October 12, 2006© 2006, William Glass-Husain. Permission to redistribute granted provided copyright notice kept intact. 1 Business Tips for the Open Source.

October 12, 2006 © 2006, William Glass-Husain. Permission to redistribute granted provided copyright notice kept intact.

1

Business Tips for the Open Source Consultant

• About Consulting• Core Business Philosophy• Consulting Techniques• Appendix

Presenter Contact Info:

Will Glass-HusainMenlo Park, California USA

[email protected] + 1 415 440-7500

mailto:[email protected]

http://www.jlamp.com/


2

Why Consult?

• Have more control over lifestyle, working conditions, projects. (but not total control).

• Set your own hours and work schedule. (e.g. open large blocks of time for family or travel).

• Subsidize other interests in your life such as a startup or open source software project.

• Or simply earn a lot of money.

Consulting can be a great way to earn a living…… if it suits your skills and temperament

About Consulting


3

Consulting vs. Contracting

A Contractor:

• Is hired for a specific project.

• Is told specifically what to do and how to do it.

• Is closely managed by the client.

• Is primarily valued for technical skill.

A Consultant

• Typically has an ongoing relationship with the client.

• Finds and suggests new ways to help the client be successful.

• Is responsible for high-level deliverables and budget.

• Is valued for both business knowledge and technical skill.

About Consulting

As a consultant you will be able to charge higher rates and have greater control over your work environment than as a contractor.


4

Consulting and Open Source Go Hand in Hand

• Consultants benefit from using open source projects.– Consultants focus on business problems rather than developing code

libraries and tools.– Independents can compete with much bigger firms (in the past such firms

had an advantage with sophisticated in-house tools).– Being part of an open source project can lead to consulting or training

work.

• Open source projects benefit from consultants.– Consultants often have much more flexibility to contribute code back to

the community than do corporate developers.– Projects become more relevant as developers use them in real world

applications.– Some committers use consulting to fund special interest in open source

projects.

• Caution! – Before donating code to open source project be sure you have ownership

of code or that your contract permits you to do so.– Avoid using GPL or other viral licenses without buy-in from client.

About Consulting


5

Success is All About the Money...

Profit

Revenue

Costs

Billable Hours

Unproductive Hours

Time Spent Finding New

Business

Existing Customers

New Customers

Projects

TechnologyMarketing

LaborOffice

Subscription Fees

Spousal Subsidy

Billable Rates

Product Sales

Administrative Time

Other Non-Billable Time

Core Business Philosophy


6

…But the "Soft, Fuzzy Stuff" is What Makes it Happen

High Customer Satisfactio

n

Productivity(billable hours /

real hours) Profit

Revenue

Costs

Billable Hours

Unproductive Hours

Time Spent Finding New

Business

Existing Customer

New Customers

Projects

TechnologyMarketing

LaborOffice

Subscription Fees

Spousal Subsidy

Billable Rates

Product Sales

Administrative Time

Other Non-Billable Time

Reputation

Perception of Value Provided

Trust



7

"Highly Satisfied" Customers Provide Enormous Benefits

• Long term source of projects and revenue.

• "Unproductive" time searching for new work is sharply reduced.

• Serious disputes over deliverables or billing never arise.

• Provide testimonials you can use to help get new business


Highly Satisfied

Passively Satisfied

Not Satisfied


8

Example: Highly Satisfied Clients

• Firm: Small, innovative IT services company in Silicon Valley provides lavish customer support to local clients.

• Example services:– Innovative pricing – flat fee for all services– Maintains the “most important computer in the company” – computer in

CEO’s home. (or vacation house!)– Regular “how is everything going?” visits to each client– Local call center can dispatch technician to site in 10 minutes.

• Benefit – has never lost a customer

• Benefit – every customer is a reference for new business– Will invite potential customers to join on walk through existing customer

facilities

• Benefit – strong loyalty means that though they initially lose money on each customer the ultimate profit is high



9

Your Work Should Provide Tangible Value to Customers

• All projects must either– Build revenues

• Example: service-based web site brings in subscription revenue.

– Reduce costs• Example: compliance-monitoring database reduces labor costs.

– Provide specific if hard-to-measure benefits• Example: internal e-learning application boosts staff knowledge.

• Customers care about these three things. Typically, it's irrelevant to them what technology gets them there.

• Tell your customer explicitly what value you are providing.

• Whenever possible, aim for option 1. – If you help your customers make money, they will give

you money, more money and more money.



10

Your Customer Relationship is based on Credibility and Trust

• Learn about the business– Use "we" and "our" to refer to business problems.– Ask questions, but not stupid ones. – Demonstrate your understanding by summarizing the business

issues in conversation and proposals.– Use real examples and jargon in sample applications.

