Chapter 72: Out of the Blue

October 14, 1988, Chicago, Illinois

"How did things go with Archbishop ALYPY?" Dave asked on Friday morning.

"Great!" I replied. "He's very happy with what we came up with. He requested a few minor changes which Jeri will make, and then we can teach Zeke and Ralph how to install it, and Cassie and Barbara how to support it. This is good practice for the next step," I answered. "Did you decide what you wanted to do?"

"Yes. You and Jeri are going to do a prototype of the legal software, one that works well enough to demonstrate to Ford, Jackson, and Finch. Once it's ready, I'll send the two of you out there to show it to them. My goal is to get them interested enough that they'll be willing to adopt it. We'll make it completely compatible with the current and future back-end code, so they wouldn't even have to switch everyone."

"You think Jeri can handle going to California?" I asked.

"You've had nothing but good things to say about her presentations to the Archbishop. I know lawyers are a different breed altogether, but Ben Jackson in LA is a good guy, and you get along well with him. He's pretty easygoing, as lawyers go. Not like your friend Frank Volstead in Cincinnati."

"That man is no friend of mine! Ben van Hoek is, but Volstead, and his partner Braun, are not on my Christmas card list!"

"Anyway, I'd like you guys to have a working version to show off in January. It doesn't have to be feature complete. But it has to be ready to demo."

"I think we can do that," I said. "Assuming you can give us enough time."

"I think so. You've moved through the PRIME conversions pretty quickly, and Charlie and Debbie are handling bug fixes and changes, and Tim has come up to speed rapidly. The big concern is that the logistics software is languishing, but we've never really been able to dedicate time and resources to it. I talked to Julia about basically putting it into pure maintenance mode when Terry finishes the next point release. We're going to lose Purina, and if you think about it, they were basically funding that development. Without them, we won't have the revenue to support it, and it's really distracting us from our two main packages. The same is true for the estimation and inventory software."

"We have some pretty good customers who use that. I kind of hate to leave them in the lurch."

"I talked to Julia and Elyse about selling those two packages to another firm," Dave said. "I think we should propose that to the Board."

"Remember, Jeremiah's dad has a partial interest in that software and we'd need to share some of the proceeds with him."

"So you aren't opposed to that idea?" Dave asked.

"No. It'll help us narrow our focus, which is something that I've worried about. If we eliminate Purina from the mix, those two software packages don't even make half of what we make in consulting revenue at this point. Forget about comparing them to the legal and medical software."

"This could give us some operating capital to expand," Dave said.

I laughed hard, "Let me guess. Cindi talked to you about this!"

He smiled, "That may have happened."

"She's a crafty one, that ex-girlfriend of yours! She does find a way to get what she wants!"

"Except with you!" Dave laughed. "She never did manage that, despite her best efforts."

"Let's meet about this once the usual Friday pipeline status meeting is done. You, me, Julia, Elyse, and Cindi. I want to talk it through, and we'll have to propose it to the Board. We can talk about Elyse's proposals about our rates as well."

"I do have one private thing to talk to you about," Dave said.

"Sure. What's up?"

"Julia and I are going to start trying for a little brother or sister for Peter after Christmas. I just wanted to give you a heads up that sometime late next year or in early 1990, she'll be taking a couple of months off again. Your sister won't have graduated by then, right?"

"Right. She'll have her MBA around the end of May of '91. Have Julia talk to my dad when she's ready."

"Oh, before I forget, I signed your vacation requests. They're approved!"

"Thanks, Boss!" I chuckled.

"I'll come get you when Julia, Elyse, and Cindi are done with their meeting."

Dave left, and I got to work on the proposal for the new customer that I'd visited the previous morning. I was about halfway done when he came back and said that the team was ready.

"Very slick move, Cindi," I chuckled as I walked into the room.

She smiled and winked, and the five of us sat down at the conference table.

"There are two items we need to discuss," Julia said. "We'll start with Elyse's proposals for how we set our rates and charge for time. I know you've all had her memo for a week, so I don't think we need to recap the proposal. Comments?"

I waited, because I wanted to hear other opinions, and I knew that if I gave mine first, it might send the conversation in totally the wrong direction. Dave spoke first.

