The consultant conundrum

21 Feb 2007

The question of whether to use the big consultant firm or the small, local supplier comes up a lot these days and it usually gets an airing whenever there’s a dust-up about projects that have gone off track with scope creep and escalating costs.

It is not easy to use a broad brush on this issue because there are several factors that come into play in making the decision about whether or not to engage the big players. Many of the issues have more to do with the client organisation than anything else. While there may be an impression that government is all one big super-corporate entity, the reality is that it is more like a collection of different machines clunking along in loose formation and coming under increasing pressure to deliver more with less — and the discussion about the definition of ‘more’ is for another day.

Some public sector organisations don’t deal directly with the public (as individuals or corporates) and they all have different histories. Some organisations haven’t invested too much in technology-based change and therefore have no corporate knowledge about the risky business of managing large-scale change projects. Others are old hands and have established very good reputations as competent procurers of third-party services.

So looking for sameness in their respective approaches may be a little too adventurous. And tarring everyone with the same brush is unfair. There are many good people on the client side. Some also mean well but do not have the experience required to come to deal with the many issues that have to be tackled in major projects. On the supplier side, there are also many good people who have good reputations. And, of course, there are those who give their profession a bad name by rushing into contracts without having done enough of the diligence work on risk assessments and potential for scope creep.

Having once worked in a small Irish company, I can recall that to even bid for government business was a major decision because of the time and money required to go through the long gestation period that such contracts sometimes entail, and the ever-present knowledge that people didn’t tend to get sacked in the public sector for sticking with the more established suppliers (the majority of whom had strong connections with their multinational mother ships).

This is a key issue for people who do not get rewarded for taking risks. While logic would suggest that the issue has more to do with capacity building for risk management, another reality lies in the area of limited resources for building that capacity. People, rather than cash, are perhaps a more significant resource problem for some public service agencies. The drive for reducing the size of the public service, the IT drain that many agencies suffered in the boom years and the increasing emphasis on performance where the focus is more on the core business of the organisation in terms of measurable outputs and impacts are all having an effect.

One of the consequences may therefore be that it is easier for people to outsource the problem to professionals. And, with issues around experience and human resources, the tendency has to be to go for the supplier organisations that can do the most. While there are well-documented cases of very successful relationships between public and private sector organisations, I think it has a lot to do with the fact that those client organisations have very competent people. For that again, there have been some disasters and many of these can be put down to the fact that the client organisations didn’t quite realise what they were getting into (at sufficiently high level at least) or the suppliers didn’t quite realise how complex the problem was — or, indeed, both.

The evidence is very strong now that large-scale projects involving ICT are, in fact, complex transformational change projects requiring co-ordination across business, human resource and technology areas. So getting all worked up about the micro-technical issues while ignoring the other issues (ie the remaining 80pc) is not the way to do it. For the organisation that needs someone to pull all these strands together, it is far more attractive to get a bigger supplier who can boast (sometimes with little justification, perhaps) that it can do the full deal. Of course, there is the option of handing out a separate contract to someone (even a small operator) to oversee the big project.

But smaller suppliers tend to be more niche providers. While they may be very good at developing some of the software components or handling other specific aspects of the project requirements, they may not be great at dealing with the full picture. Unless the client organisation has the confidence and competence to manage small suppliers and make sure that the project doesn’t end up in a game of musical chairs, smaller companies tend not to feature largely in some of the big projects, except as sub-contractors. Sometimes too in this situation they can get squeezed between the client and the main supplier and end up being scapegoated for delays and cost escalation.

One possible avenue is to form a ‘virtual corporation’ to compete with the bigger suppliers. This corporation might also have a shared executive service to assist in bidding for the large projects. What I had in mind was a type of ‘Kerrygold’ brand for ICT players where they could use a common brand of quality for marketing purposes and have some sort of a bonding system to ensure that if one of the partners got into difficulties the consortium could rescue the situation and give a level of confidence to clients looking for comfort, security and assurances of reduced risk. I did suggest this to some ICT industry contacts and I even detected some enthusiasm for the idea. One straight talker, however, said that if you put some of these people into the same room they’d devour each other. Still, you never know.

By Colm Butler