Consultants may help or hinder your organisation. Julia Vowler
reports on how to get good value and extra skills when employing
them for your company.
From one-man bands to billion-dollar global businesses, IT
consultancy is something that no corporation can do without. A
great deal of money for consultancy is being spent. The consulting
industry is a lucrative one, and there's only one place where all
this money can be coming from, and that is the corporate budget.
It is the job of IT directors to ensure that wherever they get
consultants from and whatever they are employed to do, the business
gets good value.
To do that, the IT director needs to be in control of
consultants, not the other way around.Everyone knows the horror
stories of letting one in and three years later, there's a hundred
you can't get rid of. Consultants keep finding new things to do and
charge for.
Overdosing on consultancy is a sign of organisational distress.
Marks & Spencer is said to have had dozens of advice firms in,
and appointed another company to manage them all. Not a healthy
sign.
If you don't want your company to be the example of the worst on
the circuit, what rules should you apply to managing
consultants?
Rules
There are several rules. The first and most important is
obvious. It is knowing why you are hiring consultancy and what you
want it to achieve.
"The most important rule is to be clear what you expect and how
you will measure once you've got it," says Philip Virgo of the
Institute for the Management of Information Systems.
There are, says Virgo, two reasons for recruiting. These are
doing what you could do yourself, but don't have the time or
resources for, or doing what you can't. He warns the latter reason
means 'to do what can't be done at all by anyone.' In this case,
the purpose of the external consultant is a scapegoat.
"That can be a very valid reason (for hiring them)," Virgo
asserts.
Like any project, the work you bring to a consultancy has to
have boundaries. "You need to ring-fence it so it doesn't drift,"
he says.
Consultants will also be looking around trying to spot work they
can do when inside your building. They have sales targets to meet
and generating follow-on work is an excellent way to do so. It's up
to you to decide whether to resist or agree. But if you do approve,
it becomes another project.
Dividing contracts into chunks with deliverables, time-scales
and investment calculations makes obvious sense when managing an IT
consultancy.
Virgo points out, however, that you may get a different attitude
from smaller agencies specialising in scarce skills. Instead of
wanting to achieve symbiosis with the host, they need as much
business as possible while in demand. They are not going to stay
once they've done their work.
As soon as they've finished, "they'll charge you an arm and a
leg and get out," says Virgo.
If they are affected by the IR35 tax change, they'll be out
sooner. They can't take a risk of being seen as a permanent
employee by the taxman.
Divide and conquer
Another technique for consultants is applying the divide and
conquer rule. But is this a dishonourable sides-against-middle
play? Not if it's done openly, explicitly and fairly.
"A number of companies deliberately and openly dual source their
consultancy," says Virgo.
Multiple sourcing consultancies may be as effective as Adam
Smith's "invisible hand" in ensuring competition amongst suppliers
results in maximum efficiency and minimum cost for the purchasers.
Sometimes it's good to be more proactive. Suppliers of any goods or
skills need to be managed by the purchaser. It makes sense to hire
someone.
If you don't have the time or expertise to police a consulting
contract, hire someone who does. There are plenty of highly
experienced, often retired professionals who can be brought in to
ride shotgun on consultants, says Virgo.
Whoever you get, he adds, one rule must be applied across the
board. The performance monitoring consultancy must not be allowed
to bid for work themselves. Their role is to police other firms.
That way, their neutrality is ensured.
The bottom line on managing is you get the consultancy you
deserve. As with outsourcing, a certain percentage of the budget
simply must be spent on managing the contract. Or the final bill
will be much higher.
Next week - the consultants reply. Are you the user they hate to
work for?
Advice on consultancies
- Recognise there are only two reasons for hiring consultants: to
do what you could do if you had the time and resources, or to do
what you lack the skills to achieve
- Define what they will do and when it will be done. How will you
measure whether it's been done well?
- Have the say-so on exactly who the consulting firm
sends
- Have the approval on any sub-contractors the firm
uses
- Turn any suggested follow-on work into another defined and
measured project
- Use a third party - an individual or consultancy - to ride
shotgun on consultants, in the style of consulting and contracting
engineers. There needs to be strict contractual bans on collusion
between the two
- Accept that no one else has the interests of your company at
heart except you. You cannot expect external consultants to be
responsible for your costs