| Vol. 4, No.6 : September 9, 2003 |
CIOview eUpdate
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Feature Story: Uncovering the True Value of IT Consultants
A line manager admitted that he was confused about his business. His boss sent him to a consulting firm. Upon his return his supervisor asked, "Are you still confused?" At which point he replied "Yes, but at a much higher level." There is no shortage of old adages, which question the value of consulting. In today's tight economy being able to showcase value for a consultant is no laughing matter.
There is no question that consultants routinely improve the financial impact of many IT endeavors, but in which areas and to what extent? CIOview has found that consultants have the largest impact on
- Time to market Hardware costs Software costs
- Training/Knowledge transfer
Time to Market
In these cost conscious times consultant daily rates of $2,000 or more can seem like an extravagance. In fact, the daily rate compared to an average IT salary of less than $70,000 seems on the surface fairly outrageous. However, when simply comparing a consultant on a cost basis many companies
- Fail to consider that when a $70K salary is fully costed it commonly exceeds $150K Cannot ensure that IT personnel are 100% committed to a new project. Despite their best efforts IT staff always retain residual duties that adversely affect their performance on new projects
- Do not take into consideration the cost of not having the new IT facility available. Even a fairly modest new application can yield tens of thousands of dollars per day
Consultants routinely shave between 15% and 40% off the time to market on any project depending upon size and complexity. Savings typically come from a streamlined project management approach which simply permits faster internal decision-making to take place. The other categories of services where consultants routinely shine is reducing the time it takes to complete a
- Requirements Definition -- Consulting companies usually have experience of completing the same projects multiple times. They very often have worked out the common user requirements and are simply looking for info to tweak those specifically for your needs. The result is a 20-75% reduction in the time it takes to complete a requirements definition. Project Schedule -- This is simply the task of making sure the appropriate resources are available at the right time. Consultants save here because, by definition, if a consultant is present it is very likely that senior management buy-in is there as well. This fact alone commonly ensures the appropriate people are available when necessary. Consultants routinely chalk up a 35-50% advantage for this task. Software Installation -- CIOview has found that consultants routinely shine at software installation. Savings of 20% are common at the low-end while in complex situations such as "follow-the-sun" deployments savings can exceed 45%.
- Documentation -- Consultants usually document development as it takes place and then use this documentation as the basic training guide. The time to complete the documentation is usually 20-30% less than internal efforts, and the costs of training experience a similar benefit. These savings also tend to spill over into shortened acceptance testing activities.
Furthermore, consultants normally re-use a much larger amount of existing code and can complete an audit of existing code, particularly mainframe code, in much less time. Part of this efficiency is due to the tools they can access, while part of their success is from having more experience in porting code. This has a multifold effect. It not only reduces the time to market but also significantly limits the amount of new code that has to be written, the number of individuals that need to be involved in the development process, and even the amount of development software and tools that need to be purchased.
Hardware Costs
Consultants commonly can configure fewer hardware resources for new applications than in-house personnel. This is particularly true for the configuring of database applications. This is all made possible largely because consultants are doing this time and time again. In addition, being able to configure machines with fewer processors naturally leads to reduced software costs.
Software Costs
Most software products have a per-processor pricing option. Therefore by reducing the number of processors being used once can experience lower software prices. Having less software and hardware then leads to lower support and maintenance costs.
Support and Maintenance
Support and maintenance costs are largely a function of hardware and software expenditures. Unlike hardware and software, support and maintenance is an ongoing cost and therefore has a much more dramatic impact on your ultimate financial results. It is worth mentioning that the personnel required to support your new environment will be reduced if one can minimize the number of servers required. Once more this is obviously an ongoing cost that it is of paramount importance to minimize.
Training and Knowledge Transfer
Companies that attain the best ROIs routinely are the ones that spend the most in training. Training and knowledge transfer should be treated much more as an investment than a cost. Part of the ability to provide good training is in the ability to transfer knowledge about the process as well as the application, and consultants tend to be highly skilled in transferring knowledge.
There are many projects where consultants shine. CIOview has found their largest impact is for
- Server optimization Directories Web-enabling applications Enterprise applications Electronic content management
- Linux migration
As companies have to do more with less the natural reaction may be to reduce consulting. In reality this is probably the very time many companies can use consultants to change permanently the rut in which they find themselves.
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