Getting Clueful: Nine Things CIOs Should Know About Computer Consulting and Contracting

The hired guns of IT explain (in gory detail) the mistakes that enterprise IT managers make, and how to get the most out of the consulting budget.

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It ought to go without saying that enterprises should honor the contracts they sign. Unfortunately, that isn't the case in the real world. Consultants complain about late payments, changes authorized by the client that then demands a refund because the project went over budget, and not paying for something or changing the terms and conditions to suit the client's need of the week.

Late payments during a project—or with an ongoing consulting gig—are a major problem for the service provider. If the client company's accounting department decides to let a consultant's invoice slide, the consultant faces a dilemma: Should he turn off the client's service? When? Ten days late? Probably not. Sixty? Definitely. But what about after 25 days? The point is, if you want good service from your consultant, don't nickel and dime him.

7. There's a relationship between a consulting rate and the individual's value. Any manager wants to hire the best people for the lowest possible cost. Professional consultants, however, want to be paid fairly for their expertise. Sure, you might be able to find a consultant who'll work for pennies, but the professionals insist, you'll get exactly what you pay for.

Usability consultant and Healthcare Chairman for World Usability Day 2007 Theo Mandel says that he's bombarded with requests for usability experts from recruiters yet told the client is unwilling to pay his rate. "If they want an expert in the field, they need to understand they won't get an expert by offering rates appropriate for low- to mid-level skill and experience in the field. If they really want an expert, they need to expect to pay an appropriate rate," he says.

Your own staff is highly differentiated in their skills and compensation; you should view contractors similarly. Christopher Lawson, an Oracle performance consultant, says taking the cheapskate approach is oftentimes the most expensive way to run a project. Lawson recommends hiring the best consultants you can find for complex tasks because they'll work more efficiently and they'll know the right answers off the bat. Finding the most qualified candidates means offering top rates, he adds. It also means that your subject matter experts on staff must be involved in interviewing key candidates for consulting positions to help vet their expertise, since many consultants talk a very good game.

When thinking about consulting rates, keep in mind that the job shops take a hefty percentage off the top. If you pay an independent consultant $75 an hour, you may or may not get someone who is worth $75 an hour. If you pay an agency $100 per hour for a contractor, you are most certainly not getting a $100-an-hour person because of the middlemen's markup. The middlemen obviously make more money when they find a contractor who may not be up for the challenges of the assignment but will take a lower pay rate. The enterprise probably doesn't get a price break.

8. They bill by the hour. Don't expect work for free.

If you want a contractor to spend any time on your behalf, be prepared to pay for it. "Every hour worked is billable," says consultant John Bland. And that includes hours spent working outside the office.

"For every hour that I am visibly working on a project, two to three hours have been spent doing unseen work," says Chris Mague, systems administrator at Danger Inc.

You may not be aware of the investment your consultants make in learning the technical (and not-so-technical) details of your assignment. Rudy Limeback is a SQL consultant who has been self-employed for six years. "An hourly consultant will bill not only for time spent actually producing a deliverable, but also for time spent becoming familiar with the client situation in order to make a recommendation. This includes meetings, e-mails, phone calls and reading of background material. Allow the consultant lots of leeway here," Limeback recommends.

Consultants are typically paid differently than contractors. Where contractors charge by the hour, consultants invoice per project. If you intend to hire a consultant, do not ask her to bill you by the hour, advises Scott Barber, president and chief technologist at PerfTestPlus. "As a senior person with expertise in an area in which you (or your team) lacks expertise, a consultant had better know what they are doing," he says. "As such, it is not their time that you are paying them for, it's their results."

9. Treat 'em like people.

Treat contractors and consultants with respect. That means including them in key meetings, providing them with good equipment and offering them comfortable working conditions.

Some managers intentionally give contractors less-than-ideal working conditions because they want to appease their full-time employees, who are often sensitive to any superior treatment the contractors might get. After all, the contractors are frequently retained to develop new applications on new technology while employees are stuck supporting the old software. To compensate, managers give contractors old computers, stained chairs, rickety desks, tiny workspaces, limited parking facilities and even reduced access to the company cafeteria.

Some clients go too far in the other direction: They treat contractors like employees by commanding them to attend a company picnic (unpaid) or to go on a golf outing. Consultants want to be paid for their time, and they aren't motivated to create lasting business relationships when everyone knows the consulting engagement is temporary.

Of course, you're unlikely to respect consultants if you don't care about your existing employees. All too often, a consultant's opinion is given far more credence than the opinions of people who have been working on the problem for months. For example, at one minicomputer company (which is, thankfully, long gone), I was asked to evaluate the QA system for the firm's many language compilers. I asked the employees for their input, who were happy to share their wish lists. I also did some technical analysis of the process, but that was minor. When I presented the "here's what needs to change" data, the managers acted as though I had discovered fire when the information had been available to them all along. Message to CIOs: If you want to keep the working relationship between your full-time staff and your consulting staff constructive and positive, treat each with respect and realize that some of the genius ideas your consultants are presenting may be coming from your own people.

For many IT shops, consultants and contractors are a fact of life. If you apply these nine suggestions to your business, you're sure to get more productive work from happier people and save money to boot.

Esther Schindler is senior online editor at CIO.com. Before her descent into computer journalism, she supported herself as an IT professional and computer consultant. As a contractor and consultant, she optimized compilers, wrote customized add-ons for accounting applications, was an OS/2 network administrator for a utility company, trained corporate users on desktop publishing systems, and installed far too many operating systems on small business computers. Her first online community position—long before becoming BlogMom for CIO's Advice & Opinion section—was as sysop of the CompuServe Computer Consultant's forum. As a result, she finds it impossible to discuss this topic with brevity.

Copyright © 2007 IDG Communications, Inc.

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