The Software Requirements Memory Jogger is an easy-to-use guide for developing and managing precise software requirements. The Software Requirements Memory Jogger provides every member of your project team with the tools and techniques to foster communication between business and technical teams on the necessary requirements for producing successful software. The Software Requirements Memory Jogger will benefit all stakeholders at any organizational level involved in software development projects management team, practitioners, QA/QC personnel. – Explore practical steps, tips, and examples to help you develop and manage requirements – Follow the User Requirements Roadmap a toolkit of techniques for discovering and analyzing user requirements – Streamline communications between all requirements stakeholders – Learn how to write clear, concise requirements documents

About the Author

Ellen Gottesdiener is Principal Consultant and founder (more…)

Ohio Leads Nation In New and Expanded Facility Investment

Columbus, Ohio – Governor Ted Strickland, Lt. Governor Lee Fisher, and Ohio Department of Development Director Lisa Patt-McDaniel today joined members of Ohio’s business and economic development communities to announce that the State of Ohio has been awarded Site Selection magazine’s fourth consecutive Governor’s Cup Award for leading the nation in new and expanded facilities in 2009.

The March edition of the magazine highlights the award, Ohio’s economic accomplishments, and the numerous Ohio cities around the state as the best in the country in their respective categories.

Cooperation Key

“One of the reasons I believe in Ohio is that companies know Ohio is a great place to do business,” Strickland said. “We have reduced taxes and regulations, we have increased the skills and education of our workforce, and we have been recognized once again by setting the pace for the nation in new and expanded capital investments.”

“Economic achievement only thrives when commitment and collaboration at the federal, state, and local level is attained on a daily basis,” Fisher said. “This award is shared with the Ohio economic development community and the people of Ohio, because only their ideas and talents help build and create a lasting positive change in Ohio. Let us use this momentum to continue building and growing Ohio’s economy with innovation and creative solutions.”

This year marks the eighth time Ohio has been awarded the Governor’s Cup, receiving the award in 1993, 1994, 1995, 2003, 2006, 2007, and 2008. The occasion marks the fourth win in a row for Ohio and our state’s fifth in seven years. The award is based on corporate location projects that meet at least one of three criteria: (a) involve a capital investment of at least $1 million, (b) create at least 50 new jobs or (c) add at least 20,000 square feet of new floor area.

“This award belongs to the Ohio economic development communities, which are leading Ohio’s efforts to bring prosperity to the people and businesses of our state,” Patt-McDaniel said. “We as a state are working with our local communities to give Ohioans a State of Perfect Balance between business pursuits and quality of life.”

Governor Strickland attributes Ohio’s fourth consecutive Governor’s Cup win to our state’s manufacturing strengths, logistics capabilities, skilled workforce and competitive business environment.

The City of Dayton played an outstanding role again this year, ranking number one in their category for the second year in a row in mid-sized metropolitan areas with populations between 200,000 and one million.

Cincinnati/Middletown ranked 6th among metros cities with a population over 1 million, which marks the eighth-consecutive time the city has been ranked in the Top 10 nationally (2002-2009).

Wooster, Ashtabula, and Findlay ranked 2nd, 6th and 10th respectively among micropolitan cities of 10,000 to 50,000 in population.

This award indicates the diligent efforts of elected officials, economic development professionals and private sector leaders as they work together to retain and attract capital investment in our state. Their efforts to stimulate economic growth have put Ohio on the top for the fourth consecutive year.

“The collaboration between business and state make for an ideal location for Alcoa,” said William F. Christopher, Alcoa Executive Vice President and President of Alcoa Engineered Products and Solutions. “Our revitalized press capacity will allow the continued presence of manufacturing operations in Cuyahoga County and provide continued growth and good jobs for years to come at Cleveland Works.”

Conway Data, Site Selection’s publisher, has annually recognized the U.S. state with the most new and expanded corporate facilities since 1978 as tracked by its New Plant database.

“It is a privilege to be the bearer of good news in the economic development arena, particularly during challenging economic times,” said Mark Arend, Editor in Chief of Site Selection. “Ohio fought hard in 2009 to win new projects and to expand existing operations in the state. Its 381 projects and fourth consecutive Governor’s Cup are proof that many companies are investing and growing in Ohio because they want to be there.”

The magazine’s yearly analyses are regarded by corporate real estate analysts as “the industry scoreboard.” Ohio won the award with 381 projects; Texas placed second with 374 projects, followed by Michigan (371), Pennsylvania (333) and Tennessee (234) to round out the top five. In addition, several cities ranked in the top 10 metropolitan and micropolitan categories for new and expanded corporate facilities.

