By Andy McCue, 21 June 2007 12:44
NEWS
Organisations risk wasting vast sums of money on external consultants by not managing them tightly enough or using them when the work could be done just as effectively in-house.
The warning comes on the heels of a report by MPs this week that revealed the public sector wastes more than £500m a year on the unnecessary and poor use of consultants.
The issue split silicon.com's 12-strong CIO Jury IT user panel this week who were asked if external consultants deliver value for money. Most said both "yes" and "no" - the main caveat being that consultants need to be tightly managed to get the best value out of them.
Neil Hammond, head of IT of British Sugar, said: "If there is there a specific question you want tackled or a specific, well defined project you want undertaken then consultants can be very useful in order to supplement resource and skills or take an external perspective. But if they take over your strategic planning and programme management then you're in trouble - keep consultants on tap, not on top."
That means consultants need to be used within a clearly and tightly scoped context set out by the employing organisation. Paul Haley, IT director at the University of Aberdeen, said: "To permit the consultant to scope the project is to abdicate managerial responsibility."
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Kevin Fitzpatrick, CIO of Sodexho UK, added: "Though consultants can sometimes truly be 'partners' their primary motivation is revenue for their company not yours."
Nicholas Bellenberg, IT director at publisher Hachette Filipacchi UK, said he has had excellent experience of using consultants when they are tightly focused, delivery driven and with finite budgets, but said that is not always the case.
He said: "My worst experience was years ago when I had cancelled a particular piece of work the company supplying the consultant said, 'Couldn't you just keep him on until the end of the month?' It was clear that their agenda was keeping the day rate coming in, rather than delivering value. Caveat emptor."
The use of consultants in the public sector is obviously a thorny issue given the cost to the taxpayer. Peter Ryder, head of ICT of Preston City Council, said: "Some do an excellent job but perhaps the real question is, should we always be using and spending so much on external consultants who charge a considerable fee when a lot of the work can successfully be done in-house?"
Janet Norman-Philips, head of e-government of South Norfolk Council, added: "The right consultant at the right time can save you a fortune and a pile of grief. On the other hand there are times when using a consultant is insane or, even worse, when the consultant you use is insane - then you are really in trouble."
But David Supple, head of IT and creative services of consultancy firm Ecotec defended his industry. He said: "The key is knowing what to ask for and knowing whether or not the knowledge and guidance you are asking for is good value for money in the first place - the management of consultants is a skill in its own right."
Today's CIO Jury wasÂ…
Ade Bajomo, head of IT systems and strategy, Pearl Life
Nicholas Bellenberg, IT director, Hachette Filipacchi UK
Peter Birley, IT director, Browne Jacobson
Chris Broad, head of IM and technology, UKAEA
Kevin Fitzpatrick, CIO, Sodexho UK
Paul Haley, IT director, University of Aberdeen
Neil Hammond, head of IT, British Sugar
Janet Norman-Philips, head of e-government, South Norfolk Council
Andy Pepper, director of business IS, Tetley
Peter Ryder, head of ICT, Preston City Council
David Supple, head of IT and creative services, Ecotec
Graham Yellowley, director of technology services, Mitsubishi UFJ Securities International
Want to be part of silicon.com's CIO Jury and have your say on the hot issues for IT departments? If you are a CIO, CTO, IT director or equivalent at a large or small company in the private or public sector and you want to be part of silicon.com's CIO Jury pool, or you know an IT chief who should be, then drop us a line at editorial@silicon.com
Comments
There are 11 comments. Join the discussion
1. anonymous
I think the industry needs to decide what it wants here .....
If you look at the career marketplace, the major consultancies are crying out for resource, especially senior people. Opportunities in companies, particularly at the senior management level, are few and far between.
In-house knowledge and motivation is very important, and often under valued. All too often resourcing decisions are made on a commercial basis, rather than investing in headcount. As a result, skilled resources are rare - so companies are forced to utilise consultancies, and so the cycle continues.
2. Charles Smith
If you get a genuine Consultant who has substantial experience and expertise you can get excellent value for money. If you get someone labelled as a consultant who has little experience then it can be an expensive waste of money.
Consultants should be treated like high quality scotch whisky. Always choose the best, even though the price is high. Then take in small doses. Relax and smile. Cheap whisky in large quantities just gives you a nasty hangover after a period of dizziness.
3. anonymous
Of course consultants can be a waste of money. But so can using your regular people if they don't know what they are doing or are poor at controlling costs or project management.
There is also a problem with the view in your jury of nailing down consultants so you're always in control. We've come across many instances when people who don't really know what they're doing specify dumb things in contracts and build in under-achievement. This is especially so in government contracts.
4. Simon
All too often they are used for the wrong reason. I've seen many situations where management have been too afraid to say what they want or to stand up and take responsibility for risk. The result is that they employ a consultant on the basis that :
If it all turns out well they can take the credit for getting the right consultant in.
