s legal department
before it is signed.
§ A contract offered by a consulting organization may provide too much protection for the consulting firm at the potential expense of a customer. A contract may be ambiguous about responsibility for performance. When a contract uses vague terms, rather than precise, concrete terms about the level of work, quality, responsibility, and support, a customer must be cautious. Customers have found, to their dismay, that when things go wrong, the responsibility of the consulting firm, as outlined in the contract, is limited.
§ The financial terms of the assignment must be clearly outlined in the contract.
The arrangement may be for time and materials, or it may be a fixed bid. In either event, items such as overtime, travel expenses, and other costs should be agreed upon in writing.
§ Although it may seem obvious, one of the items that the customer should pay attention to is that of having the workspace for the consultants ready for them before they arrive. It does happen that consultants show up and they do not have the hardware needed to begin work. Having the consultants sitting idle for several days while the hardware issues are being resolved is an unnecessary expense.
§ As is the case with any transaction involving legal liability, IT managers must consult an attorney.
RESPONSIBILITIES OF CONSULTANTS
Consulting assignments should be built on strong relationships between customers and consulting firms. A consultant’
s objective is to obtain the business. This should
be done on the basis of values that can be very clearly articulated. Consultants are responsible to customers for the following:
§ Taking the time and effort to clearly understand the needs of the customer
§ Honestly evaluating their ability to provide the caliber of people required to successfully complete a project
§ Clearly and accurately reporting, in a timely manner, to customers on the status of a project
§ Candidly raising issues of concern
§ Making certain that their employees have strong work ethics and provide a fair value for their expense to customers
§ Ensuring that customer expectations are met and, when possible, exceeding those expectations
The list of responsibilities is considerably longer for customers than for consultants because customers bear a heavier burden for a project’
s outcome. Customers must
keep in mind that consultants deal with issues that arise everyday. So, in the event of difficulty, consultants are going, de facto, to be in a stronger position.
MANAGING AN ASSIGNMENT
Most consulting firms are ethical and have the best interests of customers as their primary concern, but some firms do not hold these values. When management at a consulting firm changes, the firm’
s former values may change because they no
longer fit the goals of the new management.
Because consultants are brought in to do work that, for whatever reason, is beyond the capability of the customer, consultants enjoy an immediate advantage over their customers. Customers may be vulnerable if their organization does not have experience in managing large IT projects. It may be that the decision has been made to move to a new technology about which no one in the customer’
s organization has
any experience. It may be that the level of pressure is such within the organization that no one pays appropriate attention to the work of the consultants. In any situation where the consultants have a clear advantage, the possibility exists that the advantage may be used to the detriment of the customer.
Customers have to guard against being in a position where consultants are the only ones with knowledge about how to maintain the applications once the consultants have developed them. Examples exist of situations where consultants have been at a customer site in excess of five years, doing essentially the same work, because none of the customer’
s employees understand how the system works. Falling into such a situation is a failure on the part of IT management.
If consultants fulfill their obligations to a project but do not transfer project knowledge to members of the customer’
s staff, the consultants have not completed
their assignment. Any consulting assignment should include a transfer of knowledge from consultants to employees of the customer.
Sometimes, consultants are assigned to handle all cutting-edge or advance technology and members of the IT staff are given more mundane work. This arrangement is not advisable. A better approach is to find a way to involve members of IT in areas of a project where they can develop new skills and gain experience. A major reason that IT employees leave an organization is because they are not given opportunities to develop new experience and skills. By allowing only consultants to gain experience with new technology, IT management may inadvertently make their personnel look for these opportunities with other organizations.
THIRD-PARTY ASSISTANCE
One way to mitigate concern about managing consultants is hiring a third-party expert, who accepts responsibility to manage the consultants. This approach can be a sound business move. Nevertheless, responsibility for project outcome still rests with the customer. Such an expert must be able to deal effectively with consultants and should be compensated on the basis of the consultant’
s performance.
Although using a third-party manager may be viewed as additional overhead, it can substantially benefit a project. Because consultants are hired to provide skills that the customer does not possess, IT management may have difficulty in determining whether the consultants are delivering what they are contracted to deliver. A third-party expert can make this determination and judge the quality of the consultants’
work.
A third-party manager is in an excellent position to verify that project knowledge transfers from consultants to members of the IT staff. Completing that transfer should be the responsibility of a third-party manager, who should develop a plan for this transfer and present the plan to IT management for approval. A third party can also bring a higher level of objectivity to the issues that are certain to arise; as the work moves forward, it will not have a particular turf to defend.
Using a third-party manager does not have to complicate IT’
s management of a
project. IT managers should find someone who has the required experience and have that person serve as liaison between the customer and the consulting organization.
An expert can be valuable to IT management by simply posing appropriate questions about the project to consultants. Raising these questions forces consultants to use care in providing answers. A third party can also help level the playing field between the customer and the consulting organization.
A third-party arrangement does not have to be full-time. A third party can conduct periodic reviews. When such an assignment is not full-time, a customer and the third-party manager must be specific about meeting with consultants. Although having the third party available on a full-time basis is more effective, one working part-time can also considerably benefit a project.
CONCLUSION
Many IT consulting ventures work out with both parties pleased at project’
s end. No
matter what the outcome may be, however, final responsibility must be borne by the IT customer. Ideally, the process should be seen as a partnership where IT and the consultants, working together, provide solutions. When the process works well, it is possible to deliver results that exceed expectations.
From the start of a project, IT and consultants must agree on a set of deliverables due at the project’
s end. There also has to be agreement about the deliverable’
s
level of quality. From the beginning, a strong partnership must be developed between the IT organization and the consulting group. The partnership must be focused on the customer’
s needs.
Capable consultants, working on clear assignments, strongly managed by the customer, can yield a good return on the customer’
s investment. A lack of strong
consultant management, or allowing hostility to arise between members of the IT
department and the consultants, can quickly create an environment for failure.
Chapter 29: How to Manage Outsourcing for
Best Results
Douglas B. Hoyt
OVERVIEW
Outsourcing is often compared to a marriage. Each is a relationship in which both sides can benefit substantially. Yet both relationships have inevitable friction and conflicts. The key to success in both affiliations is for the parties to keep in mind the interests and desires of the other, and to try to please each other, and to resolve conflicts in a civilized way. The one difference is that marriages are intended to continue “until death do us part,” whereas all outsourcing contracts have defined termination dates, which of course can be extended.
This chapter discusses the plans and actions computer operations managers, and others, must take to make an outsourcing relationship work smoothly and with maximum benefits for the client, as well as for the service vendor. There are always difficulties in these relationships — conflicts, obstacles, misunderstandings, and changed circumstances. These types of difficulties must be anticipated and approaches created for coping with them successfully. With careful planning and management, outsourcing can be a source of savings and other competitive advantages; some sloppily planned and managed outsourcing have been disasters.