Thanks for the help guys - so what do we do now?

Not all business consultants are worth what they demand for their services.
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The Independent Online
As a rule, management consultants are regarded with even more caution than estate agents and second-hand car dealers. Whether or not you have used consultants in the past, your perception is likely to be along the lines of "well-dressed and expensive".

The reason for this is simple. Typical large consultancies have grand offices and expensive staff. They have to bill on a grand scale to cover their overheads so the primary motivation becomes billing rather than customer service.

One method commonly used by large firms to maximise their revenue is to charge standard rates regardless of skill level. Is it reasonable to expect a "green pea" graduate to command pounds 10,000 per week in consulting fees? How often does the "chief", who was so visible during the sales process, work on the case?

Customers are becoming more aware of the value equation. Before they commit to costs they are looking at what they hope to get in return. The potential return from each of the four main areas of consulting varies, and so too does the possible value.

Computer systems

Growing reliance on systems and the expense of retaining internal development teams makes this a huge and growing market for consultants. But the best possible result is likely to be "break even". If the system works and is delivered on budget and on time the client considers it a success. There is seldom a sense of delight or over-achievement.

All too often, systems are late and over-budget. By the time they have been implemented the rules have changed. Sometimes the first "upgrade" comes at the same time as initial implementation. In the worst cases, the system may have to be expensively scrapped, or the business is forced to conform to the limits that the system imposes on it. To add insult to injury, staff training is often crammed in during the last few weeks. Rather than improving customer service, the new system can easily make it much worse.

Cost cutters

This area of consulting has become a niche in its own right rather than the outcome of a "strategic recommendation". Typically when there is a merger or acquisition the board of the combined organisation wants to illustrate that it has reduced cost by eliminating overheads. This usually comes down to eliminating duplicate functions, whether at head office or regional level. The principle is clear, but the danger is that the wrong people may be taken out at the wrong time.

The customer wants to reduce costs without hurting customer service. It also wants to minimise the effect on morale. This is an area where the consultant can delight the customer. It should be possible to pick and retain the best elements from each of the pre-merger companies so that the whole is greater than the sum of its parts.

Despite that, the results are usually disappointing. The cost- cutting is effective but the best employees often leave, and morale plummets. The first to be cut tend to be the acquired company's management - on the assumption that they are less intelligent than those of the acquirer. Next is the computer system of the acquired company - regardless of how good this system might be. In close succession come the expected staff redundancies and office closures.

This approach results in poor morale and administrative chaos. In two recent instances large insurers undertook short-term cost cutting which led to poorer customer service. By the time the customer became aware of the problem the consultant was causing chaos in another organisation. The consultants presumably feel they are doing their job, but the customer will almost certainly end up disappointed.

Strategists

Strategy consultants are the clever people who work at board level and profess to be able to determine business development strategies. If a company wants to become a European player or compete on the world stage it turns to strategy consultants. They have been key players in almost all FTSE companies for the past 20 years. It is not uncommon for them to get so close to the senior teams that the teams cannot function without them.

That they have survived so long at the behest of the country's most senior management teams is evidence that some strategic consultants are good. However, the waters are becoming muddied. It is no longer acceptable for consultants to just come up with ideas. There has to be a way to implement them in a reasonable amount of time. Without an implementation plan, management is unable to assess the value of the proposals.

Yet this simple message is missed by many consultants and the organisations carrying out the programmes. The implementation stage of any change programme, large or small, is when change management teams determine the success or failure of an initiative.

It doesn't take a genius to work out that "more sales" is good and "less cost" is good and "better quality" is good. These tend to form the mainstay of strategic initiatives. The difficult bit is making it happen.

Change management

The common thread across the issues raised above in the context of IT consultants, cost cutters and strategists is that the implementation stage of any initiative is vital. Systems developed without adequate consideration for training and implementation will not delight the customer. Cost-cutting without adequate consideration for the end customer and internal morale will not delight the customer. Strategic initiatives without a means of implementation will not delight the customer.

Change managers are the backbone of any change initiative. These change teams can come from within the company or from outside. From the consultant's perspective, change management offers a chance to delight the customer. Not only can strategic initiatives be implemented on time but processes can be improved and costs reduced.

The whole thrust of project management is value added. How can we implement this initiative in a way that the end result is optimal for the customer?

Nine times out of 10 the answer lies in mobilising the customer's workers on the grounds that they probably know more than the management team about implementation issues and certainly more than the consultants.

This leads to the customer's staff feeling that they are associated with the change rather than having had it "done to" them. Best of all, the consultant leaves behind an enthusiastic workforce and the likelihood of sustainable change. Ironically, this approach is the cheapest for customers as it uses more of their staff time than their consultant's time.

A lovely tale is told of some work that was almost sold to a national chain of bookmakers. The work was relatively straightforward and the lead consultant confidently predicted a return on investment of six times. The proposal was rejected by the bookmaker. He was uncomfortable with a six-to-one bet.

Yet that sort of return should be standard rather than exceptional. Think about consultants that you have used in the past. Have you ever really tried to quantify the benefits? Would you use them again? If you cannot quantify the benefits the chances are that you have not received value for money. The perception that those consultants have left with you is that they were expensive.

It would be nice to think that we could substitute "well- dressed and great value" for "well-dressed and expensive". But then, if the customer is getting great value, perhaps the suit is less important.

Alastair White is a director of Paradigm Consultants, tel: 0117-930 0455; www.paradigmx.com

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