In-Depth

Getting the Most out of IT Project Consultants

• 10/01/1999

You cringe when you think about it – a project that you wholeheartedly sponsored, sticking your neck out to convince other stakeholders that it had "the right stuff," crashes and burns just a few months after its launch. You’re in good company.

A recent study by The Standish Group, a research firm in Dennis, Mass., indicates that project failure is a pervasive reality among IT executives, revealing that:

• Forty percent of IT projects are canceled before completion.

• Thirty-three percent of the remaining projects are "challenged" by cost/time overruns or changes in scope.

• Together, failed and challenged projects cost U.S. companies and government agencies an estimated $145 billion per year.

Why do so many projects get off track? There are myriad reasons, but one common factor is mistakes in hiring and managing consultants. Many sponsors unwittingly set their projects up for failure by not establishing clear guidelines on the front-end as to: How to discern when it’s the right time to bring in outside help; What to look for in consultants before hiring them; And how to effectively manage consultants once they’re on board.

With big money and your management reputation on the line, here’s how you can avoid making costly mistakes in working with consultants on your next IT project.

Bringing in consultants before you’ve fully utilized your existing resources can be demoralizing to your staff. It conveys to in-house project team members that you think they’re not competent enough in their core skill-sets to contribute effectively to the project. Therefore, maintain morale by hiring consultants only when the project’s scope makes it necessary. How do you tell? According to Ralf Leszinski, a McKinsey & Co. alum and Executive Vice President of Atlanta-based Project Management Services Inc., there are five signs:

• When your company doesn’t have the in-house expertise. This is when you have no one on your core management team that has the expertise required to manage the project.

• When your company lacks the capacity to lead a new project. You may have the skill-set within your company, but can’t free them up in time to address a critical project.

• When you need to accelerate the progress. Suppose you have a new software product ready to go but the associated systems to control the sales are three months behind schedule. If you’re at full capacity, bringing in the right consultants will help you expedite the process and diminish loss of potential revenue.

• When the project’s revenue exceeds expenditures. This is when the project will create an additional revenue stream, overcoming its costs.

• When a project component doesn’t fit your core delivery structure. In other words, gaining knowledge in a particular area is not going to enhance your overall business model. After the project is completed, you can easily part with that knowledge because it’s not something you’re interested in carrying forward in your company.

Once you’ve determined that it’s the right time to bring in consultants, how do you identify who would be a good match for your project? What criteria should you look for? In addition to the standard quantitative issues, such as the firm’s financial strength and capacity, look for the following qualitative factors as you interview prospective consultants.

What is their track record? Have they done similar work before? Remember to pay for the consultant’s knowledge, not training.

Are they open about their failures? There’s nobody out there with a perfect track record. Ask about their projects that did not go well. When something went wrong with a project, how did the consultant respond? What steps did he or she take to salvage the project? What did the consultant learn that will make him or her better prepared next time?

Do they initiate a discussion on your success criteria? Look for consultants who ask you questions like, "What is your definition of success for the project? If we were to go in and do exactly what you want, what would the post-project environment look like?" If the consultant is not clear on your objectives on the front-end, expect to make several time- and money-consuming adjustments down the road to get things back on track. Define success criteria and keep it in focus throughout the project.

Are they concerned about what drives your business’ profitability? For example, a solution might meet the project’s objectives, but if it’s too costly, it will have a negative impact on your bottom line. Look for consultants who suggest solutions that not only meet a particular need, but also enhance your company’s overall performance.

What is the firm’s core competency? Say that the project involves several different components: a strategic portion, tactical portion, specific technical expertise and so forth. Find out which component the consulting company is best at, as opposed to looking for a "one-stop-shop" firm. Why? No firm can be excellent in all facets of a project. Instead, try to match the consultant to the specific project component. Or, hire a lead consultant as a "general contractor" who has access to the best coders, network designers, trainers, etc.

