Monday, December 1, 2008

My Political / Economic Crystal Ball

As a small business owner, I have to admit to a little schadenfreude as I watch the stock market dive. High-powered executives and financial geniuses must watch in helpless consternation as all the value built purely on expectation evaporates into the economic ether.

As a homeowner, I'm really glad that I don't have to sell my house right now, so some of you that have put off moving into a larger home can enjoy a little schadenfreude at my expense.

But as an American, it's not really my nature to be down for long. My crytsal ball tells me...

Plan on cost-cutting and continued attempts to increase business efficiencies through 2010. The world will turn again in 2011, beginning a modest but lengthy recovery, the heights of which will be tempered by a ballooning U.S. deficit and nagging tax rates. Taxes and spending will be reined in after the 2010 elections. Madam Pelosi will be deposed by the Democrats in an effort to stop the bleeding, as the House Democratic majority will be cut to the bone. Republicans will run the Senate outright, retaining 17 of the 19 Republican-held seats up for election, and winning 11 of the 17 Democrat-held seats, for a net gain of 9 Republicans, putting them at 50.

So all rep firms should be approaching 2011 with excitement and anticipation. The trick is of course, to survive until then.

The business buzzword nowadays is deleverage - shedding debt - and hardly anyone can do it fast enough. As a rep firm, you have the awesome advantage of being a pay as you go expense. Press that advantage.

Double the money that you spend marketing to potential principals. This year and next the dissatisfaction with both current representation and fixed cost direct sales reps will be very high. Fill that void, and work to carry slightly more lines. Resign one line for each two that you add.

Be the single most positive and optimistic voice that your current principals hear. Don't be Polly-Annish - tell the truth - but do so with optimism for the future and genuine excitement about the opportunities ahead.

Be sure that you're being paid what you ought to be paid. Be sure that you're getting sales information from your principals. If they are unwilling to share that information with you, something is wrong.

In your own operations, be as intelligent as you can be about your overhead. The RPMS E-Data Wizard can get you more information in less time - if you're not uploading data electronically, you should be.

Fill every working minute of your time, and the time of your employees. If the phone isn't ringing, find something else to do that improves your business. Every employee must participate in that process. Those that don't must be fired.

Push your sales reps. Have a frank conversation with them about their activity reports. You know, I know, and they know that they're not responsible individually for the state of your industry, or the capital of your customers. But what you can't know - what you can't ever really know - is whether you're getting their best efforts. Your ability to measure their efforts in ways other than dollars may mean the difference between keeping and losing the lines that keep your business afloat. There are fantastic tools out there for measuring activities and opportunities, including our favorite, TeleNotes.

Ask your vendors for discounts. You may not always get them, but you can almost always get better terms. Every single vendor you have, including your phone company, Internet provider, insurance company, landlord - yes, even your software company - are worried about whether or not you will be around to pay your next bill, or renwew your next contract. Work that to your advantage. Reduce your costs right now in exchange for extended contracts.

Help your principals undertstand that this is how the world works now, and is likely to be for the next year or two. Be creative. Demonstrate to both customers and principals that you are the indespensible cog in the wheel of their relationships.

Tuesday, November 11, 2008

RPMS Version 7.9 in 2009, and Beyond

In 2009 our company will hit a couple of milestones worth mentioning.

Our very first PC based software system was delivered in 1985. So in September of 2009 we will begin our twenty-fifth year of support and updates to rep software for manufacturers reps.

2009 will also see the final updates and enhancements to RPMS Version 7, in preparation for 2010 and the new RPMS Version 8.

When we re-wrote RPMS from the ground up back in 2000 and 2001, the idea was to create a version that was both easier to use and easier to support. Mission accomplished. RPMS V7 is the most popular version of RPMS ever, but even better, takes far less support per installation than any previous version. V7 has continued to change and improve over the last several years - you can look back at a history of those changes here.

And there are still some enhancements we want to make in 7.9 this year to finish off this version of our system. Some of our plans include...
·                                 Adding a ship-date oriented line item report, much like the open order reports but regarding shipped items
·                                 Making improvements to the Inventory system, including allocation verification and better status change management from stocked to non-stocked; and kit/assembly management
·                                 Adding the ability to print a range of purchase orders by date range, principal, customer, sales rep, or combinations
·                                 Adding the opportunity to 'auto-add' products during short form data entry, for products that are not found
·                                 Completing the TeleNotes to RPMS interface
...and likely other ideas that come up as well.

As in other times with other major version changes, we will have a dual-development schedule. Work will continue on enhancements and improvements to V7, while work begins in earnest upon RPMS V8.

