October 18th, 2007
Are your consultants worth it?
IT consulting is a big-bucks proposition where client costs can rack up quickly. Let’s explore a few issues around whether those high fees are “worth it” to the client.
I asked Richard Weissberg, who built and sold a successful consulting company, for his thoughts on the consulting value vs. cost equation:
There are lots of mediocre consultants out there; people whose primary interest is filling their own pockets at the clients’ expense. You should avoid these.
One of out ten consultants is the great one you want. These wise ones solve client problems directly, quickly, and clearly, delivering outrageous value along the way. These are folks you should hire and keep, and they’re worth whatever they charge.
Of course, the big question becomes, “How can you find the great ones?”. High intelligence, skill, and experience are baseline starting points. The really crucial attributes are integrity, flexibility, and wisdom. Unless you’re just lucky, you’ll only find people like this through personal contacts and referrals.
Finally, recognize that great consultants often have all the work they can handle. People of this caliber can be selective about the assignments they accept. They typically seek clients who respect their work, are willing to pay for it, and who are capable of true partnership.
Once you’ve found a consultant, what’s the best way to structure a value-oriented relationship? Dennis Howlett, ZDNet blogger and fellow Enterprise Irregular, gave me this advice:
The industry is used to hourly billing, which brings cost, rather than value, to the client. Many businesses want per-hour billing because they think that’s how to control a contract. It isn’t.
You must assess the value of milestones and price/cost consulting services accordingly. I’m not recommending fixed-price contracts, which are different from value-based arrangements. In a value-based situation, consulting prices are established in reference to value brought to the client by the services.
This is a relatively unusual model in consulting circles, but it’s the best way to align consulting fees with client requirements. In addition, this approach means utility engagements are treated appropriately, while value-add consulting reaps the reward it deserves.
Mechanical billing arrangements, which disconnect consultant cost and client value, are certainly common. Value-based consulting contracts offer a better way to match consulting fees with client goals.
Michael Krigsman is CEO of Asuret, Inc., a software and consulting company dedicated to reducing software implementation failures. Click here to discuss this post with him on Twitter. See his full profile and disclosure of his industry affiliations.
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