• Be professional in dress and demeanor.

• Deliver what you say you will deliver.– Every deadline matters.


Example (property database)

Property Amenities: strip club, foobar, rocketpad BADProperty Amenities: club room, pool, tennis courts GOOD


11

A Good Reputation Helps Generate New Business

• Preferred ways to generate new business– From existing clients.– Clients recommend you to industry colleagues or other contacts.– Prospects come and seek you out.

• All of these methods depend on a having a good reputation with your client and in the field.

• Ways to build your reputation:– Collect written testimonial letters from every highly satisfied

client.– Post high-quality content to a website or blog.– Be involved in open source projects.– Speak at conferences.– Write a book.



12

Examples: Customer Leads Based on Word of Mouth

• Market Strategy Consulting Firm– Primary contact is a VP. Was business colleague 1996-97, called

me up in 2002. Have collaborated on 6 projects since then.

• Real Estate Consulting Firm– Original contact: longtime friend was junior developer. Came in

to offer mentoring advice, ended up driving development of series of projects. Highly satisfied customer has provided extensive repeat business.

• Prominent US Business School– Original contact was instructor who was customer at previous

company. Made personal connection with program director in in-person meeting. Excellent references from other customers sealed the deal. Now on second project with that program and are expanding to other programs within School.



13

Stay Productive – Focus on Benefits to Customer and Yourself

• Manage your time carefully – time is money.

• Avoid "dead hours" – time spent on miscellaneous tasks that provide no benefit and are not billable.

• Provide transparency to the client on invoicing – track time by hour on a daily basis listing tasks accomplished.

• Avoid refactoring for the sake of refactoring. Make sure that everything you do moves the project towards meeting the client needs.



14

Keep Costs Low When Possible

• Big benefit to independent consulting – costs can be extremely low.

• Typical costs– Office/Telephone– Marketing (including web site)– Labor costs (e.g. outside graphical designer)– Technology

• Working out of home has substantial cost benefits.

• Technology is the most effective investment as it is directly tied to productivity.



15

How to Sell a Project

• Selling is a multi-step process. You need multiple project in different parts of the pipeline.

• Personal and informal works when there is mutual trust.

• Request For Proposal (RFP)'s are a killer. Avoid unless you are "Column A" (first choice).

• Always be worried about where your next project is coming from!

Consulting Techniques

Selling a "Complex Solution"

"Unqualified"

ProspectsQualifiedProspects

ProposedProject

OngoingProject

learn aboutclient's needs and budget

write proposal for specific project

negotiate and close

look for repeat business


16

Example: Project Lifecycle

• Project: Executive Training simulation for US Business School.

• Unqualified lead: referred by former customer, now instructor at school. (April 2005)

• Qualified lead: Had several initial conversations verifying client needs, our capabilities and budget. Client wrote RFP (Request for Proposal) clearly favoring our approach. (June 2005)

• Proposed project: Wrote detailed proposal summarizing their needs, our proposed solution, implementation schedule, and pricing. Later feedback from client was that this was only proposal that truly reflected client needs. (July 2005)

• Closed deal: Met in-person at our site and theirs. Held phone calls to answer questions on proposal. Was accepted, had final negotiations on price. (July – November 2005).

• Implementation: built simulation and assisted in course. (December 2005 – Jun 2006).

• Repeat business: Smaller re-delivery of solution. Adapted solution for MBA program within same school. (September 2006)



17

How to Stay in Touch with the Client

• Cultivate your contacts– Manager contact – who's job is on the line?– Worker contact – who uses the product?– Technology contact – who provides enabling infrastructure?– Business contact – who approves the checks?

• Weekly informal contact during project– Emails– Dropping in

• "Catch-up" meetings every couple of months between projects– Demonstrate something new.– Discuss ideas for future work.

• Be sure to stay in touch during difficult times or the situation can get worse.



18

Pricing

• One of the trickiest questions to answer is "How much do I charge?"

• Cost side:– Expected annual salary and hours worked per year– Personal insurance, office, other costs– "Utilization Percent" – in your line of business, what reasonable

percentage of time are you looking for work versus billing?

• Value side:– What's the value of the project to the business?– Are you a contractor or consultant?– What do others charge for this type of work?– What have you charged in the past?

• Never discount! You won't be able to later charge the higher rate.

• Offer extra hours with discretion, but make the time visible to the client.



19

Writing a Contract

• Never start work without a signed contract or (preferably) a succinct "Letter of Engagement". This is less for legal reasons and more to make expectations clear up front.