And what, you may well ask, does Version 8 have in store? Plenty, of course, necessitating the major version change, including...
·                                 File and record handling changes that will provide major speed improvements for reports, snapshots, and data entry
·                                 Architectural changes to databases that will greatly improve product (part number) versatility
·                                 A major system-level change that will provide two incredible new advantages:
o                                                        Automatic off-site backup and database auditing, for daily guarantee of database reliability and integrity, on RPMS-hosted servers
o                                                        Simple, powerful, secure remote access for field sales reps, including reports, customers, order entry and more, from RPMS-hosted servers
·                                 A license management change that automatically configures your system for optimum usage. If you don't use a feature, you won't pay for that feature.
...and probably more that will become apparent as the new software takes shape.

Will V8 look different? For remote accessing field sales reps, yes. For the rest of us, not much. We should all be very comfortable with the look and feel on the first day.

Is it Internet-based? No, not completely. More like Internet-enhanced. While there are some things that are done best on a web-based product, the day to day management of a rep system is not necessarily one of them. Rep software operators want speed, reliability, ease-of-use, and suitability to task. Where the software operates is not nearly as important to them as how it operates.

Is it priced differently? We're not sure. But we do expect that our 2010 pricing will not create any heavy financial burden on customers that stay under our maintenance program from year to year.

Is it licensed differently? Yes, it has to be. Once we cross into the world of hosting - even in the narrowly limited way that we will first do so - we will recognize new and on-going commitments that will have to be passed along.

So in 2010, we dip our toe into the software as a service water. Much like our migration from DOS to Windows back in the late 1980's, RPMS will support multiple styles of system for a while. The desktop-based client-server RPMS V8 will continue to provide outstanding speed and ease of use for day-to-day operation, in a familiar and practical environment. The V8 database, regularly backed up to and audited by RPMS servers, will provide a stable, secure off-site backup. And the new code we write to run on our servers for your authorized remote users will provide a simple, powerful way for field-sales reps and remote offices to access their corporate data.

This 'best of all worlds' approach has served us well in the past, and is, we believe, our best means to move forward to new models of software delivery. Until then though, RPMS Versions 7.8 and 7.9 will continue to set the standard for rep software. We're looking forward to this next journey in software development, and hope that you are too.

Tuesday, July 1, 2008

Accounting for Maintenance Subscriptions

Accounting is dry subject matter. Sorry in advance to bore you, but given the current financial climate, I thought it might be timely for you to learn a little more about how we handle the money that you send us.


For most of the history of our company, we did our accounting on a cash basis. [You probably already know this, but if it's been a while since business school, cash basis means that we counted our revenue when we received it, and we counted our expenses when we wrote checks. No sooner, no later, for either one.]

Cash basis accounting is the way that most small businesses function. It is simple, perfectly legal, and easy to implement. Most rep firms we encounter run on a cash basis. But for a company that relies to a large degree on subscription revenue, it is not a very smart way to operate.

Here's why.

As a software company, we annually ask our customers to purchase support and update contracts. Our version of this contract is calledEMA - the RPMS Extended Maintenance Agreement. Near the end of each customer's subscription period, we send them an invoice, and invite them to renew their maintenance subscriptions. Most customers do, and for that, we're always grateful.

But up until about 2003, we looked at the subscription money our customers sent as immediate income, because we operated on that cash basis. That tended to create some awkward circumstances.

For example, when a customer's subscription expired in December 2000, and their 2001 subscription renewal check arrived before year-end, we'd be compelled to count the money as 2000 income. But all the expenses we incurred on behalf of that customer would happen in 2001.

Speaking of 2001 - though I hate to - I hope your business in 2001 was better than ours. Ours pretty much stunk. We'd historically borrowed money during August and September, and that year we had to borrow even more than usual. We managed to turn a profit, but barely. And Brent and I really did not like the feeling of scraping around for short-term funding, when we knew that our business was generally pretty sound.

It seemed to us that if there were some way we could count the subscription income in the month we earned it, as opposed to when we'd received it, our cash reserves would get a whole lot healthier. So in late 2003, we changed our accounting method to an accrual basis, and our business model changed completely.

[Quick accounting refresher: In accrual basis accounting, revenue is recognized only when it is both realized AND earned. 'Realized' means when the cash comes in, but revenue is not 'earned' until products or services are provided. Expenses are recognized in the period in which related revenue is recognized. ]

So what happens nowadays to your EMA subscription money when you send it to us? Well, it goes in the bank, obviously. But as it passes through our accounting system (QuickBooks Pro, if you care) it gets placed in one of twelve different liability accounts, each based on the last month of the subscription. So if your EMA expires in September, your money gets written to liability account number 2409, called "EMA through September".

