We met to talk about employee owned IT contracting firms, sharing space with PLUG's Installfest. There were five participants, two were currently independent IT practitioners and one had been and independent practitioner in the past.
There was a genuine feeling that small businesses were not getting the quality of IT service that they deserved and that the deficit got more pronounced as businesses got smaller. Small businesses needed time-share IT services. Quick response was essential. The service also needed to be broad. No single practitioner can be competent to deal with every eventuality that a reasonable customer base of small and medium businesses might present. One person suggested that someone looking to get into serving small businesses should call dentists, doctors, lawyers, Realtors, construction firms, and so on, to see who is providing their IT service now.
Although the initial discussion was about an employee owned consulting firm, the preponderance of successful, independent practitioners drove the conversation to focus on organizational forms that would enhance business for small, independent IT practitioners. The conversation generally moved from solutions that would reduce independence but give reliable incomes, to solutions that left independent practitioners independent.
The employee owned company theoretically keeps its focus on engineering and technology. It also should provide relatively secure steady incomes for the employees. The big down side is that the founders take on entrepreneurial risk without the potential reward of becoming disproportionately wealthy if the company succeeds.
Another potential form of cooperative is a firm that outsources all the real work to subcontractors. The virtual IT firm handles contracts, marketing and sales, but the actual work is done by subcontracted (independent) experts. While this could be an entrepreneurial model, the version envisioned in the discussion would be owned by member IT practitioners and would award subcontracts to members. The cooperative would be very selective about what IT practitioners or firms could become members.
We observed that independent practitioners (which for practical purposes includes IT groups of up to ten or so employees) need to be lean, wear multiple hats, and bridge the people gap. Marketing and sales can be a challenge for the independent IT practitioner since these skills will not come naturally to most of them. We thought that the professions--dentistry, medicine, law, and architecture are role models for the IT practice. Construction contracting may be an even better model especially because IT practitioners will have to deal with fraudulent and non-fraudulent non-payment, shady characters, and so on. The former independent practitioner said that the only resource that delivered value to his practice was the Arizona Small Business Association. Networking groups were worse than useless because they attracted sales monkeys, dreamers, ne'er do wells, and fraudsters in overwhelming numbers. Also, one should studiously avoid any trade or barter
deals. Work for real money.
Nevertheless, I observed that professionals built their practices on referrals, and referrals meant networking with peers. Other participants said they not only needed an referral network for building a practice, but also so they could refer customers to trusted providers when there was work that they were not competent to do.
As a result, the proposal that generated the most interest was one to form a professional association for small, independent IT practitioners. This association would help members built referral networks the same way that professional associations help other professions. The association could also provide resources on effective marketing and sales. Like other networking groups, this one would be a magnet for undesirable elements--namely those trying to sell to the valid membership, those who imagine themselves to be technical professionals, and those looking to commit fraud. Therefore the association would need effective membership barriers.
One employee owned start up that failed in the Valley was AZ Refresh, a web development community.
It was also suggested that it would be useful to talk to Ed Nusbaum and Francine Hardaway about their experience starting AZIPA.
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