COVER STORY: CONSULTANTS VS IT DIRECTORS - Let's be frank with each

The IT industry has learned how to play nicely with other people.

It was not always thus, though. When the top accountancy firms began growing their IT arms a decade or so ago (the arms they are now all cutting loose) the fashion of the day was IT cost cutting. The IT consultant’s value-add was to show the company how it could constrain its burgeoning IT costs. This, of course, did not endear the consultant to the IT director.

For their part, IT directors loved nothing better than to be able to reverse the situation by managing the consultant with a strong hand when an implementation project with consultancy input came around. Conflictual relationships tended to be the name of the game. But time and changed circumstances have taught both sides a great deal.

The IT director’s view: Jeremy Boss, executive responsible for IT, Imperial Tobacco Group

Boss has seen both sides of the game, having started his career in IT as a management consultant for Coopers & Lybrand (now part of PricewaterhouseCoopers).

He says: “The relationship varies a good deal from consultancy to consultancy, and even within the same consultancy from project to project, if the account director at the consultancy changes. One of the most essential issues, from my perspective, particularly with the current universal skills shortage, is to ensure that we get a balanced team from the consultancy.

The fear is that you will find yourself drawing from a great amorphous mass of consultancy resource. All the top consultancies probably have a world expert on just about everything, but that doesn’t mean that they are going to be available for your project. This makes keeping control of team selection critical.

We almost never go into a major project on the basis that the consultancy takes all the risk for delivery of the end product and is therefore given a free hand on means and resources. We often call for a range of CVs, so that we can select a team that is neither top heavy with experts, nor too lightweight.

The key person from the consultancy’s side is clearly the account director. They have to be your eyes and ears inside their organisation, with the clout to be able to pull the right resources onto your project at the right time.

I find working with smaller consultancies can sometimes make it easier. However, with the boutiques you are very often buying an individual’s skills, rather than a real team, and true skills are in very short supply.

I always try to retain the project management function in-house, so there is someone in a key position on the team with a strong understanding of what the project means from our side.

As a mid-size organisation, by comparison with some of the larger blue chip companies in Europe, we have to recognise that there is a limit on the leverage we can exert on the larger consultancy firms. However, we maximise it by emphasising to the firm that we are keen to take a long term view of the relationship. We prefer to keep the same consultancies for job after job. We don’t look to drive the relationship with a tightly written contract. The bottom line, however, is they don’t get any more work if they screw up!

We don’t use very much strategic consultancy. We are a very pragmatic company, and calling for 300-page consultancy reports is not our style. Our major requirement is for a good deal of integration skills. We need the consultancies to enable us to run a lean IT team in-house. Moreover, I recognise that I could not hope to recruit and hold the level of expertise in-house that a large consultancy can offer.

One of the inevitable issues brought about by the fact that the time scales for projects are shortening so dramatically, is that IT directors tend to have ever larger numbers of projects running simultaneously. The more consultants you bring in, the more your management overheads, in terms of time and effort, increase. One of the key skills in this job now is the ability to manage networks of inter-related projects. Bringing in external people inevitably adds additional layers of complexity and you have to work very hard to keep things visible and focused.

Inevitably consultants will try to cross sell other services and skills during the course of a project. This is a legitimate practice, up to a point, but it is a very easy line for a consultancy to cross. In summary, our approach is to judge them by their actions, and the key moments are when problems occur. That Is when you discover how much or how little the relationship matters to them.”

The consultant’s view: Eddie Oliver, chairman, KPMG UK Consulting Practice

“There was a time when consultants would get called in to propose a strategy on which the IT director had already made up his/her mind, and where the real game was to legitimise this idea. That still happens, but more rarely.

When things take this form now, it is for much sounder reasons. What often happens these days is that clients are looking to gain confidence and certainty that they have evaluated all the options properly. The industry is moving so quickly right now that even IT directors who make a strenuous effort to stay abreast of new developments know there is much that they will have missed.

The other thing IT directors need, of course, is implementation support. Putting in large, complex systems is what consultants do for a living. In-house IT staff may have been involved in the occasional implementation, but the main thrust of their work is operations. It’s not the same thing at all.

There used to be clear dividing lines between the two great themes of strategy and consultancy. These two mainstays are now converging faster than ever before. Clients don’t want theory now, they want solutions. The days when you could send a strategist in to do the strategy, and then follow up with implementation consultancy some time later are over. Pure play strategic consultancies like McKinsey are adding technology implementation to their offering as fast as they can, but they have a lot of catching up to do to get where we are.

As everyone dashes for the Net there is just not the time for old style conflictual games between consultants and IT directors. I’m not saying that every relationship between every IT director and every KPMG consultant is always rosy. People remain people, but the picture is hugely better than it was a few years ago.”

