Consultant, anyone?

Some of the best companies I work with are consulting firms. And some are the worst, too. How does IT pick the best? IT has always depended on strategic relationships with vendors and its heavy use of consultants to a degree that's unmatched in any other field of business. That's because no company can go it alone. The best consultants either provide special skills, handle the ever-growing IT workload and provide development and integration capabilities or take on the management of large-scale projects. The worst consultants believe their companies are smarter than their IT clients, instead of recognizing that they're extensions of their clients' resources. Junior consultants in several well-known firms especially show this trait; it's part of their firms' core cultures.

It's this arrogance that rightly irritates many IT professionals. IT is buying the culture, not just the consultants and project capacity. Arrogant cultures make lousy partners and are in the rip-off business without realizing it. Because they believe they're so much smarter, they make many mistakes that the more collaborative and respectful consulting firms don't make.

For the large consultancies, you can easily track just where that arrogance is likely to show up: in the lawsuits against them. Almost always, you see legal action against a consultancy where a senior partner sold the work and is rarely seen again. The junior partners, who do the real work, get in over their heads but don't know enough to realize it.

Want to avoid a potentially bad experience with a large consulting firm and possibly having to take it to court? First, find out if it's facing any current lawsuits. Second, understand the firm's economics. You're paying for its overhead as well as its talent. The mergers among the giants assume that economies of scale justify the deals. That made sense in the era of the fairly homogenous corporate technology base of the early 1990s. I'm not so sure it does now. It creates horrendous overhead, complexity of internal coordination and a ferocious reliance on major large-scale projects to make money. That's why a senior partner who may have sold the job disappears. He has to sell a lot of time and materials labor at high markup, then hands off the work to junior partners.

Independent and boutique consultants have an edge in that they don't have overhead, they make their money on the work of their senior partners and don't dump the work on juniors. Their disadvantages are that they can't scale up and can easily get themselves involved in projects for which they have neither the management skills nor the resources. In my work with the megaplayers, I'm impressed with the quality of only about a quarter of their staffs.

All consulting firms can afford to pay salaries that are far higher than what a corporate IT organization should pay, and they can get the best talent, though they must increasingly offer more than attractive salaries (hence the race by these firms to make initial public offerings).

The giants can pay well because they have the size to spread the costs of superstars across many projects. And the independents can pay well because they don't have the overhead. But as the former try to be all services to all clients in all markets, they spread themselves thin and end up with more weak coverage of their skill gaps.

When selecting an IT consultant, look at a firm's record of how well it works with outside individuals, other specialists, consultancies and vendors. If it's a company that's very much NIH (not invented here) and doesn't make use of boutiques and independents for specific parts of the engagement, run. Too many consultants and consulting firms are overpriced and don't deliver value when you engage them. It's partly your own fault when that happens, so base your decision on the relationship you'll have with a consultant. Look primarily at its culture, the way it bills clients and its collaborative skills.

Your firm will continue to use consultants. So use them well.

Keen (peter@peterkeen.com) is chairman of Keen Innovations (formerly The International Center for Information Technologies) in Fairfax Station, Va., a senior fellow of Differentis, a European B2B consultancy and a distinguished visiting professor at the University of Delft in the Netherlands.

Join the newsletter!

Error: Please check your email address.

More about Keen Innovations

Show Comments