Open Insights 02 – Consulting Apples and Oranges

Heavyweight Internet Newsletter for Tuesday, December 07, 2004

Issue: 2

Welcome to the Heavyweight Internet Group newsletter.

From all of us here at Heavyweight Internet Group we’d like to wish you a

happy and safe holiday season.

Consulting Apples and Oranges

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Consulting is a big word. It carries a lot of meaning in different

business circles, mostly formed by large consulting firms. This

article will dispell some of the generalizations, and help you

find services right for your business needs.

Consultants in general terms, bring specialized help to a firm for

a duration of time, to solve specific business problems. In terms of

technology projects, a team of specialists, or in some cases a single

consultant are hired to build your technology infrastructure, or tune an

existing system.

Large or Boutique?

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When scouting out consulting expertise, the initial reflex is often to

to with a large consulting firm that presumably has a long history, and

excellent experience in your technical area. When hiring a large firm,

however, you’re effectively hiring on the reputation of the firm, not

the individuals who will be sent to work with your company. Experience

and expertise can vary dramatically though, which is one way a smaller

firm can differentiate. For smaller firms, their reputation is built

on the knowledge, experience, and expertise of a small number of

individuals who you will likely be working directly with. Their

business success, and resilience in the marketplace is a direct

testament to what they can achieve for your business.

Additionally the relative size of your account to the firm you hire is

an important factor. If you are a fairly small firm, you will likely

fall

to the bottom of the pile with a larger consulting firm. However with a

small boutique firm, you are one of only a handful of their clients, so

you retain a commanding importance to them.

How about those fees?

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The discussion of fees and costs is always an important one. In real

terms, smaller boutique firms can bring your total costs down

dramatically, but how best to measure that?

Often, because of history and the example of others in the industry, fees

are based around hourly rates. A company for obvious reasons, would like

to calculate the cost of a technology project, and the presumtion is that

an hourly fee is the first step in doing so. But hourly fees take

attention away from the real question of return on investment, and often

lead to apples and oranges comparisons. One consultant may come at

a very inexpensive hourly rate, but take weeks to solve problems.

Another may bill more, but have years of experience and so be able

to spot a familiar problem quickly, and get the same problem solved

in hours or days. Hourly billing also allows for weak project scoping up

front because a consultant won’t be hurt if the project drags out. In

general terms, hourly billing encourages slower fulfillment of

objectives, scope creep, and maximizes the number of discrete physical

activities.

However, focusing on the project itself, defining the scope and outlining

the project requirements up front, and then assigning a total cost to

completion, allows you to really compare two competing solutions. Some

consultants may be reluctant to assign a fixed fee to a project due to

fears of scope creep, and so on. But a fixed fee project will also

force you to iron out details up front, avoiding surprises down the

road. And more importantly it will take everyone’s attention off of hour

by hour details, and focus them instead on the milestones and project as

a whole.

Conclusion

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There are a lot of factors to consider when hiring a consulting firm to

work with you. You’ve heard horror stories of projects gone awry, or

perhaps been on the losing end of such a project. All the more reason to

do your due diligence with various consulting shops, to find the one

which

will fit your needs. Temper the reflex to go with one of the larger

firms, and you may be pleasantly surprised at what you find.