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What if... you could pass responsibility for your application implementation to someone else?
Anyone for blame the consultant?

By editorial@silicon.com

Published: Wednesday 03 July 2002

Most enterprises have been there. Consultants who seem to have been around forever as that expensive ERP or CRM project goes on and on. Answers? Columnist and consultant Dale Vile has a few...

Cost overruns and late delivery have been the hallmark of ERP and CRM implementation projects over the years. The story is all too common: highly paid consultants swagger in confidently pre-contract then stand there a year later explaining why it's now going to take twice as long and cost twice as much. If these guys are such hot shots, how come they consistently underestimate what needs doing so badly?

The cynical might argue consultants are never that motivated to deliver quickly because the longer a project goes on, the higher their fees. Whatever is behind the problem, the general lack of confidence in consultants delivering on time and to budget has led to an increase in the number of fixed price implementations of ERP and CRM applications, for example.

Fixing the price seems to be an ideal way of dealing with the issue. The customer gets its application up and running and the consultant agrees contractually not to go over budget. Indirectly, the time problem is also potentially solved as the consultant has an incentive to deliver quickly to avoid cost overruns eating into their margin.

We all know it's never quite that simple. Consulting firms negotiate hard to constrain scope and work exclusions and exceptions into contracts that leave the door open for chargeable 'extras' at a later date.

Nevertheless, customers still pursue fixed price as there is another perceived benefit of the approach. They feel the pressure to deliver is taken off of them and transferred to the consulting house. The temptation is therefore to think once all the hard negotiating is over, they can put their feet up and simply wait for the system to become available.

So what if customers really did pass responsibility for implementing their ERP or CRM system in this way?

The short answer to this question is that they would get the consultants' interpretation of what they asked for right at the beginning of the project. This might seem like a great result but there are some simple truths that make it otherwise.

First, it is not possible for a consultant to take on board the requirement with 100 per cent accuracy. There will be misunderstandings and ambiguity and if any of these are at a fundamental level, they could have a major impact on the shape and functionality of the final solution.

Also, the customer representatives that put together the specification in the first place are unlikely to have a complete and accurate understanding of the way every business process works already. Some apparently quite trivial detail - the codes and dates Gladys in Logistics writes down in her little blue book, for example - might easily be overlooked, even though it is essential to the integrity and control of an important process.

The reality is the 'passing the buck' mindset that often accompanies fixed price implementations of enterprise applications creates more problems than it solves. This is apparent to anyone who has been in the position of refereeing between angry customers who claim a system does not work and implementation firms insisting they have delivered what was agreed. At this point, the words in the consulting contract are of very little comfort. Even if a customer takes and wins legal action, they have still missed their go live date and failed to get the benefits they were looking for from the implementation. This is very much a lose/lose scenario.

The key to success is for customers to recognise it is their responsibility to implement the new system and the consultant is just a facilitator. All that any of these applications and consultants can do is create an IT systems representation of the business processes the customer wants. Whichever way you cut it, the processes themselves are still, and will remain, the customer's - not the consultant's.

It is also important to appreciate it is not possible to tie down all details pre-contract, either from a time/cost point of view or simply because it is impossible to be sure all relevant information has been gathered. Gladys' little blue book, for example, will naturally surface during the project when a workshop is run to hammer out the details of the delivery scheduling process - but not necessarily before.

A sign of a doomed implementation is a project room full of consultants grumbling that if they don't get answers to their key questions soon, they'll have to guess rather than hold up the project.

A sign of a good implementation is a project room equally populated with customer staff and consultants working in harmony and it is impossible to tell the difference between the two.

It is certainly possible to construct good fixed price agreements provided the implementation firm is experienced and enough work is put in up front. In any fixed price scenario it is critical to ensure expectations are fully aligned in terms of the deliverable, acknowledging that definition of some detail will naturally be deferred until the relevant point in the project. This is where the consultant's experience comes in, as they will be able to anticipate the likely options and plan for them relatively confidently.

Above all, the customer must not treat fixed price agreements as an opportunity to relinquish responsibility. They must remember it is their project and they must allocate a significant amount of time of their most experienced staff to work as part of the implementation team.

The bottom line is that projects succeed despite fixed price contracts, not because of them.

What are your thoughts? Post a Reader Comment below or email editorial@silicon.com to let us know - or say what you'd like Dale to cover in future 'What if...' columns.

**Dale Vile is service director at analyst house Quocirca. His C.V. boasts years at Nortel Networks, Bloor Research, SAP and Sybase and his job now involves working with vendors and users wanting to tap the business benefits of technology. For more information see: http://www.quocirca.com

Past columns:
What if... we didn't have modern communications and IT?
http://www.silicon.com/a53871
What if... everyone always knew where you are?
http://www.silicon.com/a52368
What if... the sales and marketing director was put in charge of IT?
http://www.silicon.com/a51814
What if... 3G was available right now?
http://www.silicon.com/a51156
What if... teachers were replaced by computers?
http://www.silicon.com/a50842