The nature of the business:

Some straightforward talk

Typically, there are two ways a company can utilize consultants/contractors when implementing packaged software. One, the company will hire an outside systems integrator on a fixed-bid arrangement, with the outside resource taking responsibility for the overall outcome. Or two, the company takes responsibility for the project and augments their existing staff with skilled consultants/contractors on a time and materials basis.

Potential Issues With Project-Based Consulting

  1. Misaligned goals between client and integrator

    2. Most people who have implemented enterprise software within their organization will agree that having an implementation partner (integrator) is critical to success. To be successful, the client and the integrator need to agree on how success is defined and work toward the same goals. When the overall goals of the integrator and client are not in line, success is almost impossible.

    In fixed-bid consulting, the integrator agrees to complete certain tasks and deliver specified outcomes for a fixed price. As part of the contracting process, the scope of the effort and specific responsibilities for each party are clearly defined in writing. Any deviation from this results in a change order, which typically means additional fees and/or changes in the time to deliver or complete the project.

    Clients like fixed-bid consulting because they believe that they are reducing their risk by being able to hold an integrator accountable for the success of the project. Consulting firms will agree to do project-based work because they believe that they can maximize their profits by meeting the minimum requirements of the contract as quickly and cheaply as possible. This is the problem.

    In this situation, the overall goals of the two parties are not in line. The very nature of the relationship is that it isn’t a relationship, because each party is looking out for its own interests. The client wants to get as much work completed as possible for the lowest cost. The consulting firm wants to meet their deliverables as quickly as possible doing the least amount of work. Every hour they spend working on the project decreases their profit margin. If they find that they misjudged the scope of the project, or the effort and cost necessary to complete it, they will use the change order process to nickel-and-dime their client to make up for lost profits.

    If it were possible to cover every scenario or situation that may come up in a project within the defined scope, responsibilities and assumptions in the agreement, this wouldn’t be a problem. But the reality is that since there will always be differing opinions on interpretation, the client and consulting firm will always be at odds with each other. Instead of working together to successfully implement the software, the two parties will end up at disagreeing over what is and isn’t in scope, and what is and isn’t a change order.

  2. Lack of ownership by the client

    3. Typically, a client wants to buy a fixed-bid solution because they do not feel that they can successfully implement the project themselves. This is usually because the client does not have the right functional and technical resources familiar with the product to be implemented, or a lack of experience managing the many aspects of software implementation. In some cases, it may even be to transfer the risk of what is seen to be a dead-end or “doomed to fail” project to an outside party.

    To successfully implement enterprise software, both the client and integrator need to have ownership in the successful outcome of the project. The bottom line: enterprise software cannot be implemented solely by an integrator. The fact is that a client will have to dedicate considerable resources to the effort. And it must be a joint effort between both parties with active participation from the client.

  3. System Integrator Compensated by Software Vendor

    4. System integrators have formal partnerships with the software vendors who compensate the them for selling their software and support licensing. In some cases, this can be of benefit to the client, as an integrator may be willing to discount license fees more than the software vendor. The downside is that because they are compensated on the software sale, three things often happen:

    1. To keep the total cost (software and implementation) competitive, they will often underestimate the total effort needed to fully implement the software in a fixed-bid solution, leading to the change order battle we previously discussed.
    2. They will push the solution even if there are known limitations and gaps that will impact the client.
    3. There is a lack of focus on the long-term relationship. Integrators focus on the initial software sale and doing the minimum to meet their contractual obligations, versus being focused on implementing a sustainable, supportable solution.

    Most companies today want to take a “best of breed” approach to enterprise software, integrating products from multiple vendors. Having an implementation partner who is financially impartial to the chosen solution can be a big benefit in finding and implementing the best solution.

Our Solution

There are pros and cons to each approach, and each has its place. We believe that in most situations, a company is better off maintaining control of its projects and using outside consultants to supplement internal resources instead of a fixed-bid solution. This is based on our many years of experience implementing enterprise software and managing projects both ways. In addition, we do not accept compensation from any software vendor. Our preference in solutions is based on what we’ve found provides the best value to our clients, not which vendor pays us the biggest commission for helping them sell their software.