Screwing the customer: Tales from the crazy consultant file

Screwing the customer: Tales from the crazy consultant file

Summary: There are consultants out there who will take advantage of the client. Here are some tips to protect yourself.

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The screw that screws the customer
Photo credit: "The screw that screws the customer" by Michael Krigsman

After all this time blogging about CIO issues and the world of IT, I am always amazed by the antics of some consultants. Yesterday, I heard wild stories from two different people.

In the first case, an enterprise buyer told me about his company's ERP implementation. They bought on-premise software from a reseller but the project isn't going too well. Although the company is small, with about 25 people, the CEO has fine-tuned their business model so customers always pay in advance of work being performed; in other words, this little business is a multi-million dollar money machine. The company is stable and happy, and does not plan on significant business change or growth. Unfortunately, these folks can't absorb the business process changes created by their new ERP system. As a result, the implementation is late and distracting for the owner.

Although this firm bought software from a third-party reseller, they want the software vendor to find another implementation services company. Unfortunately, the software vendor has no relationship with this buyer -- the software was purchased elsewhere and the company chose its own consultants.

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This buyer has no IT department, little experience with computers, and no appetite for change. They were sold software that poorly fits their needs and are now completely dependent on the consulting company, which has taken advantage of that position of power.  In other words, the buyer has outsourced control, leverage, and judgment to an unworthy consulting firm. Translation - the customer is screwed.

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Aside from everything else, these folks would be perfect candidates for a cloud-based solution. A small company with no IT staff and straightforward requirements should be in the cloud. Translation - the customer is double screwed.

The second case is even worse. A small consulting organization has a multi-million dollar change management contract with a large state agency. Partially through the project, the consulting company unilaterally decided to shift its focus to advising on tools and methodologies, rather than provide open-ended change management support. 

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Eventually, the customer balked and sent the consulting firm a strongly worded letter that came just short of terminating the relationship. Recognizing the time and expense the state must endure to end the contract and hire replacements, the consultants responded with a large invoice and veiled threats of legal action. Meanwhile, the agency hiring manager, who reports just steps away from the governor, has few good options since any choices involve delays and additional expense. Translation - this customer is also screwed.

ANALYSIS AND STRATEGY

Both enterprise buyers made the fundamental error of handing control of a mission critical project to external consultants.

In the first instance, an inexperienced buyer purchased the wrong software and then outsourced virtually all system and technical knowledge to the software implementers. Given the customer's lack of experience, the consultants have this buyer as a hostage for life (or until the customer replaces the consulting firm).

In the second case, the consultants performed a bait and switch, unilaterally deciding to change strategies without giving the customer any options or choices. 

The common denominator in both situations is consultants who possess too much real (or perceived) power over the client. Although the best consultants always remember they are trusted advisors, unethical ones use their position to take advantage of the customer's weakness. The worst consultants intentionally manipulate the client into a position of dependency, by taking advantage of the customer's lack of knowledge. 

The signal challenge for enterprise buyers is hiring trustworthy consultants who will place the client's needs first. The difficult in accomplishing this is compounded when the customer has little experience in the subject area. To avoid these problems, buyers should dig into the consultant's references and look for subtle cues about the relationship with previous clients; ask for references on projects that did not end perfectly, to gain insight into the consultant's commitment under pressure. In addition, be sensitive to early warning signs of trouble; if something feels wrong on your project, get it out into the open, and have a discussion with your consultants. Its far better to raise awkward issues early than to wait until the blossom into huge problems.

Trust is the currency of relationship and value. Find ways to develop a relationship of trust with your consultants and keep a sensitive eye for things that do not look or feel right. In the end, the project is your responsibility to manage; although consultants can support your efforts, do not allow external third parties to become your de facto boss.

Please share your experience and advice on dealing with consultants!

Topics: CXO, Enterprise Software

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10 comments
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  • Never happens with MCS...

    I gladly pay for the privilege of having MCS consultants crawling all over my sprawling Windows empire. In matter of fact, I often times funnel additional dollars to them and then receive some of it back in Amex gift cards.
    Mike Cox
    • Nice one.

      Nice one.

