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Exorcising consulting horrors - Dealing with
the demons that lurk within outside help
November 10, 1998
Good spellbinders know that the scariest stories
are often those in which the commonplace
takes on a sinister aspect.
For the most part, consulting organizations
are considered steadfast partners in the
planning and execution of most IT
organizations' strategic plans. But it only
takes a few missteps or a change in the
overall economic climate to turn the
once-friendly faces of hired experts into the
latest incarnation of the devil.
Even in good times, the IT landscape is
fraught with technical wrong-turns and
failure to meet key milestones on time, which
can cast even the most familiar terrain into
dark ominous shadows.
"There are so many options, and so many
major technical directions that you can take,
that few people are in a position to have a
full understanding of the relative strengths of
the avenues you might choose," said Lowell
Antze, vice president of systems
development at North American Mortgage, in
Santa Rosa, Calif. "Usually, you have several
options thrust upon you by vendors, and you
choose from those few that you have
literacy in."
IT managers are kept up at night by
high-profile outsourcing failures, sensational
accounts of profligate consultants, and
horror stories of junior or unqualified system
integrators scuttling enterprise resource
planning (ERP) projects.
One recurrent IT manager's nightmare is
shelling out top dollar, only to wind up
training the consultancy's newer employees.
"We've seen some [on the job training of
rookie consultants], and we certainly didn't
get the A players initially or consistently. But
the second time around, we've had more
success," said Jeff Armstrong, manager of
SAP programs at StorageTek, in Louisville,
Colo.
Even with the right personnel, internal
managers have to be vigilant about the
long-term interests of the company.
"Consultants can take short-cuts," Antze
said. "One project was set up so any
programmer would have control over all
objects in the systems. This later made it
easy for users to find a back door to key
data. Basically, it took a lot of work-arounds,
and makes for more complex maintenance,
especially as the system grows."
"One of the things you hope to get [from
consultants] is enough breadth of vision and
depth of understanding of your organization
to get the best solution," Antze added. "But
if you hand over control completely they will
pursue their own interests, and leave you
unable to respond to changing business
conditions."
However, these bleak scenarios do not mean
that IT organizations will be relying less on
consulting services any time soon. The
market research company, the Gartner
Group, projects double-digit growth in the
outsourcing business by 2002. Also, by 2002,
the Gartner Group expects that as much as
half of the IT workforce at companies with
more than $1 billion in revenue will consist of
consultants, contract workers, and other
hired guns.
The sometimes painful experiences of IT
organizations seem to show that managing
consultants is a tricky, but not impossible,
balancing act. Tactics such as imposing cost
and performance metrics, requiring periodic
contract renegotiation, and teaming internal
staff with outsiders to lessen long-term
dependency can keep costs in check and
benefit the internal IT group and the
company as a whole.
Another measure that organizations are
adopting to guard against losing control of
vital IT operations is so-called "selective
outsourcing," in which functions such as
application management, network services,
and IT planning are turned over on an
individual basis, said Rita Terdiman, a Gartner
analyst.
Overall, IT is a diverse environment well
beyond the grasp of any one company's
internal IS group. Throw in a skills shortage,
the accelerating pace of technical change,
and increasing calls from upper management
to more closely tether IT operations to core
business goals, and the impulse to call for
outside help is almost irresistible.
Depending on your perspective, this means
consultants will either have their fingers on
the pulse of your business or a stranglehold
on your IT budget. Partly because of
consulting horror stories, one senior-level
business manager said he avoids using
consultants as much as possible.
"We never got into that trap," said Bob
Silver, executive vice president of
operations, services, and systems at
financial services company PaineWebber, in
New York. "We're a growth company, using
technology for growth. So if I need the
people, I should be hiring the people, not
hiring the consultants."
Silver maintained that attitude down the line.
"One point is [consultants are] more
expensive than your own workforce. Two is,
contractors don't have the historical
perspective or loyalty to the company,"
Silver said.
But other organizations are simply putting
more stringent controls in place.
Some companies, for example, are beginning
to insert bench-marking clauses into their
outsourcing contracts in order to periodically
survey market rates and possibly renegotiate
basic terms, according to Terdiman.
"Although these clauses haven't resulted in
new pricing algorithms yet, they will have
more teeth later, and they serve to open
discussions in the meantime," Terdiman said.
On the theory that people tend to fear what
they do not understand, analysts and IT
managers alike advocate brushing up on the
consulting market and adopting clear
management practices for getting the most
from external IT muscle.
"We got educated by our first [SAP ERP]
implementation. We didn't really know what
we were doing in terms of schedules and
budgets, and for the most part were pretty
much locked in [to the terms]. Then we
renegotiated. We had a better feel for where
the consulting market was," Armstrong said.
Long-term dependence on consultants can
be lessened by pairing internal IT staff with
the external team, both to champion the
customer organization's business objectives
and to affect the all-important technology
transfer, according to Karl-Heinz Neumann,
deputy member of the executive
management group for IT at Munich
Reinsurance, a Munich, Germany-based
multinational insurance company.
But implementation pressures can crowd out
long-term planning, Armstrong said.
"The danger is that you get wrapped up in
the implementation and don't plan for
technology transfers. It's happened here in
the past. We've had permanent contractors.
They're just about like the regular
employees, but the company's paying three
or more times as much for them. But you
can't overnight just let them go. You need
them to mentor your people and then
transition them out." Armstrong added. "If
you've got a good partner, it's a good
security blanket, especially if you don't have
budget pressures."
Lynda Radosevich contributed to this article.
Little shop of horrors
Major problems companies have with
outsourcing
* Deal does not meet business objectives
* Vendor oversells the deal or customer has
unrealistic expectations
* Customers mismanage the deal
* Vendor does not adequately define scope,
service levels, or prices
* Customer service is poor
* Vendor lacks skilled people
* People who understand the terms of the
contract leave
* Technology and business change
unexpectedly
* Deals do not reflect changing market costs
and therefore do not meet customers' cost
expectations
Source: Gartner Group
[Copyright 1998, InfoWorld] |