"This really will help me stabilize the consulting team and allow me to properly balance resources and demands. My biggest concern is that we're losing two major revenue sources in Purina and Waukesha. I have enough work in the pipeline to keep the consulting side busy, for now. I do have something of a resource problem in the short term, because I'm going to have Steve work on the Windows conversion with Jeri. In addition, he has the class to teach at IIT for the rest of the semester. That means I need to hire.

"The problem is that we could easily be in a position by the end of January where we're caught up and I have someone 'on the bench', so to speak. And this is going to be a continual problem. If we don't have enough staff, we'll leave money on the table, but if I have enough staff to do all the work, we could have periods where they don't have any billable hours. Elyse's plan lets us balance staff better, because we'll have booked the revenue, and we won't have to dip into reserves for those lean times, or worse, lay someone off because we don't have immediate work for them."

"I agree," Cindi said. "By changing the refund policy on support contracts, I can staff properly without worrying about cancellations. What I want to do is rework all the contracts to cover a calendar year, with all of them terminating on December 31st, with a small surcharge if you renew after December 1st. That way, I know by the end of November what my staffing needs for the following year will be. The cancellation fees ensure that we don't have to reduce staff if a number of clients cancel for whatever reason. We've had very few of those, but we have had some, and it plays havoc with the budgets.

"For the on-site support that's chargeable, I agree with Dave. The blocks of hours make a lot of sense for the same reasons that they do for the consulting side. As Elyse pointed out in her memo, we do have to be careful of the liability that we incur to actually provide that support in the future. And, not to sound like a cynical sales person, raising our base rate and offering discounts will actually increase our sales. I'll also point out that we haven't raised our basic consulting or on-site support rates since we started."

"That's true," Elyse said. "But I suspect you don't agree with my proposal for a small increase in the cost of our legal and medical software, as well as the maintenance contract."

"I don't think we can afford to do that," Cindi said. "At least not on the legal side."

"Our costs continue to rise, and inflation isn't going away anytime soon," Elyse said. "We haven't had a price increase since we set the licensing fees a couple of years ago. We don't have much choice, really. At some point, something has to give."

"Can we at least wait until this whole BLS crisis has passed?" Cindi asked. "I don't want to announce price increases now. Can we revisit this after the first of the year with a target of March 1st?"

I decided it was time to say my piece.

"I think that's a reasonable compromise. Cindi, you do acknowledge that at some point, we have to raise our prices or cut service, right?"

She nodded, "Yes, as much as it pains me, I do understand that."

"And Elyse, I'm sure you understand that we have to stay competitive, at least when you look at what we provide for what we charge, measured against our competition."

"Yes, of course," she replied, nodding.

"Then let's discuss that in January," I said. "Overall, I agree with the proposed changes to the way we handle consulting and paid support. This isn't something that the Board needs to approve, so if Julia approves, then we implement it. What would the effective date be?"

"I think it has to be January 1st," Elyse said. "We need to have time to formalize it and notify everyone. I can get that done by the end of October so that all of our customers have a 60-day notice. New customers after November 1st would be on the new plan immediately."

"I approve," Julia said. "Make it so!"

We all laughed, even though she'd used Captain Picard's phrase many times since we all started watching Star Trek: The Next Generation.

"That brings us to Dave's proposal, which I have a sneaking suspicion came from Cindi," I said.

"To fight and conquer in all our battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting." Cindi said.

We all laughed again.

"OK, Madame Mao, let's hear your proposal!" I chuckled.

"Wow, that was low even for you!" Cindi said with a grin. "Comparing me to that woman? Just because I quoted Sun Tzu?"

"I was thinking more of conniving and scheming, rather than The Art of War," I teased.

"Opportunities multiply as they are seized." she said.

"Maybe we should discuss the actual proposal, instead of you two trying to dominate each other!" Elyse smirked.

Cindi nodded, "We all know, and we all agree, that we are stretched too thin and have way too many irons in the fire or balls in the air, or whatever metaphor you want to use."

I nodded, "Stephie would have called it 'Busier than a one-legged man in an ass-kicking contest'."

Everyone laughed.

