Background:
Sales and marketing management noticed a large number of potential sales disappearing from their radar screens. Sales representatives had identified these as “in the bag” yet they failed to close. The vanished business was significant - amounting to the tens of millions of dollars. Further investigation showed that many, if not most, of these lost sales resulted from an inability to deliver products or functionality when the customers wanted or expected them. Quite often, the missing product or function was quite minor in itself but leveraged a lot of business.

A formal “Lost Sales analysis” program confirmed these findings. It showed the company lost a significant number of sales - amounting to tens of millions of dollars - because changes in Engineering schedules caused delays in availability or cancellations of critical items needed to complete the customers needs. In most cases, the delayed or cancelled items were not significant in themselves; revenues from the delayed or cancelled products usually projected in the low thousands. However, they were essential to the customers’ ability to implement projects that led to creating the sales opportunity.

Operating Scenario:
Sales reps, as expected, were always on the lookout for opportunities to satisfy customer needs and make a sale. They would talk to their friends and contacts in Development to learn of products and enhancements in the pipeline and would then leverage that information in crafting an offering to their prospects. While selling futures – products and enhancements not yet in the price book - contravened company policy of selling only listed products, management ignored this practice as it helped bring in additional revenues.

Unfortunately, this led to a number of problems. While the sales reps noted the potential sale in their pipeline reports, there was no system in place to track and manage all the commitments and customer expectations supporting the prospective sale. The company had no CRM system in place and had no plans or budget to install one in the near future.

The need for closing the information gap between the sales representatives and engineering management was obvious. Management wanted IS to bridge the gap. When the IS function could not accept any additional workload, management charged Roy Sequeira with doing whatever was necessary to ensure that no further sales were lost because of this information shortfall.

Actions taken:
To scope out the extent of the assignment, Roy interviewed a number of sales reps to understand the various sorts of commitments they made to customers about products in development and how they recorded and tracked these commitments. Each sales rep tracked and managed customer commitments individually; there was no consistency in the methods used.

The normal project management process in Development constantly reviewed projects against schedules and resource constraints. They moved resources between projects as needed to ensure projects stayed on time and close to budget. Unless specially notified, engineering management generally based their decisions on internal conditions within the engineering function. When faced with schedule slippage and resource constraints, they slipped or cancelled projects with low revenue expectations in favour of those with greater potential. Since they had no knowledge of commitments made to customers, these played no part in influencing scheduling decisions.

The company needed a method of documenting and communicating all factors, including futures commitments made to prospects, showing how they leveraged prospective sales and the expected revenue.

As the IS department had no resources available, Roy created data forms that captured all commitments for futures, including when the prospect expected delivery and the total sale potential. Roy also designed and created a database to record this information. Development would use this information in their monthly scheduling and review meeting.

Comparing this database against the Engineering schedule showed all sales at risk, where customers expected or needed a product earlier than Engineering could deliver. The reports also showed how much slack time was in the commitment in case resource conflicts caused a schedule slip.

Results:
Now the company had the information needed to globally optimize resource allocations and schedules against revenue expectations. Quarterly revenues were now factored into scheduling decisions as Engineering management now had full knowledge how they affected sales for the current and upcoming quarters.

Roy had the process complete and running within 6 weeks with immediate results. By eliminating a major cause of lost sales, the company quickly saw an increase in revenues.