At the beginning of each month, we make a general journal entry, taking a different percentage of the remaining liability from each month and posting it as EMA Income. For example, at the beginning of November we will take 100% of the remaining liability from the 2411-November account. And we'll take 50% of the balance of the 2412-December account, the rest to come out the next month. And 33% of the 2401-January account, 25% of the 2402-February, etc.

Each subsequent month the percentages shift, such that ALL the remaining EMA is cleared out of the current month's liability account, half from the next month, and so on. It is not really as difficult as I'm afraid I've made it sound. A little spreadsheet cheat-sheet shows the month and the percentages to write as income.

But here's the really useful thing. We have cash when we need it. More importantly, we have money when you need us. We haven't robbed Peter to pay Paul. We don't worry about funding our obligation to provide you with support and programming updates. You've already funded it, and we won't take the difference for ourselves until we've earned it.

A little boring, I know. Not very edgy, this conservative accounting stuff. But since we're asking you for money now and then, we thought you might like to know.

Monday, May 19, 2008

Redmond Rewrite Time?

I think that Microsoft - Microsoft no less - is going to rewrite.

In her 
blog All About Microsoft, Mary-Jo Foley writes about "Midori", the code name for a new microkernel-based operating system, itself the offshoot of a project called "Singularity". Singularity is the Microsoft project that studies what a future, non-Windows based operating system might look like.

Microsoft notes that the Singularity project is strictly research-oriented, with no plans for commercialization. But Foley speculates that Midori might someday find the light of day, based on the level of talent and resources Microsoft is applying to the project.

What struck me the most about her article was the mission statement excerpt she quoted from the Singularity team, itself lifted from here. I've copied some of it below, with my emphasis added:
·                                 “The Singularity project started in 2003 to re-examine the design decisions and increasingly obvious shortcomings of existing systems and software stacks. These shortcomings include: widespread security vulnerabilities; unexpected interactions among applications; failures caused by errant extensions, plug-ins, and drivers, and a perceived lack of robustness. We believe thatmany of these problems are attributable to systems that have not evolved far beyond the computer architectures and programming languages of the 1960’s and 1970’s. The computing environment of that period was very different from today…."

The bold type above reminded me greatly of something that I wrote in the forward of our RPMS Version 7 User's Guide, back in December of 2001.
·                                 "Without a major rewrite of our software, we found that could not focus on our core purpose. Our growth was limited by support issues, our sales were limited by packaging and pricing issues, and our creativity was limited by a file structure designed for the 1980s."

I was trying to describe our decision to completely change the RPMS software from the architecture that served for Versions 1 through 6 to the new design in Version 7. I don't know that I fully captured it, but it seemed in those days that every single thing we tried to add to Version 6 was next to impossible.

Over and over, some new challenge we encountered had to do with inherent system design problems. Software designs that had been strengths for the mini-based service business and more strictly limited DOS operating systems became impediments. Memory and disk space were no longer dear, and there was no longer any reason to treat them as such at the expense of usability.

This growing frustration with the then current version of RPMS led to a meeting of the minds that took place in August of 1999. Murray Nolte, a long-time programmer for RPMS, Steve Goold, our most senior technical support specialist, and I all sat down together to make a list. In crass and probably typical form, I titled the list 10 Things that Suck About RPMS. After the meeting was over, I re-titled the list 15 Things that Suck About RPMS. (Looking back through the archives, I see that some politically correct marketing-type person has subsequently revised it and added sales-specific problems to it, so that in early 2000 it was re-titled 20 Difficult Issues with the RPMS Software Product. Which is what I meant of course, but nobody else has a sense of humor.)

Anyway, it was pretty clear to me that we needed to rewrite our product. And you really never, never want to do that. See this advice, then look at this advice, and if you're still not convinced that a rewrite is a bad idea, consider this. Bottom line - nobody recommends the rewrite pathway very much.

All that being said, all the money we spent, and all the pain we (and our customers!) went through, I guess I'd have to say that I'd do it again. Just better.

Because all through 1999 and 2000 we were selling so many rep software systems that it seemed as though the sky was the limit. Then along came January 2001, and it was, as Brent famously said, "like somebody turned out the light". The rep industry was simply battered by recession, imports, the Internet, 9/11 and more. In our view, it has never recovered in terms of number of agencies. Reps overall probably still do the volume they did in the twentieth century, or in many cases more - they're just paid less, and there are fewer rep firms.

The V7 rewrite turned out to be critical for us, because today we support a still very large installed base with a very small company. That never could have happened with the previous generation of software architecture. We would have died.

