Hopefully, last month’s column gave you an understanding of the categories and basic criteria for managing consulting services. Now let’s look at the excesses, conflicts and abuses that occur, and some ways to prevent them or at least mitigate their effects.
The Seven Deadly Sins of ConsultantsThese are not limited to consultants, many product vendors enjoy these vices and you may even have a few internal associates capable of this level of avarice.
Sin #1: Mea culpa, I sell my time.
This is often considered sinful because it lacks a direct reference to performance. Any number of hours can be spent on something worth far less than the cost of the time. Materiality is a very important means of determining the value of time spent and invoiced. Consultants often find it difficult to commit to a deliverables schedule with a fixed price, and time has been the alternative measure of expense.
Avoidance and PenanceApply the materiality test to project deliverables and hold consultants accountable for time to deliver estimates. This means managing the project at the task level in addition to tracking the time and resource utilization measures. A constant theme of driving estimated cost-to-deliver values when your consultant relationship manager starts discussing project additions is a good start. Of course, asking for anecdotal comparisons that give you a clear view of what other similar firms spend for such deliverables adds to your confidence about these costs.
Sin #2: I am apt to get comfortable in your office.Consulting engagements often digress into data gathering and process improvement expeditions. Armed with a hall pass and phone card, many consultants are trained in the art of detecting previously unknown but extremely pressing enterprise needs. Consultants also have a way of enlisting the support of your internal associates to fill in the gaps and expedite their own work.
Avoidance and PenanceWe are all familiar with the notion of charging our consultants rent for their unending occupation of our offices and labs. While this notion is a bit extreme, it isn’t a bad basis for monitoring this behavior. Monitoring consultant’s use of your internal associates’ time and energy is a good way to determine the load imposed by the consulting engagement. The consulting load or impact on your daily business flow must be considered during contract negotiations. This impact is an artifact of service level agreements (SLAs) and is quite a useful way to identify some of your indirect costs when using consultants. It is also a handy bargaining tool when pricing gets high. The smarter consultants will point out that all of that time spent badgering your associates is actually very valuable knowledge transfer. The balance between knowledge transfer and workload transfer should be carefully considered.
Sin #3: I tend to learn certain things and want to take refuge in them.We all know the old saying about having only a hammer, everything looks like a nail. Expertise in areas such as change management, process quality or CRM is great, but a prolonged emphasis, particularly organizationally, can narrow the scope of competencies. While there is nothing wrong with a boutique approach, specialization in business or technical areas often limits the value of such firms outside those boundaries.
Avoidance and PenanceIdentify the primary marketing and intellectual property focus of firms you are considering. The smaller the firm, the more any specialization becomes all-encompassing. While trends and patterns continually emerge in consulting, publication and staffing efforts are good indications as to the intended course of a consulting firm. Systems integrators and product specific firms are somewhat exempt from this concern since their firms must specialize in key areas.
Sin #4: I don’t always work and play well with other (consultants).This is a deadly sin indeed, because no consultant can provide meaningful service across all or even many domains. It is the rare consultant who says, "I don’t know" to a question and the superior consultant who says, "I don’t have that answer, but I know where to get it for you" and then proceeds to introduce you to that source.
Avoidance and PenanceConsider using a best-of-breed approach to consultants. Some consulting firms will make this easy by providing business relationships with other firms. This is especially true of boutique or specialty firms that partner with Big 5 firms to provide specific domain expertise. The boutique gets access to the larger firms’ client base but takes very little money off the table and adds to the overall depth. This also allows the larger firm to maintain a role of trusted advisor by wisely admitting its weaknesses and offering to help find the best experts in the area of need.
Sin #5: I enjoy learning but often do it at customer expense.It often appears that consultants engage in just- in-time learning. Many of the staff consultants assigned to customer sites seem to be absorbing critical business process and technical points through customer interaction. Customers understand the need for consultants to learn about their individual enterprise practices. Customers expect consultants to have industry and related knowledge prior to these engagements.
Avoidance and PenanceThe cost of training staff consultants is ultimately borne by customers. This cost is amplified when the education process is carried during an engagement. Discerning the level of consultant knowledge prior to contracting is the best way to avoid this expense. When undereducated consultants become an unacceptable burden, delineating the load factor (see Sin #2) is a good way to get the attention of the engagement manager. Remember that some level of on the job training is a good indication of consultant willingness to adapt to your needs.
Sin #6: I am often forced to rely on vendors for my continuing education.Not so bad if that education is focused on technologies and vendor offerings, terrible if the vendor is actually the primary source of knowledge about a particular discipline. For example, I do want EMC to tell me about their advances in Intelligent Storage Management, but I don’t want to rely on EMC as the only storage vendor sharing its solutions and process. I need to maintain multivendor relationship as well as external, nonvendor-based education channels including trade associations, educational institutions and peer reviews. This is often a distinguishing point for consultants and systems integrators or resellers. Most large consultancies offer both services which makes it difficult to take design and product selection advice at face value. B>
Avoidance and PenanceIdentify consultant’s trade associations and other professional development activities to discern subject matter expertise. Research consultant’s Web presence as well as publication and speaking activities to identify any consistent pattern of vendor collaboration. Beware of the consultant whose vendor activities consistently match their customer recommendations. Factor into your consideration the level of competence you need your consultant to maintain, especially if you are relying on the consultant to lead an implementation. The more responsibility for project success (as opposed to strategy or high-level design) the more vendor friendly your consultant must become. Don’t hesitate to ask for disclaimers (which should be provided as part of any RFP/Q response) identifying vendor relationships. Also give consultants a chance to disclose industry and other efforts at maintaining skill sets that do not rely on vendor relationships.
Sin # 7: I own this account/relationship.Consultants often mistake their role as trusted advisors for something more possessive. This presumed "account control" often leads to monopolistic pricing behavior. Two issues follow from this problem. The first is the obvious relationship management problem that you are already well positioned as an informed customer to resolve. The second is often more difficult, that is the process of separating the costs associated with arrogant pricing from those associated with large and complex consulting engagements.
Avoidance and PenanceThe cost of large-scale consulting engagements often appears overly laden with allocations for management and other consulting resources. While often true, there is another truth: the cost of the engagement must include the cost of managing the relationship as well as the project deliverables. It is through this relationship management function that customer requirements are met and often exceeded. Absent a relationship manager, the timing of engagement milestones and relationship duration will always be subject to misalignment.
SummaryWe have explored some of the more common mistakes and misperceptions in consulting. Managing relationships with consultants is a challenging but rewarding process. I recognize that you are often under the added pressure of having several consultants from different firms with different projects in your organization. Managing their projects and interactions, not to mention the impact they have on your firm is the real test. Take heart, most consulting firms suffer from the same problems as you do. This leads to my final bit of advice, when a consultant offers to design or build an information asset for you, ask to see theirs.
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