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October 2007

• Gentle Reminder: Upcoming Workshops

• Parts: $.38 - Shipping: $1 million?!

• Travel Tips (Up for a Meeting?)

• October-November Events

In the last issue of the newsletter, we talked about the ‘crack cocaine’ habit we are falling into, i.e., support organizations relying heavily on profits and profit margins from maintenance contracts that customers don’t want to pay, but are forced to.

Well it turns out there are more lucrative things that you can do. Like charging for things your customers didn’t expect to pay for.

Take the following example, one of the most egregious I’ve seen in recent times. The owners of C&D Distributors of Lexington, SC, submitted online bids to the US Defense Department to supply hardware components, plumbing fixtures, electronic equipment and other items. So far, so good. But once they won the contracts, they took advantage of a good intention and abused it. Here’s how.

The military had set up a system to automatically process shipping claims associated with items sent to battle zones. The intent was to ensure these (presumably) critically needed items would not be delayed in the normal bureaucratic approval process.

The owners of C&D Distributors figured out a way to exploit this loophole. They started adding outrageous shipping costs — on the order of hundreds of thousands of dollars — to items that rarely cost more than $100. Pentagon records showed that C&D Distributors, co-owned by Charlene Corley and her sister Darlene Wooten, received $455,000 to ship three machine screws, costing $1.31 each and weighing just a few ounces, to Marines in Iraq.

Think that’s bad? The company also received $998,798 — nearly a million dollars! — for shipping two 19-cent lock-washers. They billed Uncle Sam $492,097 for shipping a $10.99 threaded machine plug, $445,641 for shipping a single $8.75 plumbing tube elbow, and $403,436 for mailing six machine screws worth a total of $59.94.

The sisters lived a lavish lifestyle from 1997 to 2006 when the scheme was finally uncovered. By then they owned four beach houses, ten luxury cars and boats. They also purchased five other businesses. Once discovered, Darlene committed suicide and Charlene pled guilty in August, 2007.

Before you roll your eyes at the incompetence of big bureaucracy, take a look at how standing purchase orders are handled in your own organization. I’ve personally encountered it. When I first arrived at Duke University, we discovered that we were paying substantial annual maintenance fees for licenses on software that was obsolete and hadn’t been used in a long time. I’ve also seen similar things happen with a number of my clients.

Tip: Once a year, take a close look at every standing purchase order to see if you are paying for ‘shelfware,’ i.e., hardware or software that you have paid for but is sitting on a shelf, unused. This is just one of many tips I cover in my workshop that saves your company money and earns you respect as a customer support executive.

The savvy globetrotters among you may already know about this, but many business travelers don’t. Under certain conditions there is a way to save a substantial amount of money while seeing customers and partners around the globe. It’s called a ‘Round the World’ fare. If you can arrange your schedule to travel in just one direction, with only a few stops in each continent, you can go much farther for substantially less money.

For example, I have an engagement with IBM that requires me to be in the Gold Coast of Australia in November. (That’s my second trip to Australia this year.)

Rather than just make the trip to Sydney and back, I’m going to combine multiple stops (mostly business, some pleasure). Specifically, I’ll be going from Boston > Las Vegas > San Francisco > Sydney/Gold Coast > Singapore > Bangalore, before making my way back to Boston via Frankfurt.

In business class, this ‘round the world’ trip costs approximately $8,000 — about $7,000 less than a simple Boston-Sydney-Boston business class airfare.

For more information, check out Wikitravel’s Round the World Flights. By the way, many travel agents will not handle around the world tickets, so either go to a specialist or deal directly with the larger airline alliances.

While I’m at it, if you are in the neighborhood on the following dates, e-mail me. I’d love to catch up.

• Nov 8–11: Las Vegas, ITIM conference
• Nov 12 (evening only): San Jose, workshop
• Nov 17–21: Brisbane/Gold Coast, Australia IBM event
• Nov 22: Singapore private event
• Dec 1: Bangalore private event

Events & Upcoming Talks

Events in October and November.
For more information, visit www.verghisgroup.com/events.html

• Ongoing blog for IBM:
  In my first blog entry for IBM Software, I talked about The Butterfly Effect, how small changes early in the lifecycle of a complex system can have profound effects on the eventual outcome. Here is an excerpt from my latest entry, The Butterfly Effect, Part 2.
• HDI Motown - keynote
• ITIM Conference - Las Vegas
• Be the Voice of the Customer Workshop – San Jose (Santa Clara)
• NextNine webinar – Getting customers to willingly pay for your services
• IBM Asia Pacific Maximo conference, Australia

To discuss your specific needs, call or e-mail.

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Previous issues:
August 2007
May 2007
 

About Phil Verghis
A preeminent expert on global service delivery, Phil was vice president of Infrastructure & Support at Akamai Technologies and a member of the Senior Executive Operations Group. Among other responsibilities, he launched Akamai's award- winning Customer Care Department and ran the world's largest IP network: 15,000 servers in 66 countries handling billions of hits per day. More about Phil.

About The Verghis Group
The Verghis Group is a management consultancy focused on service and support. We are vendor-neutral. Our mentorship and facilitation based model emphasizes the speedy transfer of knowledge to your internal teams. For more information or a no-obligation initial consultation, contact:

This publication is a presentation of The Verghis Group, which is solely responsible for its contents. 
©2007 The Verghis Group. All rights reserved.