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Stating the Obvious?

First, let's define the key term. By consultant, we mean someone who offers point expertise in a specialized field for a limited duration, usually to address a critical need. You call a consultant when you're happy to pay for someone's deep knowledge, to avoid costly mistakes or quickly recover from a mistake you've already made.

Think everyone knows what a consultant is? We encountered some confusion in our research--particularly from vendors who offered to take over staffing functions for, say, PC management. Sorry, that's outsourcing.

As columnist David Willis, an analyst with the Meta Group, puts it: "Consulting is what you want when your need is strategic. Outsourcing is what you want when your need is not strategic." Consultants are usually hired to improve or fix, but never to maintain a process or function.

Only you can decide what is strategic for your organization. In general, it's the projects that help a company achieve its broadest goals. For example, changing an e-mail system will have a relatively minor effect on a business that uses e-mail primarily for internal communications. However, we interviewed an ISP that used consulting services to improve e-mail services for its customers, as e-mail is a strategic component of its business.

Making a Road Map

Regardless of how you define consulting, there's no doubt it's big business. Gartner Dataquest predicts that by 2003, total consulting in North America will grow to $8.2 billion--up 8 percent from 2001 and up 12 percent from this year. Not surprisingly, nearly all respondents to a January Gartner survey of consultants reported technical architecture as their primary competency. What we found surprising is that those respondents were developing competency in business strategy more than in any other area of expertise. (See graphic "Consulting and Systems Integration Vendor Competencies.")

We distributed two surveys of our own--one to consultants and another to our readers--to supplement this information. We asked the top revenue-producing consulting firms to tell us the specific technologies for which they offer services. The answers vary widely--with EAI (enterprise application integration) at 100 percent, CRM (customer relationship management)/ERP (enterprise resource planning) at 92 percent, VoIP (voice over IP) at 33 percent and directory services at 25 percent.Meanwhile, our e-mail poll of readers gave us anecdotal evidence of the kinds of technology consulting you desire. The spread was fairly even, with security topping the list at 17 percent of respondents and VoIP near the bottom of the list, at 4 percent.

When you draw your consulting road map, your first consideration should be: What are the goals and what are the deliverables? If the engagement is for integration services, you need both skilled design and implementation. If the engagement is purely for point expertise, look for a consultant who can provide skilled design and troubleshooting rather than one who simply provides implementation.

Then, make sure the people you hire are those who will work on the project--not the B team that shows up after you've signed on. (See "11 Questions to Help You Select the Best Service & Support Provider" for some tips on how to avoid this trap.)

You'll also need to determine how much service you need. Genuine expertise costs money, so most of us engage experts on a limited basis, during a crisis, when we want to significantly improve a process or when we need results on a tight deadline.

But just because you feel your operation can be improved, it doesn't mean you want to just hand over all the keys to a third party. You might simply be looking for an expert opinion. Or, as John Kopeck of consulting firm Compass America puts it, "You might need a course correction, but not a new captain."Let's say you're trying to decide whether and how to outsource some of your business processes--a decision that typically involves large, contractual outlays of cash and complex organizational interactions and consequences. If this is the first time your organization is considering this kind of arrangement, it makes sense to consult an expert who knows the pitfalls of outsourcing before you sign on the dotted line. "You may well want to slow down, take a day and really understand what's up with this initiative," Kopeck says. "If something is wrong with the process, you'll want to fix it first, then outsource."

Decision Dissection

Identifying your exact needs is just the first step. At some point, you'll be challenged to justify your decision to bring in outside help. Here, a comparison is in order: What would the project cost in time, money and quality if you rely on in-house expertise as opposed to hiring a consultant? What if you chose some combination of the two? It's tricky to gain insight on quality apart from references and other soft measures, but time and money are quantifiable and easy to key into your spreadsheet package.

As you can see by glancing at the graphic "Sample Cost Worksheets for Active Directory Rollout" scenarios, projects that need to get done quickly--without staff having to come up to speed--are a natural for using consulting extensively, at a penalty of cost. After all, not only will you have to pay the consultant, but you will also have to do some margin of formal training, knowledge transfer and integration work with your staff.

Projects with a tighter budget but a large time window can work well if you train your own staff: It's less expensive to use staff, but training and execution require much more time. Naturally, projects that fall somewhere in the middle are a good fit for a combination of pay-as-you-go consulting and in-house expertise, where the ultimate responsibility for pulling off the project is in-house, though you can draw on outside expertise to validate designs or answer questions.You'll also want to take a crack at calculating the project's return on investment. Technology consulting is a business value proposition. As Meta Group analyst Willis says of the digital convergence projects his firm takes on, "If there's not a 12- to 15-month payback, it's just not going to happen."

