Its time to stop this madness! (3)

Its time to stop assuming that the big consultancies actually do it better. They don’t. Relying on a big consultancy to realize the value, as company after company can attest, is madness.

In an attempt to reduce their risk, many organizations are relying on major consultancies, systems implementers or software companies to manage their projects to success. This is a high-risk approach.

Here are two examples that show that major ‘implementation’ firms have no better success rate than any average organization to project delivery. (They just make more money out of it!)

Example 1

A major bank, fed up with its repeated failure to deliver projects successfully decided to outsource much of project delivery to one of the major consultancies.

However, a review of how this relationship was operating found that a conservative estimate of the resultant wasted money from the new arrangements was about $42m pa.

What went wrong?

Firstly, the bank did not fix its project prioritisation processes — so many of the projects getting going and clocking up consultancy fees should not have got past first base. An analysis of just a sample of projects found that just over 50% could not justify their existence.

Secondly, the bank did not standardise or control its work request process — so anyone could request work from the consultancy, which often had a flag-fall of $70,000 just to look at it! The introduction of some primitive controls on who could request work and how, immediately started to reduce the $42m wasted expenditure.

Thirdly, when exploring the other side, the level of competence was seriously lacking. Having a 10-year contract in place, the consultancy outsourcer had reduced the quality of staff allocated to the client substantially and so they were certainly no better than the staff the client had had before outsourcing. Their poor quality was reducing productivity but not the charge-out cost. So, the client was paying more because of the incompetence of the consultants!

This level of incompetence was illustrated by the consultancy turning up 3 days from the implementation of a major installation and informing the client for the first time that the solution did not work, and they did not know how to make it work!

Just one consultancy, one client, an aberration? NO!

Example 2

Let’s look at a retailer who decided to work closely with another big consultancy — this time locking them into penalties and rewards based on their projects’ performance. They had ‘skin in the game’. All this did was pervert the consultancy’s thinking and areas of focus.

The primary performance measure was on time/budget implementation. This the consultancy worked diligently towards to the exclusion of all other considerations. User acceptance, business fit, value delivery considerations were all subsumed under the focus on the delivery of their bonuses.

When user staff pointed out that the systems did not work in business terms, they were told to merely test them against the (consultant-specified) specification, and if they passed that, that was all that was required.
Were their staff ‘better’? As an illustration of the quality of staff provided, the client sacked one person for incompetence and found two weeks later they were on another project now as an employee of the consultancy! (The client had given away its right to veto consultancy staff — bad move.)

So you can’t just ‘buy-in’ the solution to poor project performance.

The point is that this is not unusual. I could write case study after case study illustrating the same points.
What has got to happen to enable us to learn …MAJOR CONSULTANCIES CANNOT BE RELIED UPON TO DELIVER VALUE?

Also, to change a major consultancy, to bring in new ideas is expensive and hard — so once they have an approach that works (ie brings in profitable fees) they stick to it. As a Managing Partner of one of these firms admitted to me, “We don’t really focus on value; we say we do, but we don’t have the mechanisms to do so.”

So, if you want value from your projects you don’t go to one of the major consultancies — you go to a VDM-accredited consultancy and reap the benefits.


© Jed Simms, Australia, 2008 — Can be reproduced with source acknowledgement

To learn how to manage consultants effectively read “Consultants.CON” and “How to manage your consultants” from

Topics: Strategy Execution

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Revision History

First published: Simms, J. (Aug 2008) as "Its Time To Stop This Madness! (3)"

Updated: Chapman, A. (March 2020), Revisions and Corrections