      Off topic - what kind of imbecile came up with new ZDNet's "anti-spam" system?
      Please stand up and hold a bullseye to your chest.
      vgrig
    • 7 out of 10

      Not enough sting, and minimal mention of MCS consultants. Missed you Mike :)
      ayahdikjah
    • Welcome back!

      Sorry to say, the "receive some of it back", part seems to happen a good deal. At the very least, consultants tend to be focused on serving the executive authorizing the work, rather than the company as a whole.

      9.0
      John L. Ries
  • SAP Perspective

    In your first case it appears that the customer made many errors in judgement and unfortunately (but not surprising) is now in a tough situation and in the second case you mention "consultants performed a bait and switch, unilaterally deciding to change strategies without giving the customer any options or choices" but how and why did they allow this to occur. The consultants work for the CLIENT and the CLIENT pays the bills so there should be no mistake on the dynamics of that relationship.

    That said I has seen very poor consulting be a very big problem and written about it, from a SAP perspective, on several occasions. It is very important that customers are aware on the front end and constantly review the situation.

    Here are a few of the articles

    Seven Tips to ensure you hire the Right Consultant
    http://scn.sap.com/community/erp/hcm/blog/2011/02/24/seven-tips-to-ensure-you-hire-the-right-consultant

    Signs you Should Not Trust your SAP Consultant
    http://scn.sap.com/community/erp/hcm/blog/2012/03/12/signs-you-should-not-trust-your-sap-consultant

    SAP Consulting Fraud - Disturbing Example
    http://scn.sap.com/community/career-center/blog/2012/04/09/sap-consulting-fraud--disturbing-example
    pazahanick@...
  • What does the contract say?

    In the second case, if the state agency believes that its consultant is operating to a different scope, what does the contract say? If the contract has defined the scope, then management should be enforcing it. If it hasn't defined the scope, then why not?
    proops
  • What does the contract say?

    In the second case, if the state agency believes that its consultant is operating to a different scope, what does the contract say? If the contract has defined the scope, then management should be enforcing it. If it hasn't defined the scope, then why not?
    proops
  • Generally, the Contract is Not the Issue

    Often times, it’s not that the client has no contract rights, it’s that handling the dispute is a big disruption and even bigger disruption if they have to replace the consulting company.

    Even for companies, there are political costs associated with delaying let alone halting a project for a significant duration when major events are relying on working systems being in place. If the client is a government agency, the political ramifications are much worse, especially in these days of tight money and the no-government movement.
    elizab
    • That's a fair point, but...

      It's not entirely what I meant. I appreciate that dealing with these issues is disruptive, but how disruptive is it compared to paying for a service that you don't want?

      It seems that the agency has just rolled over for its supplier. What it should be doing is managing the issue, and when the supplier starts to get litigious, refer to a clear contract. If the contract isn't clear, then it's impossible to manage the issue. But if the contract is clear, then management should be addressing the problem rather than let it run on.

      In fact, if I were a US taxpayer who contributed to that agency, I'd be more annoyed that they were wasting money on something that they didn't want than I would be if they were trying to resolve the issue. I've worked with a lot of central government agencies in the UK and I've often seen them paralysed by the fear of negative publicity or audit, rather than pro-actively trying to resolve issues.

      Dealing with suppliers and consultants should be a partnership, but when the supplier stops acting in the interests of the client, they need to be told, pointed in the right direction and, if they fail to adapt, shown the door.
      proops
  • Wasted $ is not really where disruption lies

    Paying for a service that you did not contract for is not disruptive as much as it’s a waste of money.

    I’ve seen companies go through the following thought process:

    I can’t afford to halt the project to deal with a problematic vendor because we’ll fall off the schedule.

    X, Y, and Z systems are depending on said systems being in place because the sponsors have staked their reputations on it.

    Although the contract is on our side, it will chew up too much time and money to a) enforce our rights under the contract; b) litigate the vendor; c) come to terms. After all is said and done, we will still need to have xxxx work done but we’ll be further behind, with a pissed off vendor with whom we need to work with.

    Having said that, I agree, that you need to have a good working relationship with your advisors and vendors. If the vendor or advisor is not acting in your best interest, you are better off with out them. But I recognize that the customer is stuck with looking for replacement vendors that they can trust.
    And there lies the rub--- the vendor having your best interest at heart.
    elizab