Unless you've put in some time with project management, trading in netViz for Microsoft Excel may seem like busywork, but trust us: You want columns and numbers when you're making a case to management.

Once management buys in, you'll need to choose the consultant that's right for the job. Your partner firm may be large or small; it may be a pure-play consulting firm or a technology vendor. Regardless of the characteristics, you must pick a consultant whose advice is reliable. "A good consultant's ultimate goal is to be a trusted adviser," Compass America's Kopeck says.

Of course, when IT views itself as the trusted adviser, Willis says, "it can be a tough gap." For this reason, it's a good idea to involve internal staff in the entire process, from identifying the need to choosing which scenario makes the most sense and selecting the consulting outfit. It could well be staffers who identified the need for the specific skill or knowledge, so keeping them involved makes the ultimate outcome seem more natural.

How do you pick a trusted adviser? Word of mouth based on first-hand experience carries a lot of weight. Dave Munn, president and CEO of ITSMA (Information Technology Services Marketing Association), compares it to finding a doctor: "When it comes to making decisions about whom to use as a heart surgeon, you don't look at an ad. You ask a friend who has already had heart surgery, or you ask your doctor, whom you already trust, for a referral. When you look at IT projects, you can put them on the same scale." Munn Munn says that ITSMA's research bears out this comparison (see graphic "Sources of Info").

While we think you should check out a prospective consultant's stats in much the same way you check out an outsourcing firm's chops (see www.nwc.com/1315/1315f2.html for some suggestions), be aware that some metrics are self-reported. We'd agree that personal referrals should count for a lot when you're dealing with a strategic (heart surgery) vs. a nonstrategic (wart removal) project.

As far as other attributes go, we'd suggest having a look at ITSMA's survey of 391 Fortune 1,000 execs on the importance of various attributes of professional services firms (see graphic "Satisfaction With IT Professional Services"); use it as a good starting point for a checklist when you're choosing a consulting partner. ITSMA found performance, collaborative work style and technical proficiency to be at the top of the list. That is, besides being able to deliver the goods, consultants must be able to transfer their knowledge to you and your staff. If your consultant doesn't play well with your IT staff, start worrying. The company's employees are important stakeholders, so it's crucial to involve them in the referral process as well as the ultimate decision. We have been told (usually by folks solely in the consulting business) that the most effective and focused consultants are those who do nothing but consulting.

True? A definite maybe. While you wouldn't be too concerned about buying shoe inserts from a podiatrist, after your third joint replacement by an orthopedist who happens to be in the joint manufacturing business, you might start to wonder. Clearly, in IT, you need to watch for conflicts of interest, but you can also take advantage of synergies.

For example, if you want to find the best-of-breed SAN (storage area network) for your environment, asking IBM Global Services to come in and identify the most appropriate technology fit might not be a great idea, as IBM makes and markets a SAN. But what if you're already an IBM customer? It makes sense to use IBM's consulting and system integration teams to get off the ground: Nobody knows IBM better than IBM.

But don't expect nirvana, even when you're using "native" consulting services. You'll still have to work through typical project issues. In one New York-based ISP's iPlanet upgrade, for example, the Sun consultant solved the ISP's internal LDAP synchronization problems, but in the process an external synchronization problem arose that slowed things down. The Sun consultant said a bug was causing the problem, while Sun engineering blamed the ISP's environment. Moral of the story: Even the internal consultants can have a bug-vs.-environment fight with the internal engineers. When the problem persists, expect a VP to come along to bang some heads together--as with any internal conflict.Big or Small?

In your deliberations, you'll probably also ask if size matters. Sure, but bigger isn't always better. If you're dealing with Joe's Consulting Services, for example, Joe might not have the resources to provide expertise in the area you need. But plenty of smaller houses have devoted considerable resources to specialties and dealing well with various project areas. Our survey ("Meet the Consultants") finds that while small consulting firms tend to specialize, the 25 biggest firms tackle almost everything. In this case, specialization can work to everyone's benefit--after all, your goal in engaging a consultant is to hitch to some seriously deep knowledge.

A small firm may be more responsive and professional than a big one. Your best indicator is the scope of work the consultant outlines. If the scope looks half-baked, the consulting firm probably isn't taking you seriously: Your small engagement may be serving as an outsourcing "fishing trip" by an organization that does both consulting and outsourcing. One public-sector organization described to us how it issued a detailed RFI, and a small consulting house, Activ-e (now Neoware Technology Group), responded with a detailed, well-thought-out scope of work. IBM, in contrast, responded with what the organization said amounted to "give us money, we'll do stuff." The small house got the engagement and delivered the goods.

