Why Adsum got involved with AccountAbility

Terry McMillan founded AccountAbility Access in 2008. After more than 20 years in developing software systems targeted at ad agencies and communications companies, Terry recognised that some fundamental changes were occurring in agencies and other communications businesses.

• Work practices were changing rapidly in the advertising and communications industry – staff were spending more time working at home or otherwise away from the office. They needed a way to access the company’s systems that was fast, simple and inexpensive wherever they happened to be working from.
• Younger people coming into the industry expected and demanded easy to learn and easy to use solutions that were web based
• Profit margins continued to be squeezed, meaning that efficient management of resources, in particular the management of staff time on producing client work was becoming even more important for growth and survival.
• Time-poor staff needed to get up and running with company systems quickly and easily, without the need for expensive and time-consuming systems.
• The growth in fee based client remuneration systems meant that working out which clients were profitable, and which weren’t, was essential. Companies could no longer assume that just because everyone was busy working on client jobs, that they were making money.

As a result, Terry believed the legacy ‘installed software’ based systems in the market no longer provided the industry with the tools they needed to run their businesses effectively.

In 2008 Terry founded AccountAbility Access to develop a solution that matched the changing needs of the industry, focussed on some clear objectives, a system which:

• Staff could access from anywhere
• Was functionally rich, but simple to learn and easy to use without the need for significant training
• Client service and creative staff were happy to use because it made their job easier – not just because management and finance told them they had to use it
• Could be implemented and maintained with a minimum of time and cost
• Required no up front capital investment by the customer to purchase up front software licenses, or investment in physical infrastructure (servers, networks, specialised software etc.)

By 2008 it was becoming clear that SaaS or ‘Software as a Service’ was rapidly emerging as the logical future direction for delivery of business software. Cloud computing – in other words software delivered over the internet – was clearly the way of the future.

Terry and his team of Developers spent 2008 and the early part of 2009 designing and developing the first release of AccountAbility. In early 2009 the first companies went live with AccountAbility, since that time the service has continued to evolve rapidly, both here in Australia and overseas.

AccountAbility has now matured to the point of allowing us to focus on more rapid expansion of our customer base. The positive experiences of the companies who have adopted AccountAbility prove that it is a highly effective and flexible solution. For both large and small businesses it significantly helps improve their business processes, controls and most importantly their profitability.

Profit making in 2012 – and why ‘keeping the score’ isn’t the answer

Once your creative business has agreed the remuneration/rate card with your client, the amount of profit you make is largely dictated by some basic factors:

• Estimating the time and subsequent cost for tasks and projects, and ‘selling’ the estimate to the client
• Managing the resources allocated to each task within that estimate

It’s a pretty simple equation – yet I suspect most of us have sat at the monthly management meeting reviewing the results for the month (compiled at significant cost and with great effort) to arrive at the conclusion “most jobs are running way over estimate, we’re just not billing the amount of time our people are spending on jobs”.

The natural reaction is to establish why this is happening so we can rectify the problem. Unfortunately the action/response usually seems to be focussed on identifying the cause of the problem rather than fixing it. We implement significant and complex software solutions that are an elaborate and expensive way of identifying which jobs, and which areas of the business are always running over the estimate. There are a plethora of systems available in Australia to do this, mostly designed by Accountants and most keeping the score really well, identifying which jobs and which areas of the business that are continually blowing out the estimate.

So now we know (by job, by department and by every complex matrix you can think of) where we think the problem is. The next step is to focus on the jobs where the biggest blowouts occurred, so naturally we go directly to the people who worked on the job (the suits and the creative) to ask what went wrong. You probably know the answers that come back:

Suits: “The creative guys just went to town on those jobs. They entered 40 hours on one of them that I only estimated 15 hours, which is just rubbish – there’s no way they spent that much time on it. Creative people are just hopeless with managing their time and money”.
Creative: “There’s no way I could have done that in 15 hours, the client kept changing the brief and the bloody suits just kept rolling over on it. In any case I had no idea they only allowed 15 hours for that, it was always going to take 30 hours even if the brief didn’t get changed 3 times”.

So where to now? We’ve kept the score, we know where the problem is, how do we do something about it in the future?

If we were in a manufacturing business, we’d focus on the production line and analyse each step in the manufacturing process to identify where things are slowing down and taking more time and materials than we can sell when it rolls off the end of the line.

So how do you that in a creative business where the production line is not so clear and where you can’t just pull up a chair and watch what is happening. I guess one way would be to go to every meeting and discussion, starting with the initial meeting where we got the brief, work out how the suit arrived at each component in the estimate, looking at the way the creative people were briefed, and watching the reactions when the client starts making changes when half way through the job. In other words examining the whole process just like you’d examine a production line.

