Listen Now: When Business Changes Break Your Reporting


Episode summary: Brick and Caleb discuss a recent change at Blue Margin that made their reporting no longer useful, and how they fixed it. 


“We found ourselves in a bit of a fog... you know, the cobbler that doesn't have any shoes. This is what we do for a living, and yet we moved so quickly that we changed our business out from under our reporting platform.” - Brick Thompson, CEO


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Full transcript:


Brick Thompson: Welcome to The Dashboard Effect. I'm Brick Thompson, Founder and CEO of Blue Margin.

Caleb Ochs: And I'm Caleb Ochs, Vice President of Delivery Operations.

Brick Thompson: Hey, Caleb. Hey, good to sit down with you again. What are we talking about today?

Caleb Ochs: Today, we're going to talk a little bit about our experience of making a major change in our company. And then how we dealt with the lack of reporting that came along with it.

Brick Thompson: In other words, the change we made - and I know we're gonna be talking about here, but I'll let you introduce it - the change we made basically broke all the reporting that we were using to know how we were doing. How did we deal with that?

Caleb Ochs: Right, right. Yeah, it made it challenging. For sure.

Brick Thompson: Well, why don't you explain the context here?

Caleb Ochs: Yeah. So a little bit of background. So we, Blue Margin, has been a time and materials company since since it started. Right?

Brick Thompson: Oh, yeah, from the very start.

Caleb Ochs: From the very beginning. And, you know, last year, what we decided to do was change our pricing model. Get away from hourly billing. And what that meant is instead of time and materials, we decided to go to a fixed price model. So instead of, you can think of it as instead of coming up with an hour estimate to complete some work, what we would do is we would look at what, what work are we doing, and then without going into too much detail on how we're pricing on a fixed model, because that might take a while and it's complicated. We just fixed the price. And instead of logging hours and worried about going over budget, we would just complete the work. So, on time and materials, some of the metrics that we had - and Brick you probably can chime in here - were things like utilization. How many hours in the day do you build versus how many hours do you work?

Brick Thompson: Yeah, yeah. So, right. So we had a number that was important for us for figuring out if our staffing was right, so we could look at what percent of the hours that we were paying engineers for, were we actually able to bill for client work. And so that was a pretty important number for us. Another one that was key was what's our average billing rate? You know, we know what we signed the contract for, but sometimes we have non billable hours. And so we want to see, you know, how productive are we being? And let me say, we need to do a separate podcast on why we went to fixed pricing, because it's so much better for us, and for the client, and for the engineer, and for the stakeholders that are client companies. A whole other discussion. But yeah, so those are a couple of examples of metrics that we lost.

Caleb Ochs: Right, right. Yeah, things like backlog hours and utilization, those types of things. So those are what we ran our business on. We would look at, "How many hours did we bill yesterday?" And you know, "Was it a good day or not?" And then all of a sudden, it was really interesting as as we started going, making the transition slowly, even with our first fixed price project, the hours on that project didn't matter anymore. So, it's like every hour that we billed to that project didn't generate revenue anymore. So all of a sudden, our number for billable hours was quickly became like, unreliable.

Brick Thompson: Right. In other words, the old metric of utilization, all of a sudden, we might have gone from, say, as an example, 70% utilization to 85% utilization. But that didn't necessarily mean that we're all of a sudden overworking our people. It's just that we weren't constrained by estimates and budgets on projects. We just had to get the work done. And it turned out engineers are very happy to just keep working away at it and not have to check in with our project managers and make sure they're not going over budget for a task and that type of thing.

Caleb Ochs: Yeah, right. Right. And you know, and once that started to happen, I don't know about you, and we haven't really debrief this too much. But I spent most of my days, looking for numbers. Like just digging into the data, and I was really in the weeds. But I knew that, you know, this hours number is not telling the whole story anymore. So, I spent a lot of time just looking at the data, trying to understand how are we doing?

Brick Thompson: Well, and it was interesting for me because you'll remember when we first started thinking about making this change, one of the things we said was okay, let's just experiment a little bit, and then we'll figure out, you know, how do we need to change reporting? How do we need to change project management processes? And it was so valuable to us and our clients that we just changed all of a sudden. Basically happened over about 30 or 45 days, and we found ourselves flat footed in terms of reporting, and yes, I was looking for data, I was running spreadsheets, I was coming to you. We found ourselves in a bit of a fog, which is I mean, talk about, you know, the cobbler that doesn't have any shoes. I mean, this is what we do for a living. And yet we moved so quickly that we changed our business out from under our reporting platform.

Caleb Ochs: Right, right. Yeah, that's a good way to put it. And you know, one thing that sticks out to me is something that we just heard earlier this week from our, from our EOS implementer, about spending time on $30/hour work versus $1,000/hour work. And just digging around for data, that's $30/hour work.

