Mornin’ Cup: Governance Conflict

coffee.gifRecently I received an email broadcast from an networking contact promoting an executive position for a software company here in Atlanta. The position was for a VP of Services, and by all accounts, it seems like an interesting role. However, once I realized who this person would report to, I immediately deleted the email.

Here is the blurb from that email, sans the company name and person’s name (I’m here to point out inefficiencies, but I certainly don’t want to embarrass anyone):

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Acme Software Corporation is looking for a new VP of Services and a new Director of Enterprise Sales both reporting to the SVP of Sales.

VP of Services

Responsible for the support team (about 20 people), the services group (about 10) and training (about 7). Revenue of 15- 16 million broken out with 11 for support and 4-5 in services including training.
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Okay, once you pick yourself up off the ground from the laughing spree that surely ensued from the above description, we can continue.

I will put this succinctly. Repeat after me. In a software company, delivery of any type should never report through sales. This is a classic conflict of interest. A morass waiting to happen. A proverbial goat rodeo in the making. If anything, the delivery/services arm of a software company should report through the operating branch of the company (i.e. the COO or VP of Operations).

Would you ever allow your car salesman to also personally provide maintenance services for you? Call me crazy, but I’m guessing you wouldn’t. Performing delivery or maintenance services is outside of the realm of the salesperson’s expected expertise. In a similar fashion, you wouldn’t go to the furniture delivery guy and ask him to help you pick out an accent table for your living room. Same principle, only in reverse.

Aside from that obvious distinction, there exists a more important issue here – internal governance conflict. With the services function reporting to the people who actually sell it, what check or balance exists to prevent service quality being compromised over the long run? It is only a matter of time before a sales person goes out and sells an impossible or convoluted “solution” to a client, and throws it over the wall to the services folks which report to them. It is also only a matter of time before the services team starts harboring ill feelings.

In any software company with a services component, the services function should exist on the same level as product development, both of which should report under the operational management of the firm. Sales is best set up as an independent body, working to sell products and services from across the firm’s portfolio of solutions. Governance of delivery is not part of the sales body of knowledge, and is certainly not something that any software firm worth their weight in anything would allow to fall under sales. Doing so is simply poor functional alignment.

Armed with this new knowledge, you can rest peacefully at night, knowing that you would never buy stock in this particular company. Oh, wait, never mind. They were delisted from NASDAQ some time back. Gee, I wonder why.

Cheers.

1 Comment

  1. Don Mills ยท February 18, 2006 at 1:53 pm

    Scott,

    You’d be surprised how many companies put Customer Service within the Sales organization. They may think they are gaining efficiency but lose sight of the fact that customer service is not intended to be a sales organization. In many cases, they are there to help fix problems caused by over zealous sales people promising more than the company can deliver. One way to thwart such sales shenanigans is to only incent salespeople on what is collected from the customer, not what is billed to the customer.

    Regards,

    Don

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