I joined a small company that was on the verge of significant growth. Our mission was clear and as the new CIO it became my responsibility to see that our IT organization was positioned and ready for the growth to come.
The challenge we had was that the IT organization had a very negative reputation at the time within the company (our “internal” client). However, the 43 Turnkey clients we supported (our “external” clients) loved us. Our Turnkey clients licensed the software we developed and maintained for our internal business operations.
Revenue contribution for the company was 96% from our internal clients and 4% from the external Turnkey clients. We no longer sold new business in the Turnkey side and our growth was expected to be in the area of internal operations growth, not selling new Turnkey systems.
I’m certainly not a rocket scientist, but I understood the company’s need in this environment within a week of being with the company. It was clear as a bell that my real IT support business was with our internal clients, not the Turnkey business (the 96% of the revenue versus the 4%).
The problem was caused because although our company had changed direction from Turnkey to Internal business growth, the IT organization had not yet made the transition in their focus. They liked our Turnkey clients and thought they were so much easier to work with than the internal business managers. Well, that may be the case but it doesn’t change the fact that the real business is our internal client business, , , where the vast majority of the revenue was produced.
I had to change this culture because the IT organization’s focus was not in sync with our business need.
After spending time to assess the situation, quantify the business needs and issues we had, and to develop our IT strategy it was time to decide what we wanted to do with our Turnkey business. We liked the additional revenue and didn’t want to lose it but we also had a mission to take care of, , , and we were not supporting the main part of our business very well, the 96% internal client.
At the meeting, I congratulated the Users on their successes and how much we had appreciated our past relationship. When I got to the point where I explained we were going to change direction and move away from supporting the Turnkey business, you could hear a pin drop. There were tears, there was anger, and even disbelief. It was a difficult message to deliver and probably harder to receive.
It helped in that we delivered a well thought out transition plan to minimize disruption in their business and gave them a year to make the transition plus an option to continue using the software they had if they wanted to support it themselves.
The President of the User Group was very helpful because I reached out to him prior to the meeting and asked for his insight and help when planning the announcement. He understood the change in direction our company was taking and why so he helped me develop a set of options that gave our Turnkey clients time and a way to minimize any business disruption. He is still a close friend and continued to use the same basic system he had for many years.
The morale of the story is:
- You have to step up and do the right thing.
- Things may appear bleak at first, but they usually have a way of working out for the best.
- When you put people in a corner, be sure to provide a path out of it.
I’ll never forget how anxious I was as I prepared to make my presentation at the Disney World dinner, , , knowing I was about to pull the rug out from everyone’s feet. We did not want to hurt any of our clients, but we also needed to get on with our company strategy and prepare for the major growth we expected.
Our company grew from $30 million in revenue to just over $700 million in just over 5 years. Had we not stepped up to some of our tough issues, we would not have achieved the level of success we had.