Seven Dirty Consultant Tricks (and How to Avoid Them)
Is your consultant strongly recommending a product or service from a third party? They may be getting a cut of any deal or incentives on the back end -- a nice second or third income on top of what you're already paying.
"Always make sure that you know how the consultant is getting paid so you understand their incentives," says Jeffrey Bolden, managing partner for Blue Lotus SIDC. "A consultant can be making money via billable hours as well as making commissions on products or bringing in other vendors. We avoid that conflict of interest by providing our clients with hardware or software at our cost, and bill just for the time of the engagement."
For example, a consulting firm may recommend an outsourced solution that will save your company money, but not nearly as much as if you contracted with the outsourcer directly, says Chris Smith, partner at strategy consulting firm ARRYVE. The consultants pocket the difference, and the client is never the wiser.
"The reality is that many big IT consulting firms are getting 100 to 300 percent margins on the outsourced resources they are providing," he says. "Sure, the client is getting cost savings, but this is probably one of the bigger areas where IT consulting firms are extracting money out of their clients."
The fix: Since you're unlikely to find out how big a cut your consulting firm is getting from the outsourcer, says Smith, your best bet is to ask for competitive bids, then negotiate a better price with the firm you want to go with.
You need a shovel, they'll sell you an earth mover. Want to manage your contacts? They'll convince you an enterprise-level turnkey CRM system is the way to go. Why? Because nobody makes money selling shovels and contact managers.
"My personal 'favorite' dirty trick is IT consultants who sell the client on a complex customized solution that takes months of time to implement when the latest out-of-the-box product would cover 80 percent of the functionality and 110 percent of what the client actually needs," says Mark Mueller-Eberstein, CEO of Adgetec, a consulting, coaching, and mentoring company. "With the current speed of technical innovation, most 'customized' solutions are outdated the time they are implemented anyway."
Eberstein points to a large international bank that hired consultants to create a content creation workflow for its country reports. The consultants said it would take six months to build an automated system. Using Microsoft SharePoint, the bank developed and rolled out its own system in two days.
Because many IT shops are paid by the applications and licenses they sell, their goal is to activate as many applications as possible, says Chris Stephenson, co-founder of ARRYVE.
"In a recent RFP meeting for our client, I asked the consultant's IT sales rep if we could automatically send quotes to clients from a central email," says Stephenson. "His response was to highlight a more expensive application in the CRM software that allowed chatter with clients, centralized all communications into one portal, used Twitter (really), and did a whole bunch of other great things. When he finished, I repeated my questions, and after a pause, he said, 'No, it is unable to do that'."
The fix: Be wary if the sales team is pitching great applications rather than focusing on your business requirements, says Stephenson. The applications often cost more than the feature you're requesting and sometimes miss the business problem completely.
No matter what problem you have, the consultant knows the solution. And if they don't know the solution, they'll pretend they do anyway. Faux expertise has brought down more than a few IT projects, usually after megabucks have been spent.
One of the worst dirty tricks is when consultants take on projects they're unqualified to handle, says Innovator LLC's Steven Lowe. Unfortunately this is often exacerbated by clients that assign committees of people with no understanding of the problem to oversee the consultant.
"When this situation occurs by accident, I call it the 'empty suit' problem," says Lowe. "When it occurs on purpose, I call it the 'vampire' problem. When the consultant is an empty suit, success cannot be delivered. Instead, the consultant attempts to prolong the project until the budget and participants are exhausted, or the consultant magically acquires the necessary expertise. If the consultant goes into the commitment knowing that success is impossible, the empty suit problem becomes the vampire problem."
But having empty suits on the client side can cause projects to grind to a halt due to the inability to make the right decisions, adds Lowe.
"Huge sums of money can be wasted before the project is killed," he says. "When both sides are empty suits, the project can go on so long that it drains the life out of the company."
The fix: Drive a stake into it. Create a reasonable but short deadline for a definitive action, result, or concrete plan to limit the damage and see where you stand, says Lowe.
"A measurable result by a specific date can be used as a stake in the ground to provide an anchor for the project," he says. "This anchor can serve as a short-term target or goal, a feasibility test for a proposed solution, a competency test of those involved, a visible measure of progress, and a deterrent to 'analysis paralysis'."
And if you don't?
"A committee with no incentive or deadline to act and little technical qualification may be quite content to bleed money to vampires until the original issue either goes away on its own or becomes someone else's problem."