IT consultant - friend or foe?

The consulting industry is in transition, facing questions about its image, its fees, its independence -- even what it is. Big firms have cut staff. The mega marriages, like IBM and PwC, have begun. Niche operators are proliferating and smaller players are winning lucrative business.

All the while, C-level executives are demanding more and bargaining hard, especially where their expertise has been thinnest and the consultants' profits fattest -- information technology.

With notoriously tricky implementations like CRM, SCM and ERP opening new wounds near the scars of Y2K and the GST there is plenty of angst about. The irony is that most IT consulting relationships rupture for the most low-tech of reasons.

Managing director of Accenture Australia, Derek Young says people still underestimate the complexity of integrating technology with business. Director of finance and personnel at the University of Wollongong (UoW), Chris Grange says organisations expect too much from IT consultants too keen to deliver. And Grant Maxwell, managing director of specialist technology outsourcer and consultancy, Glenhurst IT, blames miscommunication.

Young says it doesn't help consulting's cause that the people writing history are mostly clients.

"From our experience there are many more success stories than failures, but the failures get all the air time," he says.

"I think most people appreciate that any sort of enterprise software implementation is not a simple task, and like most difficult things in life, it's unlikely to go smoothly."

UoW's Chris Grange has in the past 12 months used IT advisers from vendors, large consulting firms and four independent consultancies. But Grange says UoW has steadfast principles on how consultants are employed. It engages a consultant, not a firm, and develops a relationship with this individual consultant. UoW also gives potential consultants a small assignment first to see if both parties can work well together.

"Some of the bigger firms believe they will solve all your problems and they want to spend the first X number of days finding out what the problems are," Grange says.

"If you have a clear idea of what you need to solve, then that's a waste of money. Sometimes, we have difficulty with this part of the dialogue and we take that as a warning sign.

"We've had three proposals this year from consultants that have been fixed price. I welcome them. To me they equate to payments based on results."

Glenhurst IT's Maxwell says everyone knows a couple of horror stories of how consultants "bled a company dry". Unfortunately, he says, too many of the horror stories are true.

"There was a very brief period, long gone now, when a consultant had some initial level of respect," Maxwell says.

"Today, consultants have to realise that they come in as outsiders to a customer's business and they have to earn respect."

Do consultant's over promise or do they deliver?
When asked on behalf of his industry if it is tempting to over-promise when pitching for new business, Accenture's Derek Young says 'it's getting easier' to avoid.

"If you have highly publicised projects that go wrong then the downside outweighs the initial flush of winning a project when you have promised to deliver things you can't in the time frame and for the cost," he says.

"That's a recipe for disaster and many of the problems we've heard about in recent years can be sheeted home to this process."

One aspect of working with consultants that gets pulses racing is how they should be paid. Despite the pressure on consultants to 'put skin in the game', flat fees are still the most popular form of payment, followed by performance-based fees and results-based fees.

"I can't remember the last major pure time and materials deal that we did," Young says.

"That's a thing of the past. Being paid for results, however you define results, is going to become more common. We use scorecards that have a number of measures and different weightings. A percentage of our fee is based on hitting those scorecard metrics."

Conscious that results shape a reputation, Young says the consultant -- as the person who has been through the process many times before -- needs to take a stand if things are not happening correctly. For example, he says some clients want to manage costs by providing certain resources themselves.

"It's perfectly reasonable for the vendor and the consultant to ask if the people the client provides have the necessary skills," Young says.

"If they don't, it's no use soldiering on and pretending they are competent. It's better to put it on the table and get a solution. If you just ignore it you are creating an issue that will come back and bite you."

The larger consultancies also believe their depth of expertise is one of their key attributes. Young calls it "bench strength." He knows of two recent incidents in Australia where a relatively small player won a job to implement software yet both were asked to leave within six months.

"A larger firm was brought in," he says, "simply because the small firm lost exceptional people and they were not able to replace them. None of us can guarantee that people aren't going to leave, but you must have depth."

- Darren Horrigan