September 15, 2018
[Customer]
[Address Information]
Dear [Contact]
Thank you for making time to participate in our proposal summaryand validating our understanding of your business challenges, project priorities expected outcomes.Our industry consultants thoroughly enjoyed working with (Project lead) and his team and I personally appreciated your openness and candor in discussing the business challenges and organizational aspiration driving [CUSTOMER]’s project accounting initiative.
Further to our discussion, I have attached the detailed solution proposal we discussed on our call today for your review and signature.
[Partner Full Name], a business applications and information technology firm with an address at [ADDRESS] (hereinafter also referred to as “[Partner]") is pleased to provide this project proposal to [Customer], a [COMPANY OR INDIVIDUAL] with an address at [CUSTOMER ADDRESS] (hereinafter referred to as “[SHORTENED CUSTOMER NAME OR ACRONYM]") in support of [CUSTOMER]'s [Project Accounting (PA)] project (hereinafter referred to as the “PA Project").
By the signature of [Partner]'s authorized representative hereunder, this PA Project proposal constitutes [Partner]'s formal offer to provide the services and/or deliverables described herein on the terms and conditions described herein.
This PA Project proposal will be valid for a period of [NUMBER OF DAYS] days following the date first set forth above.
[Partner]
______
[Partner Exec FirstName] [Partner Exec.LastName]
[Partner]
Executive Summary
[CUSTOMER] has been working with [PARTNER] to address severalsignificant business challenges and improvement opportunities with [Customer’s] current finance, client management, project management and project collaboration applications.
The overarching project objective is to implement a business infrastructure that accelerates revenuegrowth, improves project estimation accuracy, reduces business risk and provides increased business and project control.
[Customer] estimatesthat its current business challenges are costing the firm over $340,000 in lost revenue,$56,000 in unreported time and $112,000 in project write-offs annually.
The operational challenges behind these losses are also impactingDSO; which is currently averaging 74 days (industry average is 46), utilization, which is currently 71% (industry average is 77%), and G&A, which is currently 24% (industry average is 10% - 20%). [CUSTOMER]’s ability to acquire new clients is also being undermined.
By addressing thebusiness and operational challenges underpinning the project accounting initiative (documented further in this document) [Customer] believesit can increase revenue by$170,000, reduce unreported billings by $28,000 and reduce project write-offs by$72,000. Additionally, the proposed business process improvements will reduce [Customer] month-end close by 4 days, reduce DSO by 14 days and significantly improve the estimation process; which will improve [Customer’s] bid win rateand improve project profitability with both existing and new clients.
Most importantly, a fully integrated One Microsoft PSO solution will provide [Customer] with the business infrastructure it requires to control increasingly complex projects and support its aggressive expansion plans.
To capture the above benefits [PARTNER] recommends implementing One PSO; which is configured exclusively for mechanical engineering firms and built upon the award winning Microsoft NAV, CRM and Office 365 platforms. To accomplish [CUSTOMER]’s goal of going live with the new system by [GO-LIVE DATE] aninitial investment of $34,000is required for configuration, data migration and training. Based on [CUSTOMER]’scurrent employee configuration, ongoing monthly subscription fees which includes all future upgrades and application support, are $4,175,
[Partner] is a leading provider of [Vertical] professional services solutions to the mechanical engineering industry, and has developed the One PSO solution on top of the MS Dynamics ERP, CRM and Office 365 platforms specifically to address the unique needs of services companies. [Partner] has been servicing [Industry] organizations since their founding in [FOUNDING YEAR], and is recognized as a [Microsoft Designation].
Project Business Drivers
[CUSTOMER]’s evaluation and leadership teamsand [PARTNER] jointly identified a number of challenges that are impeding growth, reducing project profitability and negatively impacting client relationships.
Together we have defined and documented the primary business challenges, thecorresponding operational or business process limitations, and the high-level impact to key operating metrics and risk measures.
Business Driver / Operational Limitation / ImpactGrow Revenue:
[CUSTOMER] is pursuing larger, more complex projects, with a longer term goal of expanding internationally.
More complex estimates require inputs from a larger number of subject matter experts. / Current estimating process is largely reactive. Estimation responsibilities are assigned to available resources (on the bench).
Current accounting system does not support multi-company/currency. / {CUSTOMER] ‘no-bid’ over $250,000 of “winnable” projects in 2014 because internal resources could not meet RFP response timelines.