Protecting The Jewels

If you use consultants for strategic moves, you're putting some of your most precious assets in the hands of a consultant, whether it's technical assets like the design of your network or a business asset like customer data. This is another reason to keep your staff involved. Even if staffers are unwilling to second-guess the experts, they are vitally important in pointing out potential site-specific snafus, much as your family doctor's records point out your medical history before the heart surgeon grabs the scalpel.Similarly, employees should be on the lookout for business-process or contractual errors. "Many times people have a point person to deal with consultants," says Siemens' Paul Rightmeyer. What if there's no point person? Are there consultants who consult about consulting? Compass America's Kopeck says his company never proposes it, but companies frequently request this service.

Even after you've done your homework, hiring a consultant still requires a leap of faith. How do you know you're in good hands? Truth is, you don't. The best you can hope for is to hedge against disaster. While the largest consultants provide insurance or bond, and some go so far as to use an encrypted store for customer data, the human element means you have no absolute guarantees. Instead, rely on advisable courses of actions, good references and probable outcomes.

Jonathan Feldman is chief technical manager of the Chatham County government in Savannah, Ga., and a Network Computing contributing editor. Send your comments on these articles to him at [email protected].

Pop quiz: You're launching a major IT initiative, and you don't have the in-house expertise to get the project rolling. Do you (a) hire a consultant, (b) train your staff or (c) use some combination of the two? The decision requires some serious analysis of the time and expenses associated with all three options. Consultants may be pricey, but they may be the best choice when the future of your business is riding on the project's outcome.

In this third issue of our IT Agenda series, you'll find the tools to make the decisions and get management buy-in. The first steps are determining whether the project is sufficiently strategic to warrant a consultant's expertise, then defining the deliverables.Next comes choosing the right firm. Often, this process involves research and recommendation. You'll want to learn about the candidates' areas of IT and vertical-industry expertise (see a rundown for 12 top firms in "Meet the Consultants"), how experienced their consultants are and the size of their businesses. You'll also need to learn, from experience and recommendation, how well the consultants are likely to get along with your staff. This last point is critical, as the consultants must ultimately transfer their knowledge. Otherwise, you'll keep paying the big bucks long after the hard work is done.At some point, it's time to say good-bye to your consultant--preferably when your project ends. But consultants live for the next engagement, and finding more to fix for the current client is easier than setting up at a brand-new gig. If you're not careful, your expert may sign you up for more than you intended. "The way consultants stick around for months after they're supposed to be done--it's almost like a virus," says Craig Duncan, a telecom manager for a large communications provider.

How do you prevent consultants from overstaying their welcome--most notably through tactics in which they set themselves up to provide the maintenance on your new system?

Start before the engagement begins, by clearly scoping out the project. Define where the consultancy ends and maintenance begins. "If someone comes in and creates something I can't maintain, they've set themselves up for an outsourcing or longer-term relationship beyond the scope of our consulting relationship," Duncan says. If this is what you want, great, but it's prudent to arrange the outsourcing deal separately. Typically, companies that do both outsourcing and consulting have different business units to handle each.

Furthermore, Duncan notes, you need to understand the pricing structure with respect to additional work, and you need to comprehend the internal and external influences that will drive any post-engagement maintenance.

Most system integration projects have ongoing maintenance concerns, so Duncan advises doing an internal skills analysis before embarking upon such projects; that way, you'll get a sense of the feasibility or desirability of maintaining the project in-house. (See "Decision Dissection").And if it's "after the fact"? Don't hesitate to renegotiate a project that has clearly gone outside the original scope of the work--or pull the plug and start over. Duncan has seen projects with requirements that changed over the build cycle to the point where the system was no longer sufficiently flexible to meet the new requirements. In one project, Duncan recalls, the system's internal workings were incomprehensible to the client's staff, and the consultant wound up doing the maintenance. In the end, he says, "it was significantly cheaper to rebuild the system and maintain it internally than to keep paying consultant prices for maintenance."

Of course, good consultants will be just as interested as you are in keeping a project's scope tight, as upcoming engagements will provide an incentive for them to finish your project on schedule.

And while "the end of game should mean you're done," says Siemens' Paul Rightmeyer, "my assignment should also be to identify other areas of potential improvement. I would want that from my partner." He has a good point: If additional cost savings and/or process improvements are within reach, a good consultant will identify some strategies. At that point, you can decide whether to re-engage the consultant's services. Thinking of this stage as separate from your original project can help you keep the project's scope from ballooning uncontrollably.

We invited the 25 consulting companies Gartner dataquest identified as having the highest revenues to tell us all about their business models--everything from the services they offer to their pricing plan, property protection, staffing qualifications and labs. Twelve of the companies responded. we list their answers to help guide you through the hiring process.