Bringing in outside help can be a very expensive business. The manager has to be sure he has the right firm and needs to know the criteria on which a vital judgment can be confidently made. By Jane Bird.
During the 1970s, information technology consultants were frequently depicted as overpaid individuals of doubtful pedigree who charged vast fees to inform you of what you already knew. The butt of cynical jokes, an IT consultant, was the person who borrowed your watch to tell you the time. They were often accused of adopting the "seagull" approach - flying in, dumping a fat report on your desk, and flying out again without helping to implement it.
But IT consultancy is not what it was. The seagull approach is out. Terry Neal, managing partner of the services division of Andersen Consulting, says: "In the old days a consultant was someone who gave advice or wrote a report. Now there is much more of a doing role whereby we work with customers." Even the term "consulting" had become a misnomer, emphasising the theoretical rather than the practical side.
Andersen Consulting, like most other players, is keen to stress its accountability and responsibility for projects. "We see our future not as delivering smart and clever advice at the beginning of a project, but as living with the client until solutions are delivered," Neal says. For the client, the situation may not seem that simple. When should you call in a consultant and how do you choose?
First decide what consulting style you want, recommends Mary Cockcroft, a director of Pagoda, a London-based IT consultancy. Do you want analysis and results, a catalyst to develop your own approach, or just to be told what to do? "A good consultancy will show sensitivity to your needs during the tendering process," Cockcroft says. Do not call in consultants if having a "study" carried out is actually a substitute for action. Check your contractor's track record - personal recommendations are ideal. Ask for client references. Speed of delivery is also important, so find out how long the consultancy has taken to do similar projects elsewhere. Look at its financial position. A good sign is repeat business; for consultancies such as Maidenhead-based Oasis, previous customers contribute up to 80% of sales. Ask yourself whether the consultancy will be clearly accountable for the success of the project while at the same time enabling you to retain control. Find out which individuals will be working with you. Clients frequently complain that they hire a firm on the basis of an impressive senior partner only to find a team of newly-qualified MBAs turn up to do the actual work. "This is effectively providing the theory but not the result," says Wilf Eaton, chief executive of Oasis.
A personal chemistry is also important where consultants will be working closely with your staff. Andersen's Neal recommends choosing a consultant with whom you think you can have an open battle.
Many consultants focus on niche markets such as skills development, business re-engineering or telecoms. Pagoda has a network of about 50 freelance associates with expertise in areas such as organisational change, expert systems, group-working, questionnaire compilation and data analysis. "This arrangement gives the client excellent value for money because he pays only for the expert time he uses, and is not charged for the overhead of keeping that person employed the rest of the year," says Cockcroft.
It might be useful to look at the supplier's investment in skills development or product training. If you are keen to have the latest methodology, you could chose a firm with close links to business schools, polytechnics or universities. "Ideally you want a combination of intellectual and pragmatic skills," says Eaton. Often you will have an instinctive feel as to whether the consultancy espouses a view sympathetic to your organisation. Syncho has found its clients have always made the first approach. Based at the Aston Science Park in Birmingham, it specialises in "systemics" - looking at the big picture of how an organisation works by examining the inter-relationships that underlie complex situations. "We have found people migrate towards us naturally because they like our ideas," says Anthony Gill, a Syncho director.
It is worth inviting both small and larger firms to compete for your business. Large organisations tend to hire big consultancies and vice versa. Small consultancies are almost always cheaper. Impartiality in hardware and software is another key consideration. It is unwise to get to the consultancy arm of a hardware or software supplier if you want independent advice.
If you already have IT equipment, you may want to avoid further expenditure on hardware. Significant improvements are often possible on existing equipment. BAeCAM, a British Aerospace spin-off specialising in manufacturing systems, preaches this view. Tony Kelly, its senior project manager, says: "Performance improvements of up to 60% may be possible by changing the organisational methods." Many software houses including SD-Scicon, Logica, Hoskyns and Sema Group provide consultancy services, and even the big hardware vendors such as IBM and DEC are jumping on the bandwagon.
They see consultancy as a Trojan Horse for getting their own products on to a client site. To the customer, their product knowledge may be an advantage. Kees van Rees, head of group financial information systems at Shell, who uses IT consultants regularly, says: "Some have built up an expertise in the equipment we use, and I'm grateful for it on the implementation side."
The consultancy arms of computer suppliers also appeal to clients with a strong technical background. Peter Sutherby, information director of the British Computer Society, says: "I'd probably choose a software house because its consultants would be trained in systems design. IT is their speciality, whereas I'd tend to think that the big audit firms specialise more in accounting." He also believes that consultants "challenge your established way of doing things, and are outside company politics." The disadvantage he identifies is that the very fact that you have employed outsiders means that they will not be as close to your business as you are.
And how much should you pay? Consultancies charge anything up to £1,500 for a straight day's work. For specific projects the price can be much higher. Jimmy James, deputy director of the Management Consultancies Association, says: "There is no upper limit. The ceiling is what the client will pay. If a management consultant had a piece of expertise that was very specialised and difficult to come by, the fees would be very high indeed."
Oasis claims to improve the performance of its clients by 50-100% in the task undertaken, whether it be greater profit, more efficient marketing, headcount reduction, or processing enhancement. Cost is not a good indicator, says Eaton. "Cost has to be related to benefit. You are buying know-how, the price is immaterial. What matters is the value of this expertise." BAeCAM tackles the cost arguments with an innovative risk-sharing scheme. The client can pay as little as 20% of the fee during a contract. The balance is taken up when BAeCAM's recommendations have been fully implemented and proved to have worked.
Cockcroft warns clients who retain overall control that it is the manager who should decide; consultants are there to suggest from experience. Trust is the most important ingredient, she reckons. You need to build up trust to help manage if the project scope, cost or timescale changes. These may be spelled out in the initial contract, but once the relationship has developed there may be no written agreements. "At that stage trust is enough," says Cockcroft, "trust that the consultant will deliver satisfactory results and not incur unnecessary costs. Trust that the client will pay the bill and the consultant will not steal your watch."