Lies, damned lies, and consultants

"There are three kinds of lies: lies, damned lies, and consultants," Benjamin Disraeli might have said, had he been around to observe the modern business world.

What's wrong with consultants? Well, that's more of a book than a ZDNet UK column, but I'll outline here some of the main problems, starting with the obvious though timely observation that tech consultants cosying up to major hardware and software vendors raises serious question marks over the independence of the advice they offer. To put it bluntly, consultants from an IBM-owned consulting division may be far more likely to recommend Big Blue's servers than Sun's.

This raises similar concerns about the alleged abuse of independent advice that we've seen on Wall Street recently -- where investment analysts were far too close to, and often owned by, investment bankers. It is now widely acknowledged that this system needs to be reformed to establish a clear ethical and legal separation of these activities to prevent the kind of alleged abuses we have seen recently.

In light of IBM's PwC takeover, perhaps the technology sector needs a regulator to guarantee the independence of advice it gives to firms about technology infrastructure investments, make spot checks, and publicise abuses.

Wall Street is used to working under a regulatory regime -- albeit one that has been seen to fail. But at least the existence of rules and regulations under which the financial markets operates is a necessity that is widely accepted in principle. The technology sector looks like the Wild West by comparison.

If the technology sector is to avoid charges of abuse of independent advice now is the time to start establishing the rules of independence.

While the regulator is at it, it could stamp down on some of the pernicious practices that give consultants a bad name.

Buyer beware is of course the best protection against getting ripped off by consultants. Here are some scams to look out for.

Be wary of consultants who want to spend weeks and weeks interviewing your staff. Chances are nobody knows more about your business -- its weaknesses, its strengths, the market background -- than you and your key staff. The canny consultant is well aware of this, and will cherry-pick the best ideas from your brightest people and then feed them back to you in a fancy bound report as the independent view of the esteemed consulting firm. How do you think that will make your staff feel? Especially when they find out, as they will, the day rates you have been paying Slime, Slime and Ripoff Inc? Ask yourself two questions: wouldn't it have been better to ask your staff yourself what their best ideas for improving the business were? Why are you more willing to listen to a bunch of suits you don't know than the co-workers you have worked with for years?

If you are not convinced yet, and still tempted to answer that you trust the independent advice of consultants, then consider this. Armed with the best ideas from your brightest people the consultant builds its reputation for being the 'expert' in the market in which you operate. Actually, now it has picked the brains of your brightest staff, it is rather expert. Ultimately the consultant adds knowledge about your business to the intellectual capital it has plundered elsewhere, eventually sharing this 'expertise' with whoever will pay for it -- possibly your nearest competitor.

You might think this happens in mainstream businesses only, that technology consulting it is different, where typically we are dealing with a very defined set of technical challenges. Maybe, and certainly not all consultants are out for the quick kill -- some are genuinely trying to build a long-term relationship based on adding value for your business.

But in addition to some of the basic downsides, common to all businesses employing consultants, there are also some issues unique to the technology sector. Let me illustrate the point with an example -- CRM. Most major CRM installations cost more in consulting time than in software and hardware costs -- usually to iron out the wrinkles in disparate databases and manage the application integration required at the back-end before it is worth switching on the front-end, customer interaction software.

It may be unrealistic to expect a CRM installation for a multinational corporation -- a system that possibly works on several client platforms and in multiple languages, to be a 'shrink-wrapped' plug and play solution. The complexity is very real, and has to be managed. But when the tech sector is generating more revenue from consulting and services than it is from selling hardware and software -- where is the incentive to reduce that complexity?

I wish PwC well under the new management -- in fact I am willing to act as unpaid consultant. My main advice, which I share here freely with all PwC consultants, is to fiercely defend the principle of vendor independence. Sometimes this will mean recommending IBM solutions. That's fine. But if you feel recommending IBM is the right thing to do -- you must now be ready to back it up with clear and honest metrics based on open auditing and bench testing practices.

Final thought: PwC paid a firm of consultants a fat fee to come up with a new name for the company -- and they duly did, the first day of the week, 'Monday'. (TGiM anyone?) The consultants hoped to earn upwards of £70m for the complete rebranding of PwC. Not now they won't, since the new owners IBM has decided, like the Boomtown Rats, that it doesn't like 'Mondays'. Wolff Ollins 'brand consultants' probably don't like it much now either.

To have your say online click on TalkBack and go to the ZDNet UK forums.