Which leads me back to Microsoft, and the cause of this post. I think they're going to rewrite. Microsoft today is still the fattest of cats - marketing and sales are pretty fine. But the tech types there are not indifferent to all the things that suck about Microsoft operating systems. They want to be the coolest. They want the kids to like them better than Apple. They want the IT types to like them better than Linux. I bet they have a really long list of Difficult Issues.

So when they rewrite this time, it will be an enormously different product that comes out. And if they have the guts to release it and to push it, everybody that wants to sell for this Microsoft OS will have to rewrite their software, or at the very least hope that their cross-platform application is what it claims.

Yesterday I bought my daughter a Linux operating system laptop (about $300 from Amazon) to take to college this fall. She'll use it (I hope) for taking notes in class, E-Mail, and wireless Internet. She's taking her Mac desktop to use in the dorm. When Microsoft's new, rewritten operating system appears in five years or more, they will find a vastly different audience than exists even today. It will be very, very interesting to see whether they can move the market one more time.

Saturday, March 15, 2008

Acer Monitor

I found a deal on a 24 inch Acer monitor two years and four months ago. Back in December of 2005, a monitor that size would set you back over $1,000. But I found a great buy at my local MicroCenterfor $799, before a $100 rebate.

Two years later, when the price for the same monitor was down to about $499 net, I bought a second one for home. Nowadays Samsung makes a 24 inch that you can pick up for $429 or less.

The great thing about a monitor like this is the number of windows you can see at once. For example, as I write this, I'm watching the Royals and Red Sox in my Slingbox window. At higher resolutions I can get work done in three or four different windows, if it helps - and sometimes it does, especially when debugging, or looking at two data files and a code window at once.
The not so great thing about a screen like this is spoilage. As in, now, I am spoiled. And early this month when my monitor at the office turned on for just one second, then stubbornly refused to re-display, I was very out of sorts. I have two computers there that share the monitor, so I first had to determine if my KVM switch was ok - it was - and then confirm that the monitor wouldn't display on any other computer - it would not.

So at that point I figured that my piddling one year warranty was well expired, and since I nearly never buy the extended warranties, I would now be in need of a new monitor. But just on the off chance that the warranty was better than I imagined, I looked on-line atAcer.com. I was mildly surprised to see that the 2008 version of my monitor carried a three year warranty. So then I went searching for the receipt, found it, and discovered that verily, my monitor was only a toddler - not quite three years old even.

That never happens. My stuff always breaks just after the warranty expires, never just before. I was almost giddy, under the circumstances, as I picked up the monitor, trotted it down to my car and thence over to MicroCenter, receipt in hand, where finally things ran more true to form. Microcenter doesn't handle warranty claims for Acer.

Oh.

I acted disgruntled, as though I would never shop there again, and the sales clerk acted sorry, like she was really, really sorry. We were both acting. Nevertheless, I carried on and carried my twenty-pound monitor back to my car, drove it back to my office, and used the standby seventeen inch monitor to look up Acer tech support.

The first thing I had to do was register my product. Evidently that had slipped my mind in December of ought-five. Acer wanted to know my purchase date and serial number. I dutifully supplied them, andvoila, I was qualified and warranted via E-Mail. On fixmyacer.com, I described my problem in great detail ("My monitor won't turn on") and promised to ship it to them. They promised to send it back, but not in the original box. I'm not sure why they go to great lengths to explain that you will not receive your monitor back in its original box, but I was not especially attached to that box, lovely cardboard though it was.

On May 6th UPS collected my boxed monitor at their local terminal, and for $29 promised to ship it ground to Round Rock, Texas. Acer received my monitor on May 9th, which is pretty solid speed by UPS ground. A gentleman named Ruiz signed for my monitor at the Acer repair center in Texas.

The following Monday, May 12th, I put in an inquiry to Acer Tech support, to get a status report. There was no phone number to call, nor could I find one on-line. However, an E-Mail was returned to me that evening, informing me that not only had my monitor been fixed, but it had also been shipped back out to me on May 9th. A quick check of the FedEx tracking number revealed that my monitor had begun the journey back to me at 1:07 p.m. the very day they had received it in Round Rock.

Wow again. Way to go Ruiz. And everybody else at Acer.

On the 13th FedEx delivered my monitor back to me, complete with a note about what Acer had fixed (I'm not sure what an inverter is, but now I have a new one) and that the repair was warranted for another 90 days, or the balance of my original warranty, whichever was greater.

So I was back in business, the monitor working good as new, and Acer with high marks from me for following through on their warranty, great turn-around speed and a still a really good product.