Is there a hockey stick in your world?

You may have noticed the deafening silence in my posting this week (or not - but it was there). That's because I work for a software company, and it was the end of a quarter.

In our business, the end of every quarter is a frenzied period in which a large portion of our quarterly business closes in just a few days time. This is fairly common within every software company I've ever been associated with, and it can be an exciting and stressful phenomenon.

Exciting, because there are a lot of great, game-saving "plays" that pull a team together to do what it takes to get the business in. Stressful, because it's really hard to predict where your business will come in when so much of it remains "invisible" until the final days of the quarter. The fact that any delay in process on either side (the company's or the customer's) could cause the business to slip beyond the end of the quarter. In these cases, it can affect the software company's profitability or, in the case of many customers, the budget may "disappear" if it isn't spent.

This is called the "Hockey stick effect" in our business, because it means a big spike at the end of the quarter, causing our daily business graphs to be shaped like hockey sticks.

This effect seems to be rooted in the quarterly-focused metrics of the public software company, but it happens in privately held companies, as well (like mine). I often wonder how much customers perpetuate this phenomenon by holding their buying decisions until late in the quarter to gain extra pricing leverage against software companies?

This has gone on so long in our business that I think it's baked into the fabric of the software business.

What about those of you in other businesses? What kinds of cycles do you deal with? Are they good or bad for you, your customers, and the business?

I'd love to hear your stories.

Comments

[Ken Flowers]

I saw this hockey stick in software consortium work as well while at The Open Software Foundation (OSF). There was no chance in this situation of it being caused by people trying to get a better deal. We attributed part of it to people afraid of loosing budget money at the end of a quarter.

This is also a big problem at the hardware company I'm with now.

[Dwayne Melancon]

Thanks, Ken - the reference from the OSF is very telling. I think you're right - the "use it or lose it" phenomenon is a big one (I see it at the end of September in the US Gov't, as well - that's the end of their budget year).

So --- I guess that means that the corporate world has a tendency to procrastinate, eh?

[Ken Flowers]

Procrastination feels like it is at the heart of it.

[Dwayne Melancon]

Absolutely, Ken - but a lot of it is *other people's* procrastination ("Uh-oh - I'm about to lose the ability to spend this budget!!") and it's hard to figure out how to directly affect that...