The way an IT firm approaches projects brings its strengths and customer focus to light. For NerveWire Chairman Malcolm Frank, definitive methodologies can give IT consultancies a clear advantage over their competitors.
The company, which focuses on the integration of complex, interenterprise systems for Global 2000 clients, has been named by Computerworld magazine as one of the Top 100 Emerging Companies in the IT business.
I recently interviewed Frank and asked him about methodologies and using them to define your consultancy.
First of two parts
This is the first installment of a two-part interview from TechRepublic columnist Rick Freedman. Tomorrow’s article will discuss putting together the right staff and project management methodology to attract and retain top clients.
TechRepublic: How does an IT services firm use its methodology as a competitive advantage? It seems like NerveWire has come up with some innovative ways of thinking about the client engagement. How did those ideas evolve?
Frank: The IT services universe is pretty broad. I think you have some variables that firms really have to think through in doing this. First, what do you do as a firm? That’s really important because there are so many different flavors of IT services, and one type of solution area may require one type of methodology while another requires something different.
For example, the approach you need to take on an SAP death march is very different from a fairly codified and well-contained executive management system. Where firms get into trouble is when they don’t really understand what they’re trying to address in the marketplace.
TechRepublic: You mean the guys who run after every project and then try and figure out what they’re going to be when they grow up?
Frank: Right. First, your methodology has to be defined by being very honest with yourself and making choices. So I think you have to stay focused on and answer those basic strategic questions: What do I do better than anybody else in the world? How do I make sure I have the discipline to stay focused on that? If you do that, then I think a methodology starts to unfold.
Second, are you going to try to compete on speed? If so, then you have to have a methodology that reflects that.
TechRepublic: In other words, are you going to make speed of delivery one of your core competencies?
Frank: Exactly. And again, that is a deep cultural and philosophical decision for an IT services firm. I had a conversation with (business process guru) Michael Hammer a couple of weeks ago on this, and he said the change programs, reengineering, and such is all so tough to do if organizations can’t change staff enough. So he said that, to a sophisticated buyer, the time argument isn’t that critical. He knows it takes time for a firm to internalize this stuff. But other firms—some of the Internet-born consulting firms—pushed speed-to-delivery very aggressively. If that’s who you are, your methodology needs to reflect that.
I think a third area is cost, obviously. A fourth is the type of contract you want to have with your clients. Is it going to be basic time and materials, fixed time, fixed price; is it going to be some type of value sharing arrangement?
TechRepublic: If you’re going to be offering value-based pricing, or if you’re going to be doing some type of risk-reward scenario, you’d better not be making it up as you go along. You better have a pretty robust methodology that’s focused on all of those milestones and deliverables.
Frank: You got it. You know, fixed time, fixed price, I lived through that for 10 years of my life. It’s interesting; many of the speed-to-delivery firms, who were leaders in doing fixed price and fixed schedule bids during the 1990s, got a reputation with their clients as being methodology Nazis.
The reason was, as with any project, you get three months into it and the client’s thinking starts to evolve: They understand more and they want scope changes. What you’re forced to do is say “no.” You pull out your contract and say, “fixed time, fixed price. I’m going to deliver what we decided three months ago.”
TechRepublic: Even if it doesn’t have any relevance to what you really need…
Frank: Right. Because we have a contract that says I’m on the hook for delivering this. If I change it, you’re going to kill me.
TechRepublic: And that’s always kind of a trade-off with the client: how flexible you can be vs. how much you need to nail down deliverables.
Frank: That’s right. But then there’s the Big 5 model, where in some of those firms they actually have scope expansion school, teaching their consultants how to grow the scope with the client. So I think that the type of contract you sign is another really important point. So defined methodology, speed to market, cost, and contract types are really the critical issues that go into the development of methodology.
Many folks have gotten cynical about the attempt to use methodology as a differentiator in the IT services business. Five years ago, Wall Street would really focus on a firm’s methodology to justify its valuation. Now they don’t even talk about it. They just assume you have one. And the reason is, they really trivialize it.
TechRepublic: “Who cares what you call it, it’s pretty much the same thing...”
Frank: Exactly. But those in the industry understand just how important it is. You’ve got to make some very honest decisions around each of the four elements we just went through to say who are we as a company. Because then it leads to a fifth: Over time, your methodology becomes the firm. Like Winston Churchill said, “First we define our structures, and then our structures define us.” In an IT consulting firm, first we define our methodology, and then our methodology defines us.
TechRepublic: Personalities and human beings and the way people do things, and the way the firm is comfortable doing things, start to become embedded in the methodology, so it kind of becomes mutually defining.
Frank: That’s right. And also—along those lines—how you treat the customer through your methodology. Some of the Internet-born consulting firms were the poster children for doing this badly. Many of them just treated their customers like idiots. Their approach was “You don’t get it; get out of my way and let me do this for you.”
That came from the personalities of the people that ran these firms. As opposed to other firms where they say, “No, customer is king and we need to truly collaborate with this firm.” That shows up in the methodology. They say to the client, “For our design session, you need to have all of your key users here, because we’re not so presumptuous to think we know the answers. We’ve got to collaborate with you to do this.”
TechRepublic: Talk to me a little bit about your thoughts about how you present methodology in the sales cycle.
Frank: It’s vitally important that you do it. It’s interesting; a lot of consultants think in terms of winning the contract. But the client’s on the other side of the table thinking about making my business better, you know, rolling this thing out, getting it done.
TechRepublic: Getting the benefits.
Frank: Seeing the benefits, exactly. So when you speak in terms of methodology, and how the clients interact with that and what it means to them, they start to visualize in their own minds how this whole thing is going to work and how they’re going to see benefits from it. If you sit there and just talk about, as you’re saying, your own capabilities, you just come across as narcissistic. Their defenses are up. The client’s going to think, well, bully for you, but how does that help me?
Rick Freedman is the author of three books on IT consulting, including "The IT Consultant." Rick is an independent consultant and trainer, working, through his company Consulting Strategies Inc., to help agile teams and organizations understand agile practices and migrate successfully.