Who will you get once the project begins? Beware of a "bait-and-switch" situation. Many consulting companies show up with their top guns, and then supply the client with second-teamers after the project starts. Make sure the contract specifies who will be on your team when the project is launched.

Will the key consultants be around for the long-haul? Take steps on the front-end to ensure that the consultants you hire will stay with your project till completion (see sidebar "Keeping Consultants on the Project").

Before you meet with candidates, design an evaluation matrix by putting four to five (or whatever the number) consultants’ names on the top with the above criteria listed on the left-hand side. During the interview, jot down your observations for each category, and before it’s over, ask for a list of three to five references you can contact by phone to verify information. After you’ve completed the interviews and contacted references, look at your notes and incorporate a grading system (e.g. "1-10," "1-5" or whatever works best for you) to codify how comfortable you feel about a consultant in a specific category. Then add up the scores. This way you have the data you need, at a glance, to compare apples to apples.

Once you’ve made your decision on who you should contract, how do you ensure that the relationship starts on the right foot? Here are five tips:

Notify all team members that you’ve selected a consultant, and give the reasons behind your decision. Explain to staffers about the necessary support the consultants will provide the team as a whole, while acknowledging the heavy existing workload for employees. This way, you cause in-house team members to view the idea of bringing in outsiders in a positive light, cultivating good morale for the entire team.

Identify what their facilities, communications and technical requirements are and line them up ahead of time. Consultants may need a laptop, software, access to key information or even office space. When you address these requirements on the front-end, you help the consultant get off to a good start. Otherwise, you’re paying for wasted billable time as you scramble around to equip consultants after the meter has started running.

Communicate project expectations, goals, objectives, key milestones and risks in a formal document (i.e., Project Charter) to optimize team performance.

Obtain commitment from all project team members before the project begins. Require that your team members, in a formal session, stand up and commit to their deliverables as outlined in the project charter. This action solidifies the team member’s resolve. Otherwise, you risk blowing the project on one or more people who lack genuine commitment to fulfill their project responsibilities.

Make sure that consultants understand your standard reporting processes. This is to help you assimilate the data easily, reducing chances of miscommunication that could hinder the project’s progress.

Okay, you’ve done your due diligence, finding the best consultants the project requires and getting things started on the right foot. Now, how do you manage the relationship effectively over the long-haul to keep the project on track? Here are five guidelines:

Cultivate a project environment in which consultants can report actual status. Reward honesty when you ask project heads about their status. If the person who’s behind is ridiculed, you’re not going to get the true status in the next meeting. Instead, provide help, guidance and additional resources (e.g., equipment, software, human capital, etc.) to get those consultants back up to speed.

Make consultants feel like part of the team. Consultants work best when they feel a sense of ownership and pride in the project, causing them to want to do whatever it takes to make it successful.

The company should put in the same effort as the consultants. Part of maximizing the relationship is managing the consultants. If the project is behind, for whatever reason, your resources need to be working side-by-side with the consultants for two key reasons: to ensure that the consultants have correct information concerning your internal structure; and to manage the team as a whole to keep the project on track. If the consultants are working on Saturdays to catch up, you and the staffers should be working with them to make the project a success.

Be attentive to the project and project team. Project status reporting, maintaining schedules and other supervisory functions are hard work and take you away from core project activities. But if you neglect to carefully review people’s status, sooner or later, the consultant will realize it and be more inclined to cut corners or lag behind schedule – and you won’t know until it’s too late.

Revisit the project success factors periodically with consultants. This way, you and the consultants will stay focused on completing priority tasks, as opposed to being sidetracked by other interesting but less important activities, keeping the project moving according to schedule.

Your decisions in hiring and managing consultants can make or break a project. Therefore, do your homework on the front-end. Make sure that you have a genuine need for consultants, know what to look for and take steps to maximize the relationship once you’ve hired them. This way, you can make informed decisions that boost your project success rates – and your company’s bottom line.

About the Author: Joseph Best is the CEO of Project Management Services Inc., Atlanta; (www.pmsinc.com), a professional implementation services firm that increases clients’ profits by ensuring that projects are completed on time and on budget.

