October 26th, 2007

Consultants hate failure

Posted by Michael Krigsman @ 3:21 pm

Categories: CIO issues, Consulting, Project management, Project strategy, Vendor relationships

Tags: Project, Consultant, Consulting, Failure, Cydney, Outsourcing, It Operations, Business Operations, Outsourcing & Subcontracting, Michael Krigsman

Two recent blog postings (here and here) questioned the value provided by consulting firms, stating that consultants benefit when their clients’ projects fail.

To counter this strong position, I invited Cydney Berry, Managing Director of Delivery Operations for BSG Alliance, to offer a response. Cydney has been in consulting for 20 years and has worked with hundreds of clients.

From Cydney Berry:

There is nothing positive about project failures for consultants.

If a project fails, it ultimately costs the consulting company money either directly or indirectly. All consultants want to build long-term relationships with clients. What happens when a project fails? It jeopardizes that company’s relationship with the client. It does not matter why the project failed, because if a consultant is managing the project, it’s their responsibility and even if they are not, they make a pretty good scapegoat. Project failures are never black and white (consultant vs. company) and attempting to deal with failures as such puts consultants on very shaky ground with clients. It rarely turns out well. And competitors love to amplify failures. Therefore, there is a lot of motivation to get it right.

The direct consequences of project failures can be devastating financially, especially on fixed-fee projects. Even on time and materials projects, the consultant may potentially bill more hours and get more revenue, but the negative business repercussions far outweigh any benefit from the additional revenue. If you factor in all the other outcomes of project delays and failures which indirectly increase costs, such as lower employee morale, opportunity costs, client relationship issues and negative market perception, it’s just not worth it.

What’s the ultimate impact of project failure on a consulting company? No projects, no references, no clients, no viable business. That’s a pretty good motivator to deliver successful projects.