“The Ohio Economic Development Association is honored to participate in today’s announcement,” said Mike Jacoby, President of OEDA. “Our members are often the front line of Ohio’s economic development efforts, and we work in close partnership with the talented professionals at the Ohio Department of Development. Ohio’s receipt of the Site Selection Governor’s Cup for the fourth year in a row is validation that Ohio continues to be viewed as a good location for investment by corporate America.”

Additional information about the Governor’s Cup is available at the Site Selection magazine Web site.

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Since it is critical to our business to help our healthcare information technology clients maximize their business selling price, I have given this considerable thought. Why are some of these software company valuations so high? It is because of the profitability leverage of technology. A simple example is what is Microsoft’s incremental cost to produce the next copy of Office Professional? It is probably $1.20 for three CD’s and 80 cents for packaging. Let’s say the license cost is $400. The gross margin is north of 99%. That does not happen in manufacturing or services or retail or most other industries.

One problem in selling a small healthcare technology company is that they do not have any of the brand name, distribution, or standards leverage that the big companies possess. So, on their own, they cannot create this profitability leverage. The acquiring company, however, does not want to compensate the small seller for the post acquisition results that are directly attributable to the buyer’s market presence. This is what we refer to as the valuation gap.

What we attempt to do is to help the buyer justify paying a much higher price than a pre-acquisition financial valuation of the target company. In other words, we want to get strategic value for our seller. Below are the factors that we use in our analysis:

1. Cost for the buyer to write the code internally – Many years ago, Barry Boehm, in his book, Software Engineering Economics, developed a constructive cost model for projecting the programming costs for writing computer code. He called it the COCOMO model. It was quite detailed and complex, but I have boiled it down and simplified it for our purposes. We have the advantage of estimating the “projects” retrospectively because we already know the number of lines of code comprising our client’s products. In general terms he projected that it takes 3.6 person months to write one thousand SLOC (source lines of code). So if you looked at a senior software engineer at a $70,000 fully loaded compensation package writing a program with 15,000 SLOC, your calculation is as follows – 15 X 3.6 = 54 person months X $5,800 per month = $313,200 divided by 15,000 = $20.88/SLOC.

Before you guys with 1,000,000 million lines of code get too excited about your $20.88 million business value, there are several caveats. Unfortunately the market does not care and will not pay for what it cost you to develop your product. Secondly, this information is designed to help us understand what it might cost the buyer to develop it internally so that he starts his own build versus buy analysis. Thirdly, we have to apply discounts to this analysis if the software is three generations old legacy code, for example. In that case, it is discounted by 90%. You are no longer a technology sale with high profitability leverage. They are essentially acquiring your customer base and the valuation will not be that exciting.

If, however, your application is a brand new application that has legs, start sizing your yacht. Examples of this might be a click fraud application, Pay Pal, or Internet Telephony. The second high value platform would be where your software technology “leap frogs” a popular legacy application. An example of this is when we sold a company that had completely rewritten their legacy management platform in Microsoft .Net. They leap frogged the dominant player in that space that was supporting multiple second generation solutions. Our client became a compelling strategic acquisition. Fast forward one year and I hear the acquirer is selling one of these $100,000 systems per week. Now that’s leverage!

2. Most acquirers could write the code themselves, but we suggest they analyze the cost of their time to market delay. Believe me, with first mover advantage from a competitor or, worse, customer defections, there is a very real cost of not having your product today. We were able to convince one buyer that they would be able to justify our seller’s entire purchase price based on the number of client defections their acquisition would prevent. As it turned out, the buyer had a huge install base and through multiple prior acquisitions was maintaining six disparate software platforms to deliver essentially the same functionality.

This was very expensive to maintain and they passed those costs on to their disgruntled install base. The buyer had been promising upgrades for a few years, but nothing was delivered. Customers were beginning to sign on with their major competitor. Our pitch to the buyer was to make this acquisition, demonstrate to your client base that you are really providing an upgrade path and give notice of support withdrawal for 4 or 5 of the other platforms. The acquisition was completed and, even though their customers that were contemplating leaving did not immediately upgrade, they did not defect either. Apparently the devil that you know is better than the devil you don’t in the world of healthcare information technology.

3. Another arrow in our valuation driving quiver for our sellers is we restate historical financials using the pricing power of the brand name acquirer. We had one client that was a small healthcare IT company that had developed a fine piece of software that compared favorably with a large, publicly traded company’s solution. Our product had the same functionality, ease of use, and open systems platform, but there was one very important difference. The end-user customer’s perception of risk was far greater with the little IT company that could be “out of business tomorrow.” We were literally able to double the financial performance of our client on paper and present a compelling argument to the big company buyer that those economics would be immediately available to him post acquisition. It certainly was not GAP Accounting, but it was effective as a tool to drive transaction value.