That’s not easy to do. The whole process is fairly fluid and unpredictable and you’re probably so busy doing your own job it’s just not possible to do this. Even if you have the time to do it, what are you going to learn that stops it happening on the next job that you aren’t watching like a hawk?

OK, perhaps the comparison of the creative and production process to an assembly line seems trite and simplistic, but actually it’s not. What you really have is an assembly line staffed by highly paid workers, that is continually breaking down.

One solution is to hire a Traffic Manager, someone in between the Suits and the creatives to watch and control every step. Unfortunately, adding another layer adds another cost that is extremely difficult to recover from the client. Try adding a line “Traffic Management – 6 hours @ $150 = $900” to your next job estimate and see how the client feels about that. Even if they do swallow it – it often just means there is $900 less that they ‘ll pay for the other services (like creative) to get the job done. In the end, the job is worth what it’s worth. The client is often not in the slightest bit interested in how much it costs you to do the job; they just want to feel that the end product is value for money based on the total cost.

I’ve talked to a lot of suits and a lot of creative people about this problem over the years. Without exception they recognise this issue and want to be part of doing something about it. They fully understand that their job security and sense of contributing to the well being of the business depends on them managing time and resources effectively. They WANT to do this better.

I don’t buy the argument that creative people are hopeless with time management and hopeless with managing money. What they do tell me is that they just need the basic tools and information about how long they actually have to do the job. When they can’t do the job in the time allowed they’d like to put their hand up and find a solution. They want to work with the suits to achieve a great outcome within the budget.

Curiously, the business management tools these front office people (creative and suits) are using day to day (timesheet systems as well as spread-sheets and the like that Finance keep putting in front of them) are not actually focussed on giving them the information they need to solve the problem, they are focussed on KEEPING THE SCORE. And most of these systems are so complex and unfriendly that they don’t actually even achieve their objective of keeping the score. You’ve all heard your suits and your creative people say it “I hate that bloody system, I only use it to enter my timesheets because I’ll get my ass kicked if I don’t”. They have the score keepers telling them stuff like “if you don’t do your timesheets you won’t get paid”.These guys are smart. They know damn well that the scorecard (their timesheets) doesn’t actually achieve much at all, other than keeping the score keepers happy.

In my view, the only solution is empowering the suits and the creatives with some simple information and tools that allow them to manage this process between themselves. And I’ve always found that these people are smart enough to do a great job at managing this process – they can do it way better themselves if you get out of the way and let them do it.

Keeping the score won’t solve the problem, in fact the more sophisticated/complex processes and systems you throw at solving the problem, the further you move away from solving it.

Actually you’ve got a great advantage over the businesses that are running an assembly line with relatively low paid people working the line. You’ve got some incredibly smart and savvy people that you can empower to self-regulate and make your business way more profitable in 2012 than 2011. You need to stop keeping the score, give them the tools they need to do it they and then get out of the way and watch it happen.

In the next article I’ll talk about the tools and their characteristics that will make it happen.

Business Planning

I’ve often said that advertising agencies do a wonderful job of communicating to consumers, but leave a lot to be desired when it comes to communicating internally. Much the same as I’m more adept at controlling agency finances than my own!

The same can be said about business planning. Clients of Australian agencies have access, and benefit from some of the best Strategic Brand Planners the World has to offer. But in turn, a lot of these agencies lack their own plan and simply exist from year to year without goals or strategic direction.

Running an agency without a plan is like trying to find your destination without a map. Sure you may end up arriving where you want to through natural instinct, but the risk of not is far greater.

So I’m simply now getting back to basics and listing the reasons for having an agreed Business Plan in place, no matter what the service offering.

A good plan;

• documents the reason you’re in business and clarifies the vision for the business
• provides a single point of reference if multiple owners are involved
• provides a process for succession planning
• documents exit strategies – sale, merger or acquisition
• sets out goals/milestones for the agency to achieve.
• provides necessary information for investors, capital lenders etc.
• defines your market position and addresses corporate objectives
• sets out framework for financial and operational effectiveness
• identifies risks, opportunities and threats

A plan will obviously be subject to change just as market conditions do over time. So corrections are also just part of good planning.

Can your business afford not to have one?

Michael Collinson

May 2011 update

Adsum has now been operational for over 3 months now and both David and I are very pleased with the progress. We’re very appreciative of the overwhelming support received for our new business.
As well as the consulting services, we’ve been amazed with the interest received in “Accountability”, the only internet based business system specifically developed for the marketing communication industry.
We’d like to thank the clients that have engaged us so far and look forward to welcoming new partners in due course.

We’ve launched our new Website

Welcome to the new Adsum website. We’ve just launched it, thanks to two great guys Chris and Alex. Alex is a tall handsome looking man, but that Chris fella is just amazing. 10 out of 10 we think. He’s even got a shaved head and a rugged beard, girls just go crazy over him.

© Copyright Adsum Pty Ltd - ABN 149 136 514