I’m in a real quandary – our Microsoft Gold partnership is up for renewal in a couple of months and I just got the first reminder. We’ve been really proud of our Microsoft Gold Partner status – a relationship we have enjoyed for over a decade – but Microsoft have gone and changed the rules.

Until now, we’ve been able to act as an honest broker for our clients – recommending and suggesting new expenditure where appropriate, but offering complete objectivity on supplier. I’ve been quite reluctant to jump on the resell bandwagon, in truth – there’s no margin in it, and it’s a pain! And there’s always someone on the web that is prepared to undercut whatever price you offer – with the consequent pressure on our reputation. With most of our clients, we operate on an open margin of 15% - publishing our cost prices for total transparency.

Anyway – the reason why it’s coming to a head is that Microsoft’s Gold Partners are now required to commit to a sales target. I can see the benefit to Microsoft, but I’m really not sure that’s the best thing for my clients. In fact, I’m really sure that it’s not the best thing for my clients. The last thing I’d expect my colleagues to be thinking when working with our clients is “I need to make my Microsoft target - what can I sell in here?”

So I’m on the horns of a dilemma – sacrifice our bona fides with our clients on the altar of our relationship with a key partner? Or stand firm against the behemoth in defence of our freedom to determine our clients’ best interests?

I need to study much more closely the benefits that we get as a Gold Partner. For years it’s been a no-brainer: jump through the proscribed technical hoops and then be able to lean on Microsoft whenever a client’s need requires it. Now it’s not quite so simple… and I need to come to a decision quite quickly!

Watch this space!

I needed to visit a client’s office at Warwick earlier today; a journey that I’ve done dozens of times over the years by car: that run up the M40 really is meat and drink to my autopilot!
A few days ago, though, I decided to do it by train. A super-off-peak return from London to Leamington Spa was £25.00 with Chiltern Railways; probably about a fiver more than the fuel cost. Taking my bike on board the train meant that the couple of miles at either end would be covered more quickly than blinking.

The joy was, though, that throughout the journey I was able to work and rest and relax and reflect on eMails rather than simply react – and generally do a whole load of things that you simply can’t do when driving. In fact, I’m writing this blog post while sitting on the train on the return journey – just pulling into Haddenham & Thame Parkway - what a magnificent name for a train station! There’s about 45 minutes to go before we get to Marylebone.

Well done Chiltern Railways!

Just one little thing though – why can’t this have been the walk-up fare? Surely you can vary the pricing on trains according to demand. Both trains were nearly empty – and yet the moment the clock turned midnight, all the advance fares disappear and it’s walk up or move on. Or – more to the point – pay the full fare or take the car.

Sometimes you simply can’t plan your travel as well as the train companies would like you to. Please don’t force me back to the car!

We’re in the middle of a major upgrade to our systems at the moment and – for the first time – I’m not the main protagonist actually doing the engineering. This represents a big step forward in our efficiency and productivity.

No doubt our engineers will be blogging what they’ve been doing over the past few weeks, but the view from the top is that – for the first time - I can simply outline the engineering strategy and then get on with my day. Colleagues work out how to implement it, and then go ahead and do it. Yes, I still have some input at the tactical level, and I still need to approve all the change requests (especially the timing!), but it’s such a liberating feeling!

For the first time in the 20 years since I founded Electronic Workplace, it feels like I’m able to plough the fields without needing to return to them immediately to sow the seeds. Yes I still need to lend a hand when requested, but most of the implementation is now in the hands of really capable and trusted colleagues. Indeed, if I were to be more involved, I’ll probably slow things up and complicate matters.

So I’m happy to pull back and concentrate my efforts on what I’m best able to do for the firm. Helping define the sales and marketing strategy, assisting both efforts and ensuring that our overall performance is in line with our plans and strategy. And, of course, keeping score! On the company as a whole and individual areas of delivery.

Now that we have an effective delivery engine in place, it really feels like we’ve added several orders of magnitude to our resources. I’m looking forward to my new life!

In 2003, some 80% of our business was with one client – a very large pharmaceutical company. When that company merged with another, a new edict from above required that all outsourced contracts were to be global in order to leverage economies of scale to reduce costs. Having provided a service acknowledged to have been excellent for over a decade, our contract was immediately vulnerable.

Regardless of the countless arguments that just about anyone can deploy to show the folly of this perspective, we were given one month’s notice of the cancellation of our contract when we decided that we couldn’t guarantee the quality of our service if we had to mobilise global delivery within three months.

Since then, I’ve had a very clear rule – no one client will represent more than 10% of our turnover, or 25% of our net profit. In fact, I get nervous if it’s an industry sector that represents that, let alone an individual client. So – what happens when a big new opportunity wants to turn into a client? Turn the business away? Clearly not! But – as happened last Autumn when a big financial services client in the City of London signed an IT outsourcing contract with us, we estimated the contribution from this contract would add around 50% to our net profit – so it would represent some 35% of it.

We had to work out how to reduce our exposure. Put simply, we decided that every single penny of extra profit – after accounting for additional costs and tax etc – would be added to our marketing budget. Essentially, this doubled the marketing budget for 2011. So – we’d make no money from the contract while it represented too high an exposure.

It’s been an uphill task to be honest – growing profitability by 25% by adding clients, rather than shedding staff – in the teeth of a nasty recession – isn’t easy. But it’s also not rocket science – intelligently deployed sales and marketing resources do actually work! How many businesspeople have you heard cut back on sales and marketing effort then listen to them complain about lack of business! And they blame it on economic conditions!

Throughout 2011, we’ve added new clients steadily. Not easily, but steadily nonetheless. And our paranoia on client service has meant that we haven’t lost any. Through the end of July, the target was in sight and – well – we signed an outsourcing contract with a fast growing courier company earlier this week. That contract takes us over the line – no longer does any one client represent more than 10% of our turnover or more than 25% of our net profit! Yay!

Where do we go now? Well – financial services as an industry – still represents around 40% of our turnover. That’s uncomfortable. So I’ve kept the marketing budget at its current level. We’ve delivered a 25% increase in sales in 10 months. Our pipeline suggests that we can maintain that pace for the next couple of months. I hope to keep filling the top of that hopper.

How many small businesses do you know that have such a massive exposure to a single client? How have you / they dealt with it? Has it been dealt with, or have heads simply been buried in the sand on this?