4. Financials are important so we have to acknowledge this aspect of buyer valuation as well. We generally like to build in a baseline value (before we start adding the strategic value components) of 2 X contractually recurring revenue during the current year. So, for example, if the company has monthly maintenance contracts of $100,000 times 12 months = $1.2 million X 2 = $2.4 million as a baseline company value component. Another component we add is for any contracts that extend beyond one year. We take an estimate of the gross margin produced in the firm contract years beyond year one and assign a 5 X multiple to that and discount it to present value.

Let’s use an example where they had 4 years remaining on a services contract and the last 3 years were $200,000 per year in revenue with approximately 50% gross margin. We would take the final tree years of $100,000 annual gross margin and present value it at a 5% discount rate resulting in $265,616. This would be added to the earlier 2 X recurring year 1 revenue from above. Again, this financial analysis is to establish a baseline, before we pile on the strategic value components.

5. We try to assign values for miscellaneous assets that the seller is providing to the buyer. Don’t overlook the strategic value of Blue Chip Accounts. Those accounts become a platform for the buyer’s entire product suite being sold post acquisition into an “installed account.” It is far easier to sell add-on applications and products into an existing account than it is to open up that new account. These strategic accounts can have huge value to a buyer.

6. Finally, we use a customer acquisition cost model to drive value in the eyes of a potential buyer. Let’s say that your sales person at 100% of Quota earns total salary and commissions of $125,000 and sells 5 net new accounts. That would mean that your base customer acquisition cost per account was $25,000. Add a
20% company overhead for the 85 accounts, for example, and the company value, using this methodology would be $2,550,000.

7. Our final valuation component is what we call the defensive factor. This is very real in the healthcare information technology arena. What is the value to a large firm of preventing his competitor from acquiring your technology and improving their competitive position in the marketplace. One of our clients had an outcomes database and nurse staffing software algorithm. The owner was the recognized expert in this area and had industry credibility. This was a small add on application to two large industry players’ integrated hospital applications suite. This module was viewed as providing a slight features advantage to the company that could integrate it with their main systems. The selling price for one of these major software systems to a hospital chain was often more than $50 million. The value paid for our client was determined, not by the financial performance of our client, but by the competitive edge they could provide post acquisition. Our client did very well on her company sale.

After reading this you may be saying to yourself, come on, this is a little far fetched. These components do have real value, but that value is open to a broad interpretation by the marketplace. We are attempting to assign metrics to a very subjective set of components. The buyers are smart, and experienced in the M&A process and quite frankly, they try to deflect these artistic approaches to driving up their financial outlay. The best leverage point we have is that those buyers know that we are presenting the same analysis to their competitors and they don’t know which component or components of value that we have presented will resonate with their competition. In the final analysis, we are just trying to provide the buyers some reasonable explanation for their board of directors to justify paying 8 X revenues for an acquisition.

Dave Kauppi is the editor of The Exit Strategist Newsletter, a Merger and Acquisition Advisor and President of MidMarket Capital, representing owners in the sale healthcare and technology based businesses. We provide Wall Street style investment banking services to lower mid market companies at a size appropriate fee structure.

Author: Dave Kauppi
Article Source: EzineArticles.com

If you are trying to come up with a good Information Technology business plan, you may be wondering about what your focus should be.  Usually the top priority is creating a plan that will help you get great clients, so you can effectively manage and grow your business.

Many Information Technology consultants make the mistake of thinking they can just get by on one-shot deals and fly-by-night customers.  But in reality, this type of approach just leaves you frazzled and worried about where you will get your next big project or next paycheck.  You need to build a stable business based on on-going relationships with long-term clients that will pay you each and every month, and bring you predictable service revenue.

The best plan for developing a strong Information Technology business plan is to insist that every one of your clients sign a support contract.  The following 4 tips can help you understand how to build your business plan on the solid foundation of support contracts.