"She did have her folksy sayings," Elyse said. "I always liked 'Busier than a one-armed paper-hanger'! But yes, we all agree on that. It's come up repeatedly, at nearly every staff meeting, every finance meeting, and every sales meeting. Something has to give.

"Our proposal, Dave's and mine, is that we look to sell the logistics software and the estimation/inventory software. That would leave us with the medical and legal software packages, plus the membership software we maintain for the unions, and now the Russian church. That membership software requires very little work, so it's not a big deal, and it brings in far more revenue than it costs us to maintain. It's probably our most profitable software at the moment, in terms of percentage margin we make.

"If we do sell those two packages, I propose that we use the proceeds to fund the expansion that I spoke about. I'm not talking about doing it all at once, but I could accelerate it by using those funds to cover all the implementation costs. In addition, we'd use some of the proceeds to pay down the note on the building, and refinance into a new five-year balloon note, which would significantly reduce our monthly mortgage payment. Those savings would then allow us to expand without going into the red."

I smiled, "Well, that puts a VERY different spin on your original proposal."

"I like this," Julia said. "It would allow us to focus on our core systems and expand our business, while reducing the cost of one of our major pieces of overhead."

"How do we go about this?" Dave asked.

"Julia and Elyse should talk to Jamie and Bruce and get their advice. Then they should talk to my dad; he arranged for the sale of my original business back when I was in High School, so he'll have an idea of how to proceed. Heck, the guys who bought me out then might be interested. I know that they're still around, and they've expanded far beyond Cincinnati at this point. It's not really a solid fit for them, but you never know."

"Steve raised the issue of Gerald Brown," Dave said. "He has a part interest in the estimation software. And if I recall, Windy City Trucking has some interest in the transportation software."

"They do," Elyse said. "We'd pay them part of the proceeds in exchange for ending the contracts. Both of them have already recouped everything they spent with us, and Gerald Brown has made a tidy sum above that. Steve, do you want to talk to him?"

"Yes, I should do that. And I'll talk to Jack Nelson at Windy City as well. I'm sure they'll be amenable. But let's get the details sorted out first."

Julia nodded, "Cindi, when we do finalize the sale, you should put out a press release that touts it as very good for our medical and legal software customers. We'll let whoever buys the other stuff from us put their own spin on the old customers."

"What about the customers that have Novell or cc:Mail contracts, as well as the software packages?" I asked.

"Those will be trickier, but I think we can manage it," Cindi said. "A lot depends on the buyer. If they just want to sell and support the software, then we'll have a good chance of retaining those customers."

"I'd prefer we sell to someone who wasn't competing with us for general support," I said.

"Does anyone have any objections?" Julia asked. "If not, I'll get the ball rolling."

There were none, so the meeting ended and we left the conference room. Cindi followed me to my office.

"Thanks," she said.

"You're welcome. You did exactly what I had hoped you would do — find a way to make it work. You're very good at what you do, and I'm very glad to have you here."

"Oh, I'm very good all right!" she smirked.

"You get a written, notarized permission slip from Chris, then we'll find out one way or the other. Otherwise, go sell something to someone!" I chuckled.

"Somehow, I don't see that happening," she said. "The permission slip, I mean!"

I laughed, "I knew that. I don't think so, either. I do appreciate everything you do for NIKA, Cindi. Even when we disagree."

"Thanks!"

She left my office, and about ten minutes later, Jeri came in and sat down in the chair next to my desk.

"Dave told me. I guess we're working together for a few months. I'm worried about something, though."

"Going to California?" I asked.

"Yeah. It scares me! Going on a plane. Being away from home. Presenting stuff to lawyers!"

"I think you'll be fine," I said. "I'll be there with you, and both Dave and I have complete faith in you."

"I just don't know," she said.

"How about we just get the software written, and worry about the rest of it in January, OK?"

"OK," she said softly.

She got up and went back to her office. I knew Dave was trying to get her to come out of her shell, and to some extent, he was being successful. She would, at least occasionally, speak up at his staff meetings, and she was becoming more comfortable working in small groups. She'd done a great job with Archbishop ALYPY, and I knew she'd do well with Ben Jackson. Getting her on a plane, on the other hand, might be more of a challenge than Dave thought. But that was a problem for January. We had a lot to do before then.