The IT director’s view: Martin Powell, director, NetObjects

Powell has been on both sides of the fence. A former consultant with Sterling Commerce, his company specialises in building e-solutions for plcs.

He says: “In my days as a consultant, the major sources of tension between consultants and the IT director tended to originate with breakdowns in communication.

The consultant may only be on site infrequently and is likely to have a challenging and important role. If decisions that rest with the client company, such as testing deadlines and ‘go live’ target dates are not clearly communicated to the consultants in the field, you can get major disruption. I well remember an IT director coming over to me with a smile and saying, ‘Right, we go live today’, when my bit of the puzzle was still four days from completion. That was not a happy experience.

It takes time for rank and file consultants to get familiar with a particular company and there is always a challenge in fitting in with the client company’s culture and procedures. To ensure this works as comfortably as possible, you need continuity. If the consultancy is strapped for resource and is constantly swapping people between jobs, that makes things very much more difficult for everyone involved.

I never came across any animosity between in-house staff and visiting consultants. If there is tension, it tends to come from the top. The bigger the client company, the better the IT side tends to be managed. Big companies know how to set up project teams and they know how to interact. With smaller companies and smaller projects, things can get very woolly.”

The consultant’s view: Kenny Frasier, director, PricewaterhouseCoopers

“The roots of conflict between consultants and IT directors go back both to the cost-cutting beginnings of the Big Five practices, and to the fact that the history of IT is littered with overrun projects and failed projects. Consultants tend to get the blame for much of this.

Several years ago, there were two major scenarios for consultants being called in. They were either appointed by the board, often because there was a feeling that something was going wrong in the company’s IT strategy. Or an IT director would call them in to confirm his/her decision on a new ERP system.

Today, under the pressure of e-business, there is far more awareness throughout IT of what consultants are and are not good at. We are also seeing many more arrangements where the consultancy firm shares the risks associated with the project – either through a profit share or an equity stake. This is a healthy way of getting everyone on-side and pulling in the same direction.

It seems to me that we are about to see another metamorphosis of the relationship. The Big Five accountancy firms are all in various stages of disposing of their consultancy arms. The traditional link to the audit side is disappearing both for regulatory reasons (pressure from the SEC) and because it is a barrier to equity arrangements. Severing the link with the audit firm makes it much more possible for consultants to form joint ventures. (Since auditors have to maintain their independence, they cannot take a stake in audit clients).”

The consultant’s view: Andrew Waller, managing consultant, Ernst & Young’s Real Estate consulting arm

“I look after the e-business side of things, so just about all the projects I get involved with include the client’s IT director at some point. Normally, things work pretty smoothly, since we are working to help them achieve something that is important to their strategy. At the very least, we are providing a resource, helping the in-house team to do things they would otherwise be very frustrated at not being able to do themselves.

The key to any successful consultancy project is preparation. However, if there are any internal problems at the client’s end, you can expect them to come out during a major project. If the chairman of the client company catches you in the corridor and asks: “What’s Bloggs like, really?”, (Bloggs being the IT director), you know you’re heading for difficulties.

In today’s climate, with the pressure to be first to market, the IT director knows that he/she is going to be very hard pressed to deliver projects on time. To have helpful, friendly people on hand who have been through this kind of project before has to be a positive thing.”

The consultant’s view: Paul Spence, partner, Andersen Consulting

“IT directors are turning to consultants today – both the traditional consultancies and some of the new start ups – to help them set their strategic direction and prioritise. They need help to cut through all the vendor and technology hype, and to help them understand what is real and achievable now.

Clearly some clients will take a greater interest in the balance of the consultancy team than others. However, we believe that ultimately this balance is for the consultancy firm to strike, and is part of what we bring to the table. The spectrum of possibilities runs from the client accepting the consultancy’s promise to deliver, and giving it a completely free hand, at the one end, to the consultancy allowing the client to cherry pick its resources and body shop individuals. This extreme end of the scale is not our way.

Increasingly, we see more and more medium-sized companies looking for a guaranteed outcome, and using our brand as our guarantee that we will deliver. Their aim is to get a service to market as quickly as possible and they are increasingly happy to leave the ways and means to us, provided we meet the SLAs and deliverables.

This is not much of a sea change. To some degree it has always been the case. However, things have sharpened up enormously due to the pressure on resource. The nature of things is that clients are competing for the right resources from consultancies. In their turn, the consultants are competing with dotcom start ups for that same scarce resource.

Many of the best people, those who really understand e-business, are generation Xs, resistant to traditional ideas of long-term careers and corporate authority. They are very self motivated and even though the gloss has gone off dotcoms, to some extent, as far as financial rewards are concerned, these companies represent excitement, a cracking pace and the opportunity to learn and develop. The consultancies have to work hard to attract this talent and provide them with similar challenges. In-house IT departments have got almost no chance of keeping people like this, so it follows that they need the consultancy resource.”