1. Support Contracts Are Key for the Busy Information Technology Consultant. If you are like most IT consultants, your time is incredibly valuable.  When you choose to base your Information Technology business plan on support contracts, you help better manage your time, particularly when you have many clients that all need service at once.  When you insist upon support contracts, you maximize your utilization rate while still having enough time to deal with client emergencies when they occur.
2. Better Manage Emergencies. When you base your business model on support contracts, you can prioritize your clients’ emergencies.  When you have a bunch of clients all with emergencies at the same time, you can’t be everywhere at once.  You need to narrow down the list of who gets your immediate attention and who will need to wait.  Basically, those people that have committed to you long term get the royal treatment and those that do not have to accept that you will get to them when you have the time to spare.
3. Force Customers and Clients to Make a Decision. You need to base your Information Technology business plan on support contracts in order to force those you are serving to make an important decision – are they “in,” or are they “out”?  A solid plan based on long-term relationships with clients weeds out those that are just testing the waters and are not serious about working with you long-term.
4. Manage Expectations. A solid Information Technology business plan based on support contracts also helps you manage your customers’ and clients’ expectations more effectively.  Those that have a support contract know they are top priority … and those that don’t know you have clients with support contracts and that they are the ones that will be responded to first.

In this brief article, we discussed 4 tips to help you avoid being stressed out about being everything to everyone. Learn more about how you can attract great, steady, high-paying clients now at http://www.MyInformationTechnologyBusiness.com

Copyright (C), MyInformationTechnologyBusiness.com, All Rights Reserved

Author: Joshua Feinberg
Article Source: EzineArticles.com

From Publishers Weekly

Cusumano, a professor at MIT’s Sloan School of Management and coauthor of Microsoft Secrets, offers a comprehensive overview of the software business and how the right approach is key to the success of technology companies. Cusumano first identifies the key distinction between software and other businesses. In fact, he believes it is unlike every other business because software doesn’t have one purpose but becomes whatever function it is handling for a particular customer or company. As a result, software companies must sell both products and services, according to the author. The two typical ways software companies operate is by getting the lion’s share of revenues from new product sales or via IT consulting. The third way is what the author calls “hybrid solutions companies—software firms that have some new product sales, but derive as much as 80% of their revenues from services and “maintenance.” However, what’s essential for company success i (more…)

If you are like most consultants trying to devise Information Technology business plans, you probably are aware of the idea behind Virtual IT. However, you most likely are not using it to its full advantage as part of your philosophy of solving your clients’ biggest IT business problems.

The following 4 tips can help you embrace the concept of Virtual IT and build strong Information Technology business plans that will best serve your interests and your clients’ interests.

1. Understand What Virtual IT Means. Virtual IT is really all about becoming your clients’ outsourced IT department. Instead of just selling your customers and clients PC’s, servers, routers, Wi-Fi, cabling and other physical products, you spend your time selecting and designing their networks, looking at business problems, figuring out how to apply the technology to big business problems and bringing all the resources together into one nice, seamless package. With Virtual IT, your firm acts as a client’s part-time IT manager or Virtual CIO. Virtual IT is a convenient, flexible and comprehensive technical services program that gives small businesses access to what they need, when they need it without the financial and logistical burden of a full-time, salaried IT person.

2. Know How Virtual IT Benefits Your Business. Most successful small business computer consultants position their companies as IT departments because of the many benefits this concept provides. Positioning your firm as a true Virtual IT department for your clients helps you retain high-paying, steady clients and build long-lasting relationships. And when you base Information Technology business plans on this important concept, you can provide comprehensive solutions to big IT business problems … which makes your firm indispensable to your clients.

3. Figure Out How You Can Provide Virtual IT to Your Clients. As you build your Information Technology business plans around Virtual IT, you need to incorporate Virtual IT into the services you provide to clients. For you to deliver Virtual IT successfully and profitably through strong Information Technology business plans, you need to know what the opportunities are and what typical Virtual IT solutions look like. For example, what are the traditional types of services that you can sell to your existing and future clients? Which other opportunities exist for you?

4. Remember That Virtual IT Grows Real Relationships. Be sure that you are always continuing to add value to both your existing customers and clients, and new customers and clients. This is what Virtual IT is all about. You don’t just sell the initial network installation, and cross your fingers and hope that everything works. You also can’t wait for your customers to call you. Be proactive and provide Virtual IT on an on-going basis so you and your clients can avoid major emergencies. By providing ongoing Virtual IT services, your business will be more profitable, and both you and your clients will experience fewer headaches. Plus, your clients will be relieved that they have a trusted re for long-term small business IT support.

Copyright (C) MyInformationTechnologyBusiness.com, All Rights Reserved

In this short article, we discussed 4 tips to help you use the concept of Virtual IT. Learn more about how you can get great, steady, high-paying clients now at http://www.MyInformationTechnologyBusiness.com

Learn how your computer consulting business can get more of the best, steady, high-paying clients in your area. Sign-up now for free computer consulting business tips, strategies, and best practices from the field-tested, proven Computer Consulting Kit Home Study Course

Author: Joshua Feinberg
Article Source: EzineArticles.com