• Key items for contract / letter of engagement- Project objective (1-2 sentences)- Contractor expectations: manpower, max hours, deliverables (high level)- Contractor rate / billing terms- Company expectations:

- "In order for this project to be successful, company must…"

- Contractor is independent contractor not employee- Ownership of intellectual property- Confidentiality

• Confidentiality– Non-Disclosure Agreement (NDA) – not a problem.– Non-Compete clause – a problem. Expect compensation.



20

Discussion


21

Resources

So You Want to Be a Consultant?Steve Friedlhttp://www.unixwiz.net/techtips/be-consultant.html

Million Dollar Consulting: The Professional's Guide to Growing a Practice Allan Weiss, McGraw-Hill, 2002

Beyond Software Architecture:Creating and Sustaining Winning Solutions Luke Hohman, Addison-Wesley Professional, 2003

Author's bloghttp://www.jlamp.com

Appendix

http://www.unixwiz.net/techtips/be-consultant.html

http://www.jlamp.com/


22

Sample Letter of Engagement (part I)

Appendix

January 10, 2005

Will Glass-Husain1325 Mills Street, #6Menlo Park, CA 94025

Jeff SmithSmith & Partners, LLP1020 Main Street,San Francisco, CA 94001

Dear Jeff,

This note is intended to serve as a "Letter of Engagement" formalizing our collaboration to develop a web-based financial compliance system.

Project SummaryThe primary goal of this effort is to aid Smith & Partners in tracking regulatory compliance of major clients. We expect that it will take approximately 100 billable hours to build a working system, with primary work being done by Will Glass-Husain and an additional 20 hours of effort by a graphic designer (which we will bill through). The project is expected to be completed by May 1, 2005.

In order for this project to be successful, Smith & Partners will need to provide a primary contact who is available to answer questions on regulatory issues, review project drafts, and to oversee Smith & Partners-wide deployment. It's difficult to estimate required time but this will probably be 20-30 hours over the lifetime of the project.

Independent SubcontractorBoth parties agree that Glass & Associates is an independent subcontractor to Smith & Partners and is not an employee of Smith & Partners in any manner.

RateSmith & Partners will pay Glass & Associates a rate of $____ per hour for work done under this agreement. No travel or other direct expenses will be paid unless previously agreed upon. Glass & Associates will submit hours and accomplishments weekly using a mutually agreed upon format. Glass & Associates will invoice Smith & Partners at the close of each month, with payment being due 14 days following.


23

Sample Letter of Engagement (part II)

ConfidentialityGlass & Associates agrees to keep all information learned in the performance of services for Smith & Partners in strict confidence during and after the termination of this Agreement. Glass & Associates recognizes and acknowledges that in the course of its work it will be exposed to confidential information of the Smith & Partners. It is agreed that this exchange of information in the form of financial, sales, marketing, creative information, copyrighted material or any techniques, know-how, or development work, in any form whatsoever be, kept secret and confidential by Glass & Associates. In addition, Glass & Associates agrees to return to Smith & Partners promptly all materials or confidential information furnished by Smith & Partners upon completion of an assignment or request.

Intellectual PropertyAll software and other intellectual property developed by Glass & Associates during its engagements with Smith & Partners are owned by Smith & Partners. Any software components or libraries used in an engagement that were previously developed by Glass & Associates remain the property of Glass & Associates, (including any enhancements to the pre-engagement code developed during the engagement). In such cases Glass & Associates grants Smith & Partners a royalty-free perpetual license to utilize such software components.

TermThis agreement will become effective on the above-stated date and will continue in effect for a period of one year unless sooner terminated. This Agreement shall be automatically renewed for a period of one year on each anniversary date, but may be terminated at any time by a written notice from either Smith & Partners or Glass & Associates.

Statement of Intent Underlying this agreement is an understanding that both entities are best served through openness, honesty, prudence, and integrity. We approach this intent with mutual regard and professional respect.

Jeff, I'm excited to work with you in adding this powerful new capability to Smith & Partners. To indicate your formal agreement and to kick-off this project, please sign below and fax this agreement to 333-444-5555.

Sincerely,

William Glass-HusainGlass & Associates Web Enterprises

CUSTOMER SIGNATURE

------------------------------------------------------------------- -------------------------JEFF SMITH, SMITH & PARTNER Date

Appendix

October 12, 2006© 2006, William Glass-Husain. Permission to redistribute granted provided copyright notice kept intact. 1 Business Tips for the Open Source.

Documents

consulting slide

open source projects

open source consultant

william glasshusain

open source software

provided copyright notice

glasshusain menlo park

open large blocks of