Standish Group: the 21 perils of using consultants

By David Bicknell

We always have a lot of time for the work of the Standish Group in the US on how and why IT projects fail.

The group’s recent Chaos newsletter makes some strong points about the perils of using consultants. (In fact, in all, it identified 21 perils!)

Standish argues that the number one consultancy misdeed is what is describes as “the X-Factor”. The X-Factor is the difference between what the consultant initially bids to win the contract, and what is ultimately delivered to the client. It is sometimes referred to as “low ball pricing.” These terms accurately reflect the standard practice of bidding on the project as defined. However, “there is conscious intent to solicit, promote, and champion requirements changes.” 

Standish Group continues: “The X-Factor will alter the ultimate deliverable from the project as initially defined and increase the cost. The X-Factor cost increase can occur through requirements analysis and validation. At the end of the process, the unselfish consultant provides recommendations for changes and/or additional requirements based upon user input and their own analysis, demonstrating that the project as originally defined and presented will not meet the business needs, which is something they knew all along. 

“The X-Factor final deliverable is not necessarily better. It might be worse. It is guaranteed to be different. Since requirements changes represent more money, the consultant will encourage changes at every opportunity. The end result of it being more billable hours for the consultant. The X-Factor and the other twenty factors message here is caveat emptor or let the buyer beware.

“On the surface, the X-Factor and the other twenty factors could be casually dismissed as justifiable and acceptable risks of doing business. In reality, they are carefully devised and skillfully practiced techniques designed to serve the primary objective of the consultant to maximize their profit.

“The addition of complexity and confusion is the common denominator. This gets manipulated into project expansion, schedule delays, requirements changes and additions, new hardware, new applications, system integration projects, and a “till death do we part” relationship. The consultant’s hooks are in so deep that the cost of terminating the relationship is unaffordable. The consultant will pretend to be a trusted and friendly advisor until the profit well runs dry.

“When a conflict occurs between the client’s interest and the consultant’s profit, the consultant will protect his profit. “Show Me the Money” was the mantra of the consulting world long before it became a signature line in a Hollywood movie. This mercenary depiction of consultants is not an individual or personal indictment. It reflects the nature of the industry. The behaviour pattern and mode of operation is a reaction to the “survival of the fittest” environment.

“Consultants are under enormous pressure to develop the business; and they face intense competition. This breeds their overly aggressive, relentless pursuit of the bottom line. The consultant is neither friend nor enemy; he’s an entrepreneur in business to make a profit.”

Admittedly, this X-Factor scenario will already be familiar to many companies in their dealings with consultants. Over the coming months, Standish says it plans to take a closer look at some of the other key factors to be aware of around using consultants.

Chaos Activity Newsletter

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