If it turns into the biggest pile of manure imaginable then they can blame the consultant for getting it wrong !
One of my favourite jokes quite well summarises what is often wrong with the relationship :
A man is out balloning and after a while he realises he is lost. Looking around he sees a house in his direction of travel and someone is in the garden - so he descends to within shouting distance.
The ballonist shouts down "Where am I ?", and the reply comes back "You're in a ballon !". Annoyed the man shouts down "You must be a consultant then - I've asked you a question and you've given me the answer I already knew without being helpful", to which the reply is "Yes, and you must be a manager - you don't know where you are or where you are going but now it's MY fault !"
5. Allan M. Huss
Consultants and politicians are like babies' diapers -- they should be changed often, and for the same reason. (With kudos to the comedian Robin Williams, in the movie "Man of the Year")
6. misceng
The Civil Service wastes money on consultants to save paying Civil Servants at lower cost to do the work. I was a professional engineer in the Civil Service and employed consultants because there were not enough of us to do the necessary work. They cost more but did the work well because professional engineers selected them for their expertise and briefed them clearly on the work required. The Government wanted to reduce the Civil Service so the administrators decided to get rid of professionals. They now select and brief consultants with none of the expertise the professionals could bring to the process. The result is the consultants do what they think the administrator wants and then late in the programme it is realised that the result is not what is wanted and the consultant is paid even more to sort out the mess. NHS computing seems to be the ultimate demonstration of this phenomenon.
7. Simon Allen
The first paragraph could easily read ...
"Organisations risk wasting vast sums of money on permanent members of staff by not managing them tightly enough or using them when the work could be done just as effectively out-of-house."
Why do folks like to just band ALL consultants together and say = BAD?
I recall working as a temp telephone operator 27 years ago. Frequently, the permies would say, "You mustn't answer the calls so quickly. Otherwise they'll expect us to work like that all the time."
This kind of blind attack must be turned against the poor quality of management.
8. Nick Cole
Consultants should NOT be tightly managed. That is merely a recipe for getting a rubber stamp for what the manager wants. It is therefore a complete waste of time and money. A Manager us employed to use his/her intelligence and experience. Therefore use of a consultant tells everybody else that the manager shouldn't actually be in post because that person is not actually capable of doing their job!
A consultant's REAL and only role is to provide specific external expertise that is not already possessed and would not be cost-effective to retain in house.
Just look at all those 20 somethings with no life experience just out of university providing so-called advice to everybody. Just look at all the systems (procedural as well as technical), that have no holistic understanding of the environment they are in.
Most modern consultants are good listeners and merely translate what they are told by whoever commissioned them into another form of words. An expertise if you like but is it really what they are being paid (usually an unjustifiably exorbitant amount) for?
9. Howell
It depends, a true consultant response to be sure. After working on both sides of the fence I can say this with a great of clarity and confidence. What my experience shows is that senior executives often want consultants to provide context and analysis because their staffs internally may not be given the time allocation to do so, or their point of view is skewed.
On the other hand, I have asked the question rhetorically on more than one occasion, "if 80% of all the world's consulting engagements were cancelled tomorrow for a period of 60 days what would organizations not receive" other than an invoice?
Consultancy, like health insurance in the United States is driven by profit not value creation. Unfortunately, most women and men in corporations are running scared and tend not be given the license execute on innovative ideas--that is often the domain of the consultants, because if it fails or does not go quite right then, you fire the consultant. This post might sound a bit confusing, well, it is! Consultants and clients have this symbiotic relationship, sort of like a bad habit that you aren't quite sure how to give up.
10. anonymous
I agree with another writer from London where he said “If you get a good Consultant who has substantial experience and expertise you will get excellent value for money.” Consultants and contractors are dependent upon their record for delivery and productivity, many times often over full time staff who are happy to accept the pay check. Their reputation and next contract is dependent upon this. Many consultants and contractors work longer hours and directly invest in themselves (education, further training, etc.), thereby providing direct value to their clients.
They also bring vast experience working amongst various clients that can be of benefit. They may be focussed on revenue and sustainability of a revenue pipeline, but isn’t that what most permanent employees are also after, i.e. to be recognised and well remunerated. Just to reiterate, their revenue pipeline is built upon their track record.
11. praphulla
A consultant has the ability to bridge the gap between your requirement for specialized business knowledge and the need to deploy this knowledge or leverage it for a short duration of time.
For example, as a company you may be focused on legal work, and need to develop a legal framework for a client who specializes in outsourced product design development. In order to be able to understand and analyze the specific industry environment and the variables impacting it, you may wish to consult a domain expert. This expert will help you understand, appreciate and evaluate the intricacies of the product design outsourcing industry. Once you have understood the industry, you may have no need for the expertise. This is where it is convenient to have a part-time consultant or a person who has been engaged for just a specific assignment.