The IT director’s view: John Harriman, senior IT executive, General Motors Europe

Formerly IT director for Royal Mail, Harriman’s task when he joined GM Europe was to manage the process of introducing outside consultancy competition for EDS, GM’s well established global outsourcing supplier.

He says: “I have used any number of consultancies in my career, ranging from IT consultancies such as IBM, Sema and McDonald Information Systems, to the specialist consultancies like Deloitte & Touche, PA Consulting and others.

The secret has to lie with establishing a partnering relationship rather than a rigid customer/supplier relationship.

General Motors has a very different relationship with its IT suppliers than it does with component suppliers. The idea with IT is to pursue a value for money approach, rather than a lowest price approach. What we look for is for the consultancy to manage the risks for us, and to advise us of difficulties ahead of the game. We look for flexibility without argument, and the ability to take a leading strategic approach.

Consultancies like Cap Gemini coming in to GM and working with the incumbent supplier, EDS, face very big challenges. Our problem with Cap Gemini has been to manage the fact that we are not giving it quite as much work yet as it was expecting at the outset. The EDS contract is a $3bn a year deal and until we can give Cap Gemini interesting chunks of business, it has to be a relationship of trust. It is not exactly well known in the US, and the US people in GM need time to get to know and trust a European-based consultancy. The takeover of Ernst & Young’s consultancy division should help its visibility there a good deal. Right now though, keeping the consultancy’s interest is something of a juggling act for me.

My advice to other IT directors employing consultants would be: make sure you define the scope of the project, your deliverables, and to some extent, the quality of the team you expect, and the value for money you want from the deal. Every consultancy has some great people, and a large number who are not worth the rate they are charged-out at. It is difficult for the customer to pick the team, but make sure the consultancy knows what it stands to lose if it under-powers your team!”

The IT director’s view: Tom Forrester, deputy managing director, Calanais Europe

Formerly head of IT operations at Scottish Power, Forrester joined the ranks of consultants when he took up a position with Calanais, a 50-50 joint venture between Scottish Power and SCIAS, the largest employee-owned IT company in the world. Calanais is now the outsourcer for all Scottish Power’s IT requirements. Here he wears his former, IT director’s hat: “My experiences with consultancy firms and consultants was very mixed.

In some cases, a very few cases at that, you were able to get some original thought and real strategic ideas and guidance from consultants. By and large, however, they offered regurgitated proposals, off the shelf processes, and deliverables that were of questionable business value.

The main problem, it seems to me, is that people have unrealistically high expectations, that are well above the consultancy’s capabilities. There are very few really high-calibre strategic thinkers in the world and loads of very ordinary people. If you want a consultancy relationship to be successful, you need to work with an organisation that has very specific industry expertise in your area and use them where you have a very clear idea of what it is that you want to do.

At Scottish Power, we tended not to use consultants for implementation. We were looking for ideas on the strategic alignment of our business goals and what technologies we should be investing in to achieve them. This is where we found consultants particularly light and unsatisfactory.”

The consultant’s view: Geoff Mason, head of e-business, IBM’s e-business consultancy division

Mason has spent the last 25 years with IBM, beginning as a programmer/analyst, then progressing into IT architecture and strategy. He now heads a group of 100 consultants focusing on what IBM calls “transformational e-business strategy services”. Here he looks at the respective merits of IT vendor consultants versus Big Five consultants:

“The really big difference between ourselves and the top consultancies is the breadth and depth of our delivery capability. Plus, we are doing something reasonably new and different in the overall strategy and transformation arena. We have transformed ourselves, in that IBM is now the world’s biggest dotcom company, and our clients want us to help them do the same thing. To do this we brought three skill sets together: the consultants to help frame and focus the issues; organisational change experts to manage the process through the whole cycle, and lastly, the real world implementation folk.

There are two kinds of consultants, the strategy experts who issue hypotheses, and the implementation experts who have done it 10 times already. While the Big Five have substantial implementation skills on specific packages, such as SAP, they do not have IBM’s range of delivery capabilities. Today this is what clients want. They don’t want advice, they want knowledge in the shape of solutions that can be implemented now.

While we were always well aligned with the IT management in large organisations, over the last 12 months we are talking much more to senior line of business directors – the people who sign the cheques and have the power to say no. For their part, IT directors want us to help them re-energise IT’s role in helping the business to achieve its goals. There has been disappointment about what IT has achieved for companies. The dash to e-business gives us the opportunity to show just how fundamental and valuable IT’s contribution really can be.”