A Consultant Responds to '7 Dirty Consultant Tricks'

Unwise practice No. 4: Expecting free, unlimited pre-sales consulting

Author, consultant and Harvard adjunct professor David Maister offers strong advice for professional services firms: Never respond to an RFP unless you have an in-house coach guiding your sales process. While we're less adamant than Maister, there are good reasons not to be just another pretty proposal. The likelihood of an unknown emerging in the process to win a bid is practically nil, and the main competitor is often not another consultancy, but rather no project at all.

We can think of four RFPs we were invited to participate in the last year, of which we submitted one proposal. Three of the four (including the one we submitted) didn't transition to full-scale projects, but instead to either a much less grand task or to no engagement at all. The fourth was awarded to a friend of the firm from a field of 12 applicants.

Companies sometimes issue RFPs as a means to educate themselves about different solutions. They then decide what to do after reading responses, often changing their minds when they see the price tags. We recently declined a small company's request to respond to an RFP, offering instead a few hours of free consulting with our top architect to discuss options and costs. Over the course of the discussion, the CEO acknowledged his company couldn't afford the solution he'd asked for in the RFP -- but in the end asked if we'd respond anyway.

Above and beyond RFPs, it's important for busy consultancies to parcel out their presales wisdom prudently. For example, OpenBI often gets inquiries from .Net shops about open source business intelligence platforms. While we're always willing to have technical discussions with these firms, we know full well that no .Net company we've ever prospected has opted for an OSBI solution. Given that "predictive" model, it's unwise for us to invest too heavily with such opportunities.

Unwise practice No. 5: The handling of confidentiality, IP, and noncompetition terms

While dirty consultant trick No. 4 is all about the consultancy taking intellectual property hostage from customers, my experience in small tech consultancy management over the years has been just the opposite: Prospects sometimes insist on onerous confidentiality, IP, and noncompetition clauses in the contracted Master Services Agreements that hold the consultancy for ransom.

A mutual nondisclosure agreement is the point of departure for all serious customer discussions. This is an innocuous document that very few companies/consultancies balk at signing. One recent prospect, though, asked what "secrets" we needed to protect. The answer: Plenty. We don't want project plans embedded in SOWs to be shared with other consultancies, just as customer product plans are not to be seen by their competitors. Also, consulting resumes and rate structures are proprietary, not to be used in negotiations with competitors.

More recently, attorneys negotiating for a customer proposed a work-for-hire clause in the contract, acknowledging that the customer owns the work products produced -- fine and good. In addition, though, they tried to stipulate that OpenBI could not reuse even the technical concepts we developed to implement the products. In effect, we would be prohibited from introducing our own algorithms and other technical IP, and we'd be forced to lobotomize all staffed resources after the project ended. A sensible project sponsor intervened a few weeks later, supporting language that allowed both parties to protect their interests.

Four years ago, a startup customer insisted on a two-year noncompete with companies in its broad health care analytics sector for the prospect of a $20,000 engagement. We ended up not collaborating.

Over the years, we've repeatedly found that if a prospect doesn't respect the IP and confidentiality rights of the services firm, it's a strong sign they'll be difficult to deal with in the unavoidable gray areas of project management. The sales, negotiation, and contracting process that leads to an engagement is just as much an interview by the consultancy as it is of the consultancy.

Unwise practice No. 6: Involving consultants in internal political battles

In almost all of OpenBI's engagements, we work with both IT and the business. On some occasions, the relationship between business and IT is strained, and that ill will imposes itself on projects, often leading to avoidable costs for the customer. While it's perfectly acceptable to use consultants to help find common ground between warring parties, it's not acceptable to trot them out as mouthpieces for personal agendas.

One project we engaged in a few years ago was repeatedly off-tracked by political bickering between business and IT. While the project was spinning its wheels, the consultant meter continued to run. The engagement was salvaged, fortunately, by a senior executive who used our project insights to persuade IT and business to play nice.

The worst case: Consultant abuse

Thankfully, the numbers are small, but certain customers should be avoided like the plague by consultancies. I can think of three problem customers over the last 20 years that had a common, pernicious modus operandi.

The MSA and SOW negotiations with each were a breeze. The problem, discovered later, was that the customers had no intent of abiding by the negotiated contractual terms. About 40 days after the start of net-30 payment agreements, these companies would respond to payment inquiries, claiming, "It's been submitted," or "Sorry, so and so is on vacation. We'll take care of it." After 60 days, they'd begin to offer a rationale for unpaid bills by voicing dissatisfaction: "We're not happy with the work of so and so and would like consideration on invoicing. If you do that, I can push payment through."

Those disreputable companies fully expected small consultancies to capitulate, and it had the leverage of unpaid bills on their side. I'm now just as wary of easy contract negotiations as I am of difficult ones. I'm also adamant that new customers, in particular, abide by contractual payment terms.

But deliberate misconduct is rare. In the end, building a successful consumer/consulting relationship that minimizes the risks of dirty tricks and annoyances shouldn't be too difficult. Customers should look for consultancies that are capable and experienced in their project areas and check references carefully. They should be tough-but-fair negotiators, seeking to minimize project risk as they decide the terms of engagement. They should commit their own staff to sharing management of the project effort, making joint modifications to plans as the engagement evolves. They should be comfortable with the project team before the contracts are finalized.

Most of all, both customers and consultancies should acknowledge that a successful consulting relationship involves trust, fairness, and a mutually agreed-upon value proposition -- a true partnership.

This article, "A consultant responds to '7 dirty consultant tricks'," originally appeared at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

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