IT Consultants Sued For Overstating Their Expertise. That’s Like An Iceberg Being Sued For Overstating Its Heat
Written by Evan SchumanA California county government is suing the Deloitte consulting firm because, the lawsuit alleges, it radically overstated its expertise in a major project. What the lawsuit doesn’t consider is the fact of life of consulting. Sending in senior people to convince the client that it has expertise in the topic and then sending in inexperienced, low-cost worker bees to do the actual work—this somehow surprises the people who run Marin County?
Do these people go home and get stunned when a plumber arrives late or painters don’t deliver their bids when promised? We live in a world where IT consultants act like IT consultants and always will.
According to this well-done InformationWeek story about the lawsuit, the litigation claimed that Deloitte “used the County’s project as a training ground to provide its neophyte consultants with public sector SAP experience, at the County’s expense,” that it made false claims “about its deep knowledge of SAP systems” and that “in its two years of work on the project, Deloitte engaged in a fraudulent scheme to ensure that the County would not learn the truth about Deloitte’s pre-contract misrepresentations until Deloitte’s fees had been paid.”
The county perhaps expected Deloitte to volunteer that information before those fees had been paid?
As the oft-quoted fable The Scorpion And The Frog points out, consulting firms act this way because it’s in their nature.
This is an issue with most consulting firms as opposed to individual consultants. Generally, the firms’ executives present their knowledge and expertise relatively accurately. But they’re referring to their top people. Few clients drill down to ask: “What is the specific experience and knowledge of the people who will be assigned to our project, should we sign?”
That’s a Retailer’s Lesson One from this episode: Consulting is about people, not a corporation. You should insist on meeting with the specific people who will be on your team and, critically, list their names in the contract and make the deal conditional on them being on the project.
The counter from the consulting firm will be: “We can’t do that. Our people have to be placed on the projects that make the most sense at the time.” But you need to stand firm: “I was impressed with the comments made by Jane, Bill and Abhijay, and I am comparing my comfort with working with them compared with the people sent by the other firms bidding for this project. Your bid must include the specific people you’ll be using. I’ll compromise with you, though, on the start date. If we have to wait a few more weeks to get the team promised, we’ll agree—in writing—to do so. And if you need to make a substitution, you can show me that person’s background and let me interview him/her. If that person is an acceptable substitute, that’s fine. But we need for you to bid a specific team and stick with them.”
Retailer’s Lesson Two: You don’t use a consulting firm for expertise. You can use a consultant for that, or a specific person at that consulting firm (see above about specifying a person’s name in the contract). But an onsite team from a consulting firm is to do work you don’t want your team bothering to do.
It can be to give you a 65-person programmer boost as you’re rushing to get new apps ready for the holiday season. It can even be to handle all the details of a move in a brand new area (say perhaps mobile or a cross-border program) but still be under the management of your people.
And then there’s Retailer’s Lesson Three: As tempting as it might be, you simply should never outsource your strategy. They can give advice, but if you’re dependent on the consulting group’s strategy to dictate your strategy, it is not going to end well for you or your chain.
-Marc
June 3rd, 2010 at 11:12 am
Great piece and spot on. Lesson 3 is particularly important. One of the reasons that eMarketplaces failed was the outsourcing of strategy to the big consulting firms. Many of those firms focused on an “if you build it they will come” philosophy which added countless applications and significant new functionality to each eMarketplace. This came at the expense of just getting members integrated and comfortable with using the eMarketplace to begin with. With transactions being teh lifeblood of these organizations it was sad to see, in the end, many just had great infrastructures that were standing mostly idle. Those that focused on getting members to use the eMarketplace saw better success – with a handful still in operation today.
Lessons 1 and 2 are very important, too. I’d add that retailers need to make sure those consultants aren’t just starting the project but committed throughout. Sometimes you will start with the team you want and they’ll be substituted one-by-one over the course of the project. If the consultant leaves the consulting firm, that’s one thing, but be cautious letting them leave your project willy-nilly as it takes a long time for a new consultant to get up to speed on a project – and they will never know fully what the original consultant learned from the very beginning.
Finally, verify as best you can the exact experience your consultant might have. In the eMarketplaces we saw the big firms place a person right out of school on an eMarketplace project for 2 or 3 days and then send them to another eMarketplace as a “seasoned, experienced” project manager with lots of knowledge of the technology. The second eMarketplace never knew to ask just how seasoned this “veteran” was.
June 3rd, 2010 at 3:56 pm
Same issues and concerns when engaging PCI assessors. You get the top people pre-sale, then they send you the newbies who do not understand the process, requirements, or your technical environment. And people wonder why “assessed” businesses have been breached…
June 8th, 2010 at 5:43 pm
I say “BRAVO!” to Marin County for calling this out. Sure, companies always use consulting projects to help train newbies — but not at the expense of the client’s project! Would you accept such practices for other non-IT situations? Why does IT consulting think it is something special and that the bait-and-switch is acceptable here?
Let’s be honest here — if one examines the nature of most large IT consulting firms, and especially the remainder of the big accounting firms, they really are nothing more than pyramid schemes. If this happened in any other industry everyone would be screaming for thei heads — so why is it that clients should simply roll over and accept this as “the fact of life” for IT consulting?
June 11th, 2010 at 9:41 pm
There is something to be said about engaging niche or boutique consulting firms to perform specific functions or provide subject matter expertise.
Often “what you see is what you get” – with founders or principals delivering the goods. They have a “skin in the game” and have a greater sence of accountability to the client and their firm.
June 17th, 2010 at 8:18 am
If you do not put your exact requirements for the end product(s) you want and the exact date(s) you are expecting into written form, you are foolish. You need a talented lawyer or contract type who listens and understands exactly what your tech needs are – and puts it down in clear english – and yes – you also need to state just what the consultant loses if he does not deliver – typically payments being withheld. It helps if you delay payments until the product is delivered. Let the consultant decide how to and supply the right expertise so he can be paid.