Improve Profitability:
Increasing project complexity is leading to inaccurate estimates/quotes for new bids.
Over servicing of clients. / Current estimating process is reactive and unstructured. Approval process is not always followed.
Project management lacks rigor/discipline. Document management tools are rudimentary: project files are stored on local files servers and transferred between consultants via e-mail.
Consultants are not securing change orders in advance of service delivery. / The estimate to actual variance on many projects is leading to invoicing disputes, long billing cycles, delayed payments and decreased client satisfaction.
Inaccurate and/or unapproved estimates resulted in $112,000K in project write-offs and over $210,000 in lost bids in 2014.
Utilization currently at 71% (but many resources working at capacity)
Reduce Risk:
The accelerating rate of regulatory change is making compliance (building codes, certifications, etc.) challenging.
High DSO is leading to working capital challenges.
Increasing reliance upon contract employees to staff both specialty and emergency resource requirements. / No centralized repository of regulatory/compliance documentation.No internal processes or repository for confirming LEED certification and project compliance.
Unstructured client approval process for change orders.
Limited ability to control contract resource access to confidential client information.
Takesup to 7 days to on-board contract resources before they are billable. / Approximately $36,000 of 2014 project write-offs attributed to non-compliant re-work.
Increasing volume of invoice disputes due to budget to actual variance.
DSO is currently 74 days.
Increasing risks associated with the protection of client information.
Increase Control:
Increasing project complexity requires more flexible and timely management reporting. / Current reporting tools (Excel) provide limited visibility into:
- Client/project profitability
- Service line income statements
- Project budget to actual
- Resource scheduling
- Backlog & forecasting
- Schedule & cost variance
DSO – 74 days
Project write-off/down - $112K
{CUSTOMER]’s objective to pursue more complex projects, many of which will be in a “sub” rather than “prime” contractor position, suggests that the above business challenges will become more pronounced as the organization continues to grow.
Solution Recommendation
One centralized database for all project and financial information, supported by a single communication and collaboration platform.
To address the business challenges described above, [PARTNER] recommends [CUSTOMER] implementONE PSO, which was developed on the integrated Microsoft Dynamics NAV, CRM and Office 365 platform by [PARTNER] to address the unique requirements of professional services firms.
The primary capabilities of the ONE PSO solution that [CUSTOMER] requires are:
- Project Accounting – Enables [CUSTOMER] to estimate, or budget, the total cost of the project and track costs as they occur. At the end of eachproject, [CUSTOMER] will be able to determine how effectivelythe project team stayed within budget and identify theissues that caused the project costs to exceed budget.
- Project Team Collaboration – provides a communication infrastructure that enables [CUSTOMER] to centralize project documentation, control versions and facilitate remote project meetings.
- Visual Scheduling - Enables [CUSTOMER] to visually manage its resource capacity and commitments, identify potential demand conflicts and prioritize resource assignments.
- Receivables & Payables Mgmt - Enables [CUSTOMER] to accelerate the month end close process, optimize billing accuracy and improve cash flow management.
- Mobile/Web-Based Time Entry - Enables [CUSTOMER] consultants to enter time via mobile devices.
- Opportunity Mgmt - Enables [CUSTOMER] to apply a standardized sales approach to all new opportunities and provide visibility into all prospect (and client) information accounts via any device.
- Approvals Workflow - Enables [CUSTOMER] to apply approval processes to all new estimates, change orders, RFP responses.
- Leadership Dashboards – Provides [CUSTOMER] with real-time insight into key operating and performance metrics, that can be accessed from any device, anywhere, at any time.
[PARTNER]’s ONE PSO solutions runs on Microsoft’sAzure cloud platform which provide [CUSTOMER] with a number of critical benefits:
The ability to quickly scale its operations up or down as market demand requires. Contract consultants can become a functioning part of [Customers] project teams, in minutes, not days, using the device of their choice.
Eliminate large capital outlays or ‘spikes’ when on-premises IT hardware require upgrades. Moving [Customer’s] business applications and infrastructure to Microsoft’s Azure® cloud eliminates many of the annual IT resource costs.Shifting to a scalable pay-per-use basis drastically lowering hardware and maintenance costs.
Protect [Customer’s] project data and corporate assets by moving data backup and disaster recoveryto Microsoft’s Azure cloud infrastructure.
