Outsourcing

How to win friends and waste money on consultants

Patrick Gray talks about the most common ways he's seen companies misuse money they're spending on consultants.

Having spent the majority of my career in consulting, I've seen the good, bad, and ugly all over the world. I'm likely biased, but consulting serves a legitimate and compelling purpose-the ability to gain access to expertise on an as-needed basis. However, it's easy for paying clients to forget the purpose of their consultants and burn through cash that generates little measurable benefit. Here are some of the highlights I've seen in my career.

Facilitating indecision

In most cases, consultants are billing for time and materials, with each unit of time expended on a project requiring more of your cash. While some companies avoid this practice, for technically-focused projects in particular it's still the norm. While most consultants do not actively facilitate the practice, encouraging you to make expedient decisions is not in their financial interest. Each day you dally eats into your revenue, while adding a billable day to the consultant's revenue.

Pushing pennies

There's a temptation to treat consultants like dirt: they're perceived as overpriced, they won't be around long, and why invest resources in part-timers. I once arrived at a client site where the client required we use their computers to access their infrastructure. This was an eminently reasonable request, until they literally pulled laptops out of a dumpster for the consulting team. These clunkers were falling apart, and made it difficult for the technical members of the team to get their work done.

"Sticking it to those consultants" cost the company money in lost productivity. While you need not ensconce the consulting team in corner offices and provide lodging at the Ritz, provide the basic tools required to get the job done-otherwise you'll eat billed hours while saving pennies.

Buying into the BS

One of the legitimate reasons consultants get a bad rap is their proclivity for slinging bull. Nearly everyone in the corporate world has been subjected to a buzzword-laden diatribe where a self-important consultant hogs the floor without saying much of import. Just because a consultant comes wrapped in an impeccable suit and drops elaborate buzzwords doesn't mean he or she knows what they're talking about, and if you're uncomfortable with a proposal it's well within your prerogative to press for more details or a simplified (and jargon-free) explanation.

Similarly, highly specialized consultants are often billed as providing a great resource for knowledge transfer, where they impart some of their skills to your people. Knowledge transfer is a time-consuming endeavor, so if this is of value to you, budget for the activity and make sure it actually happens. While some level of knowledge transfer happens informally, if your people need critical skills from the consultants there's no harm in requesting a formal knowledge transfer, capabilities assessment, and appropriate follow-up.

Clear the road

Another great way to waste money on consultants is to allow adversarial attitudes to fester within your staff. Consultants should be engaged to solve a business problem, and if your people aren't interested in the help and try to sabotage the effort, you should treat it as an affront that should be rectified. If your consulting team is competent and you believe in the objective of the engagement, clear the internal obstacles to accomplishing the objective, even if that obstacle if your own people.

While it's easy to bash consultants and groan when you see their prices, they're an effective way to solve a unique problem and usually less expensive than building the appropriate skills in-house. Ensuring you're getting the most bang for your buck need not be tedious or adversarial, and usually just requires some cognizance and diligence on the part of the hiring party.

About

Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

6 comments
robduvall
robduvall

I agree, if there is no clear goal with start and end dates it is doomed from the start. It is also important for a good consultant not to get distracted with new, on the fly requests as you are doing the job. We have this happen in our dealings with companies quite often and its usually becuase they are just excited about getting things done for once.

viveka
viveka

ItÂ’s an easy way out for executives to get a pricy consultant(s) and delegate due diligence to them! And the socializing that pricy consultants provide cannot be matched by better qualified but with lower muscle power.

mcarr
mcarr

Perhaps your experience is at the lower end of the market, but consultants are often used to provide knowledge the organisation is unable to obtain otherwise. Under those circumstances, the scope is better understood by the consultants than the customer and the work is often done on a fixed price contract. As a result, none of your four point points are very likely to occur. Using "consultants" as an umbrella term is lazy - they may be responsible for anything from human factors for staff to life-critical process and regulatory development.

dl_wraith
dl_wraith

I've seen consultants brought in to provide resource to a project only to be wasted by not being given clear goals and a purpose from the outset. If you use a consultant for anything, Ensure you've given them a clarity of purpose and that you follow up on and adjust any goals as things change (as they always seem to do in our world). It sounds so obvious now but trust me, a busy IT manager can easily give a woolly goal to a contractor when distracted by other pressures and never really see the benefit as a result.

osgcurt
osgcurt

Liked the part "waste money on consultants is to allow adversarial attitudes to fester within" While working on a project with Microsoft Consulting Services, I met up with this kind of environment. The solution was to stop the project and let the client know what was happening. We could not be productive, so why continue the "burn rate" if it was being undercut. This created trust. We were not working only in our financial interest. A successful project was the main goal, because that would be an investment that would produce in the future.

davidpowell
davidpowell

Some of the content in the initial post and follow on comments show little understanding of real world consultant dynamics - I would hazard a guess that we should read contractor for consultant? I have experience consulting in many different market areas, and while it woud be nice to think that the engagement would start with a nice clear set of defined goals, this is rarely the case, and the blame - IF any blame exists - cannot be so easily apportioned. In most cases the client will knowingly engage on an outline set of requirements. Only when you get in and start validating the requirements and identifying and meeting with all the pertinent stakeholders do the initial requirements get properly fleshed out and become more defined deliverables. In most cases the incumbent staff would not be able to do this due to both political constraints and a lack of experience - hence why we are engaged in the first place. A large portion of the incumbent staff then see the consultant as a waste of time and money - why is he taking so long to deliver X? We could have done it much cheaper! The truth is X is now Y, possibly with a bit of Z thrown in - hopefully giving a more accomplished product offering business benefit to a wider audience, and possibly a greater cost saving/value for money. The secret is giving the client regular updates and properly outlining and agreeing changing requirements. Also adopting a "doing it with you, not to you approach" gives support to the incumbent staff and confidence to the stakeholders that there will be value for money spent.