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Economic Value Added Analysis

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The Pareto Principle (also known as the 80/20 rule) states that we get about 80% of results from 20% of our efforts; conversely, we get 20% of our results from the other 80% of our efforts. Of course, these numbers are not precise but merely a rule of thumb. The key is to do more of the 20% that gets results and less of the other 80% that does not get good results. Easier said than done.



How can we better apply the Pareto Principle in our business life? One obvious application is for us to focus our energy on what we do best, while simultaneously leveraging the efforts of other firms who are doing what they do best. We already naturally do that to some extent. If we are in sales, we generally do not do the accounting for our firm too. If we are an accountant, we do not design the software we

use.

How can this concept be extended beyond the simple division of labor, and help us

maximize revenue and profits? The key is to continue to do what you do best, while

simultaneously leveraging what other firms do best. If you are a Web designer then

continue to focus on designing. If you want to expand into other product or service lines,

do not try to re-invent the wheel. Instead, find a good firm to partner with, and resell

their services under your brand. They do the work; you reap the profits.

For example, a Web designer might enter a relationship with a firm that develops

permission-based email marketing services. In the interest of full disclosure, I should

mention that I work for EZ Publishing, the creator of the StreamSend

email marketing service. This means that I can engage in shameless promotion, while at the same time help you by illustrating the Pareto Principle using an example I know very well.

For example, a Web designer might enter a relationship with a firm that develops

permission-based email marketing services. In the interest of full disclosure, I should

mention that I work for EZ Publishing, the creator of the StreamSend email marketing

service. This means that I can engage in shameless promotion, while at the same time

help you by illustrating the Pareto Principle using an example I know very well.

The key to all this is to find an extension of your business that is a natural fit. If you are

an accountant you do not want to extend your services to include pizza delivery. You

would only expand your business in ways that make sense to you, and that enable you

to build on what you already do well. Whatever you choose should also enable you to

leverage your current client base. That is, it should be a service that your current clients

are likely to want. You can find out what your clients want by talking with them, and

even conducting formal surveys.

We find that Web designers often find synergy in reselling permission-based email

marketing services because it fits the criteria outlined above. They have a client base

for whom they have designed websites, and for whom email marketing is an appealing

marketing tool.

Web designers mostly do project work which is great, though they often earn limited

monthly recurring revenue. The resell email marketing services to take advantage of an

opportunity to make recurring revenue.

Web design firms usually offer value-added services on top of the email marketing

services, such as designing graphics and HTML email templates. Email marketing

services typically serve as a foundation for these value-added services.

Firms that specialize in marketing services and consulting often resell the permission-

based email marketing services along with marketing consulting, design, copywriting,

and production. Often email marketing is just one component of an overall marketing

plan - though the marketing firm often also sells email marketing services as a

standalone, self-service product to earn passive recurring revenue.

The next step toward expanding your business in this way is to do some research on

what your clients want. Then pick a service you want to sell and find a good partner in

that sector. Try some experimentation, as not all reselling efforts will work well or fit with

your business model. Do not be afraid to jettison reselling arrangements that do not

work well after a reasonable time. Try something else.

For more on the Pareto Principle (80-20 rule), I recommend Richard Koch's The 80/20

Principle: The Secret to Success by Achieving More with Less or his other books on the

topic. He explains how the 80-20 rule works, and how you can use it to achieve more

both in your business and personal life. It really does work.
Economic Value Added Analysis
Many business software companies offer sales, consulting and training services for their HRIS systems or combined Payroll HRIS systems through other independent companies, called business partners or value added resellers, AKA VAR's. The question addressed with this article is are you better off to work directly with the vendor or working with one of their partners? The answer, just like most things, depends.

I might come across as a little biased with this article since I have actually worked as an HRIS system business partner for ten years but I will try my best to be objective. Realize that with all of the advantages I point out for working with both, it all depends on how skilled the vendor is versus how skilled the VAR is. This determination you will need to make based on replies from references and the number of years of experience the Payroll HRIS system VAR has.

Benefits of working with a Payroll HRIS system VAR

• Localized Payroll HRIS support and services

• Payroll HRIS system VAR may offer multiple products

• The Payroll HRIS software partner may, in fact, have more experience than the vendor offers

• Payroll HRIS system VAR may offer add on products or services not offered by vendor

Localized Payroll HRIS support and services is one of the reasons Payroll HRIS vendors work with business partners. The advantages from local support for the customer are obvious. I have, for example, a couple of clients located within a thirty minute drive from my house. With the ability to link into someone's computer or provide training over the web, there are many services that had to be provided onsite that can now be offered over the web. There are, however, still times when there is no substitute for someone actually arriving on-site to address your issues. Over the years, I found that for whatever reason I discover far more while on-site than working remotely. Thus, I believe I offer clients improved service by being onsite. The additional obvious benefit of localized support is that when on-site training or services are required, the cost of travel is likely far less than working directly with the vendor unless they are located in your vicinity.

Many Payroll HRIS system VAR's now offer multiple products. The advantage during the sales cycle becomes that s the VAR's ability to determine your needs and make a recommendation of which HRIS vendor or HRMS vendor provides the closest match to your needs.

As I stated before, Payroll HRIS software system VAR's or Business Partners are independent business that sell and support other HRIS vendors products. Many times these partners have been in business for a longer time than most, if not all, of the employees working directly for the vendor. We offer one product by a VAR on this site. Dresser and Associates has been working with the Sage Abra HRIS product for over twenty years. Obviously, the experience they have obtained with that system is going to be superior to that of anyone working directly for that Payroll HRIS vendor. Those that work directly for the vendor may have been fired, promoted, or left the company. HRIS system technical support departments or consulting staffs typically have some of the highest turnover rates in a software company.

The last benefit I would like to mention when working with a partner is that often times they are more familiar with other third party products or may have created their own to enhance the Payroll HRIS vendor's application. For example, my company created several custom interfaces for specific industries we worked with. The vendors did not offer the same.

Questions to ask before working with a Payroll HRIS VAR

• How long have they been in business with the HRIS system you are considering?

• How many HRIS implementations has the vendor performed and exactly how many has the individual who will be setting up your system performed?

These two questions determine the “depends” caveat I referred to earlier. If the Payroll HRIS VAR has just started working with this software company, you might want to consider working directly with the HRIS vendor. If they are brand new to the HRIS system, they may be certified but unless they have a number of implementations under their belt, they won't be as skilled as someone working directly for the vendor who may have greater experience. Don't automatically assume the consultant employed by the vendor is going to be experienced; everyone has to perform their first install. Just don't let the first one be you. Ask questions about the actual person who will perform your implementation to make sure. If they just became a VAR for the payroll HRIS application, they may or may not end up still working for that HRIS vendor a year down the road. So the benefit of localized support may be tossed out the window. When it comes to implementing any software application, but especially Payroll HRIS systems, experience is the greatest teacher. In short, make your decision primarily based on who, of the HRIS vendor and the VAR, has the most experience.
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About Author
Both Neil Anuskiewicz & Clay Scroggin are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Neil Anuskiewicz has sinced written about articles on various topics from Computers and The Internet, Email Advertising and Your Online Business. Neil Anuskiewicz is the Marketing Manager of EZ Publishing. In addition to developing custom web applications, EZ Publishing is the creator of the StreamSend
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