get the cost of resources. Otherwise, always look at the value a resource is going to bring to the organisation.
The webinar ended with a question and answer round. It was a very insightful webinar and I hope I did justice in providing y’all with the insights.
Thankyou!