Implementation Approach
[PARTNER] proposes that [Customer] implement ONE PSO based on [PARTNER’s] proprietary QuickStart PSO implementation methodology.QuickStart PSO was designed specifically for services firm to minimize business disruption and accelerate time-to-benefits. With over [CLIENT #] successful professional services project implementations, [PARTNER] has radically reduced the cost and duration of traditional implementations by developing standard import templates, pre-configuring the chart of accounts, embedding proven industry best practices and workflow into application functionality, and developed predefined reports and dashboards.
[PARTNER’s] QuickStart approach is predicated on a five step process that unfolds over a 4-6 week period, (depending upon [CUSTOMER]resource availability).
Step #1 – Map ONE PSO’s preconfigured business processes, workflows, reports and dashboards to [CUSTOMER’S] current business processes to determine configuration requirements.
Step #2 - [CUSTOMER] returns ONE PSO data templates to [PARTNER] for importing and testing.
Step #3 - [PARTNER] configures ONE PSO variables to support [CUSTOMER’S]requirements.
Step #4 - [PARTNER] trains [CUSTOMER] functional groups (remotely).
Step #5 - [PARTNER] and [CUSTOMER’S] schedule quarterly review and optimization sessions to identify opportunities for increased value realization.
Project Costs
While there are a number of licensing options available, [PARTNER] highly recommends [CUSTOMER] proceed with a subscription based licensing modelas it provides the greatest degree of business flexibility to support [CUSTOMER’S] growth objectives and desire to increase its utilization of contract consultants.
Subscription FeesProposal Element / Employee Count / Cost/Employee/Month / Monthly Cost
ONE PSO for Business (includes Microsoft CRM online + Office 365 E3) / 10 / $325 / $3,250
ONE PSO for Consultants (Time & Expense, Office 365 E3 / 50 / $10 / $500
ONE PSO for Sales (Microsoft CRM online + Office 365 E3) / 5 / $85 / $425
Total / $4,175
Project Fees
Proposal Element / Cost
QuickStart PSO / $34,000
Total / $34,000
Anticipated Business Benefits
While [PARTNER] did not perform a specific return on investment analysis, over the course of working with [CUSTOMER’S] project team a number of potential business benefits and measures were identified.
Improved Project Estimation
Improved project profitability
Reduce project write-offs by 50%. (2014 write-offs were >$124K)
Reduce lost or No-Bids by 50% (2014 No-bids totaled ~$680K)
Reduce DSO by 12 days
Improved Resource Scheduling
Increase billed time by 3%
Web-based time entry (weekly)
Improve time capture by 1.5%
Capital Preservation
No initial hardware or license investment required
Elimination of unpredictable future hardware costs
Improved Sales Effectiveness
Improved forecast accuracy
Increase close ratio by 10%
Increased Utilization
Accelerated consultant onboarding(loss of ~$1000+ per day)
Reduced Business Risk
Regulatory compliance
Business grade archiving/retrieval
99.9% uptime SLA
Fewer invoice disputes
Faster Consultant Onboarding Time
Consultants on-site with client without functional access (loss of ~$1000+ per day)
Delayed project starts and missed milestones.
Combined, the above represents $340,000 in additional revenue, $106,000 in additional operating margin and a 14 day DSO improvement.
Acceptance
We have reviewed and understand the terms and conditions as contained within this proposal dated [DATE].
Deposit due upon acceptance: $17,000.
[CUSTOMER][PARTNER]
NameName
SignatureSignature
TitleTitle
DateDate
About Us
[PARTNER] is a leading provider of business applications and communications solutions to the professional services industry.
[PARTNER] currently services and supports served an ever-growing number of clients since its founding in [FOUNDING YEAR]. In a relatively short period of time, [Partner] has quickly become the go-to Microsoft Dynamics and Office 365 firm for [DESCRIPTION OF SERVICES].
What's more, [Partner] has completed [NUMERICAL VALUE] comparable projects.
Benefits of selecting [Partner] for this IT Project include:
Microsoft certified & trained Partner
Cost-effective Cloud & Mobile ready solutions
Extraordinary track record of improving client workflow and efficiencies
Deep domain knowledge and expertise in [DESCRIPTION OF DOMAIN]
Talented team with impeccable references.
PREPARED BY: MARK STUYT | NEURAL IMPACT Page1 |