Navigating a Pricing Project

If you’ve done your homework and are confident you have a pricing opportunity, it’s time to start thinking about a project.  Depending on what you’re doing, the project could be extensive or it could be a quick hit.  We’ll cover scoping the project in the next articles, but first some things to avoid.  Pricing projects, like any enterprise project, are subject to similar pitfalls that can be avoided or mitigated to ensure a successful project.  In our experience, here are some of them:

  • No executive sponsorship. Pricing projects are resource intensive and touch a lot of parts in an organization.  Without executive sponsorship, these projects rarely have a chance.  Clear leadership helps align key resources that need to contribute on the project and ensures you have their attention.
  • Competing priorities. In one company, the leadership had made a decision to go with one software solution but the project team didn’t support the decision.  The project team worked with the product and halfheartedly attempted to get it working but ultimately opted to abandon the solution for their preference of a custom-built solution in contrast to the leadership’s direction.
  • Too many cooks in the kitchen. Without executive sponsorship and a clear direction, different factions in the organization align towards competing objectives.  Then, they’re compelled to ‘right the ship’ in accordance to their own objectives.
  • Underestimating the scope. In another case, the level of effort for a pricing project was way under estimated because the scope had not been defined.  The inexperienced leadership made knee jerk decisions on timelines in contrast to the advice of the more experienced team members.  Pricing projects need well defined requirements and typically require a lot of integration which takes time.
  • Data availability. Pricing projects require data.  Ultimately a pricing solution is a calculator – it brings data in, calculates and computes, then sends data downstream.  If you’re not prepared to get the data out of your systems, don’t start the pricing project.  As part of a readiness exercise, you might want to consider a master data management project or something similar to ensure data is available.
  • Limited business experience from implementers or no technical expertise in business owners. Someone on the team needs to bridge the gap between the business side and technical side.  These are two different languages and unless someone translates, you won’t end up with what you want.  There are often tradeoffs in implementations and if the technical folks don’t understand the business benefits or the business folks don’t understand the difficulty of implementing features then you can end up with an end result that misses the mark or cost overruns.
  • Ill-defined benefits. This is the big one.  When benefits are clearly defined, everything else follows.  Leaders support strong business benefits and competing priorities fade away.

These projects are typically transformational and affect a large part of your sales organization.  Because of that, they really need strategic sponsors at the executive level in a company.  They aren’t easy and the process changes that permeate after implementing these solutions are as complicated as the technical challenges.  Ignoring this reality just puts the project at risk.

All parties from the top down need to be in alignment.  If any link in the chain isn’t on board, it will again jeopardize the project.  This does not mean suppress critical thinking or challenges to the majority opinion, but there needs to be a set of strategic goals that everyone agrees with so everyone is marching in the same direction.  Here are some steps to take to mitigate the above risks prior to starting the project:

  • Clearly define the business benefits. This is one of most important things to do when starting a project.  The business benefits guide the project and ensure when you have disagreement you can balance the discussion against the benefits you are trying to deliver.  In addition, as the project progresses you should measure the business benefits achieved and evangelize the results with business owners and executives.  On the flip side, if it is not achieving the expected business benefits, realign towards them, revaluate, or cut your losses.
  • Align the business leadership. Once the business benefits are defined, it is easier to get an executive sponsor.  The executive sponsor should support the business case whole heartedly.  If the executive sponsor has a lukewarm feeling towards the business case, he or she is less likely to be the evangelist you will need with the other company leaders.
  • Always listen to the end users. Success lives and dies with the users.  If they don’t accept the solution or it is too difficult to use, they won’t adopt it.  In our projects we rapidly prototype and regularly demonstrate the results to the end users to solicit feedback.  You run the risk of getting additional scope, but this can be managed by putting it in the queue and aligning to the business priorities.

Keeping these risks and mitigation points in mind when embarking on a project is important.  In the next articles, we will walk through project planning and scoping.

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