Brick Thompson: In other words, you. You're valuing yourself at $1000 bucks an hour?

Caleb Ochs: Maybe it's more like $2000/hr, but I'm just saying. You get my point. (laughter)

Brick Thompson: I do. It sounds like you need a raise. (laughter)

Caleb Ochs: Yeah, exactly. (laughter)

Brick Thompson: Yeah, no, that's right. So there you are doing sort of entry-level business analyst work. Collecting data, doing queries, putting it into a spreadsheet, trying to make sense of it.

Caleb Ochs: Right. Right, exactly.

Brick Thompson: So where are we now?

Caleb Ochs: Now we're we're a little further along. We at least have some things that we can look at. But I think, you know, we're way further along. I don't spend my days looking at data anymore. I have some reports that I can reasonably rely on. But that's ultimately where you want to get, right? You don't want to spend two hours in the morning, looking at data, doing that business analyst work. You want to look at your number, and then go about your day.

Brick Thompson: That's right. Yeah. And actually, the reality was that once we realized, oh my gosh, this change is just going to happen. Because it needs to, it's just better for everybody. And boom, it happened. Then we buckled down, and in about two weeks, we had (actually maybe even shorter), we had a pretty good daily pulse report. And something I've always had as a CEO, it's important to me, I you know, I get up early and six o'clock I (not as early as Caleb, by the way), but six o'clock, I'm looking at my report to see you know, how did it go yesterday, how's the month going? And so all of a sudden, I had that back again. So I went from, I don't know, sort of 30 days of feeling fuzzy and looking for data and feeling uncomfortable, frankly, because I'm used to having it at my fingertips to all of a sudden I had it back. And really, I think it's a credit to the team here that our data warehouse was in a condition where we could do that. And we still have some work to do there because we're still learning about how to run a business with fixed pricing as opposed to time and materials. But we were able to adjust pretty quickly, I think.

Caleb Ochs: Right, right. And that's not just us either, right? We've had plenty of clients, I'm thinking of one in particular during COVID, where we had been working with him for a couple years already. And they had obviously COVID really impacted their business. So they didn't necessarily want to do it like we did with fixed pricing. But the same principle still applies where we had a good data warehouse, and we were able to give them the tools to make quick changes and understand what's happening quickly. So they weren't flying blind for too long.

Brick Thompson: Yeah, I know the one you're talking about this, this particular client does servicing for commercial kitchens. And when we hit sort of March and April of 2020, that really impacted their business there, you know, restaurants were closed, schools were closed. And they needed some reporting really quickly to understand about staffing and utilization, and those types of things. And actually, because the data warehouse was in place, over a long weekend, our team was able to crank out some reports that really allowed them to get control of what was going on. And they've come out of that stronger than ever. Yeah, that was that was very gratifying. And the CIO there, really was so happy to have that in place and be able to deliver that for his senior team.

Caleb Ochs: Yeah, yeah. So what's the bottom line lesson here, Brick?

Brick Thompson: Well, I mean, it sounds self-serving because it's, it's what we sell. But when you have a data infrastructure, when you've got the sort of the data plumbing in place, it really enables you to pivot, and to very quickly get a handle on what's happening in your business. And I can tell you, even for the very brief period (couple of weeks) where I didn't have it at my fingertips, it just didn't feel good in my gut. I just felt like I don't know exactly what's going on. Business is good. I'm not worried about that, but I really want to understand it so we can make sure that we're planning our staffing right. And planning our expense budgets right and planning our revenue and business development... all that stuff. And the fact that we have that data infrastructure, even though we're quite a small company, compared to most of our clients, you know, 35 people. Having that is so powerful. So, I think the bottom line is, you know, the sooner you can have that the better for your company.

Caleb Ochs: What's your tagline?

Brick Thompson: (Laughter) Oh, The Dashboard Effect?

Caleb Ochs: Oh, no. The "Stop wondering."

Brick Thompson: Oh, yeah. Oh, that's right. I well, I didn't want to give that out because they haven't trademarked it yet. (laughter) Start wondering. (laughter) Stop wondering, Start knowing.

Caleb Ochs: Yep, yep.

Brick Thompson: Yeah. I mean, I think that really is it, and you know that feeling of wondering when you're running a business doesn't feel good.

Caleb Ochs: Yep. Yep, totally agree. Where are we at?

Brick Thompson: So, yeah, we're 12 minutes in, I think we've covered the topic. So, I'll just go ahead and wrap up this episode of The Dashboard Effect.

Caleb Ochs: Great. I think that I hope that was helpful to somebody.

Brick Thompson: Yeah, it was fun to talk about.

Caleb Ochs: Yeah, and look forward to the fixed pricing episode. I'm looking forward to that. We just start talking about it.

Brick Thompson: Yeah, that'll be a good one. All right. Thanks, Caleb. See ya.

Caleb Ochs: Thanks, Brick. See ya