High-priced, open-ended consulting deals often fuel enterprise software implementation failures.
As a result, a trend has developed among consulting companies and software vendors to package services into pre-defined, discrete units, decreasing risk and lowering costs for the customer. As examples, see here (pre-configured content shipping with software), here (packaged services), and here (more packaged services).
Pertinent to this subject, Jason Busch at SpendMatters writes, “In the consulting and software worlds, the lure of the billable hour or high margin application deals has traditionally trumped a content- or information-based sale. But perhaps things are changing.” Jason goes on to describe a newly-announced partnership between software company Procuri and consulting company AT Kearney Procurement Solutions.
Procuri will include AT Kearney’s Market Solutions tool content as part of it’s software product offering. The Solutions tool includes “templates and guides for RFPs and auctions, and supply market reports and insights for a broad range of sourceable goods and services.” In other words, AT Kearney has packaged its knowledge into productized form, which can then be leveraged and reused across multiple client engagements.
Of course, there is a place for open-ended consulting arrangements, especially on complex and strategic projects taking place in a changing, dynamic environment. However, open billing arrangements potentially create an incentive for the vendor to rack up hours beyond what is required to get the job done. In contrast, fixed-fee engagements tend to shift project risk away from the customer to the consultant. In many cases, this risk shifting forces the vendor to be more efficient.
For customers, the allure is obvious: lower project risk combined with lower consulting costs.