*****

Sidebar 1:

While you can’t ultimately control people’s lives, you can take steps up-front to increase the likelihood that the consultant you hire will stay with your project to completion.

Here’s how:

• When interviewing prospective consultants, ask about their short- and medium-term goals. If they say, "After I get enough knowledge, I’d really like to get out and start my own company," that person might not be around next year.

• If the consultant is under a non-compete agreement, see if you can get a copy of it. The non-compete agreement should include time limits and specify what clients, geographic regions and services are involved. If he or she is under a tough, enforceable contract, he can’t just jump ship to the next employer who offers him five dollars more.

• Try to secure the person to a project performance bonus that’s paid out at the end of the project.

• Require the consultant to sign a non-disclosure agreement (NDA). The NDA should include the following: signatures of the individuals assigned to the project; clear definition of what constitutes "Confidential Information;" rights, restrictions and obligations of the consultant receiving the information; and the term that the agreement is in effect.

• Make a provision in the contract that reserves for you the right to review the replacement, and specifies that the consulting company will cover the knowledge transfer of the replacement. So in the event that the firm’s lead expert leaves, for whatever reason, they do not bill you for time until the replacement is as knowledgeable as the key person who left.

*****

Sidebar 2:

By Scott Maddern

While no one can deny the tremendous benefits of open, client/server computing, few would embrace its corresponding set of complexities. "Multi-vendor madness" adds to the complexity of a network, and to IT management’s headaches.

According to THG’s Information Technology Benchmark, the average company has over 100 IT hardware, software and services vendor relationships. With desktop systems, operating systems and applications frequently supplied by different vendors, the multi-vendor atmosphere can rapidly grow chaotic. IT management holds the responsibility of ensuring harmony across the network. While the drive toward standards-based open systems has helped, sorting through the complexity is still a major challenge.

Companies that deal with such issues of complexity have found outsourcing to be a sensible remedy.

In addition to complexities, cost is a major challenge. One of the most common problems of client/server technology is the unanticipated expense of deploying such a solution. Rolling out a distributed computing environment brings with it numerous "hidden" costs – maintenance, training and support – which are all integral and critical to the ongoing success of the environment.

Outsourcing can deliver a number of cost benefits, as functions such as operations and maintenance become the responsibility of the outsourcing company. For example, implementing an outsourcing strategy allows a business to control its staff costs on a long-term basis.

It hardly comes as a surprise to anyone in the business today that as the demand for, and complexity of, IT services continues to increase, the experienced labor pool continues to shrink. Not only does the nation face an overall shortage of IT staff skilled in the latest technologies, but the turnover of the existing pool is enormous. Add to this challenge the fact that IT personnel account for about 52 percent of total IT spending, according to Compass America, a leading performance consultancy.

The net result? Companies and organizations pay more than half their IT budget for people they have trouble finding in the first place – and holding onto in the second. How then, does this allow the company to remain even moderately ahead of the technology curve?

In addition to complexity, cost and personnel shortages, today’s IT manager now also has to confront the Net – most significantly, the growing demands from top management to leverage it, so that the company becomes a competitive e-business. That means that IT is, effectively, no longer the purview of the IT department, but rather a critical – strategic element affecting the entire future of the organization.

There is light at the end of this tunnel, however. Corporations that choose client/server outsourcing over the traditional in-house approach are positioning themselves to achieve considerable benefits.

By investing in an external team of IT professionals, a company can achieve new balance in its technology operations. Not only is the outsourcing team better able to deliver higher service levels, but it can also do so while better managing corporate costs. Day-to-day operational needs are met by the outsourcing partner, while internal IT personnel can focus on the requirements driven by the company’s core business. Additionally, IT management is free to concentrate on deploying technologies that enhance the company’s competitive position and long-term growth.

About the Author: Scott Maddern is Vice President of Sales and Marketing for Integris (Billerica, Mass.), which specializes in the outsourcing of open systems.