There are only two reasons for hiring consultants. One is to acquire specialist brainpower and the second is to introduce momentum, sometimes of a bracing kind, into an organisation to achieve a particular change.
It sounds simple. Yet misuse and poor management of consultants remains a source of legendary waste and considerable cynicism.
Peter Parry, who teaches how to procure consultancy at the Chartered Institute of Purchasing and Supply, says the ability to analyse the precise nature of an assignment and translate it into a clear statement of roles, responsibilities and desired results is only slowly being learnt. "So many organisations just think they can get someone in and they'll know what they have to do."
It is all the more surprising since companies have been buying consulting services since the late 19th century when Arthur D. Little set up shop in Cambridge, Massachusetts. The late 20th century saw a boom in business contracting as hiring outsiders to get a job done came to be seen as a viable alternative to employing people directly. Even so, consultancy purchasing skills have often been developed via expensive mistakes.
Steve White, programme manager for computer maker Sun Microsystems, recalls employing a company that did not have the worldwide reach Sun needed. "What happened was that they picked us off for different services in different geographies, and we ended up paying more than we should have."
Global companies need to know exactly what they need, who can deliver it and then press for volume discounts, he says. Now, Mr White has a template for global consultancy projects: "One deal, one service, one contract and one close relationship between two people covering the whole world."
PA Consulting, which runs a specialist service rescuing struggling consulting assignments for clients, believes the main cause of the breakdown of relationships is over-ambition.
"The requirements specified are frequently just not deliverable, or not within the timescale," says Andrew Hooke, head of government consulting at PA. Another common problem is confused reporting lines: "Consultants should not be made to answer to different people with conflicting aims."
John Taylor, finance director at Alfred MacAlpine Business Services, the facilities management arm of the construction services company, agrees on the importance of having one central relationship between consultant and client. But he adds that clients need to know some of the consultants' staff who will be doing the work. "We met one firm, where the partner was fantastic, but the level below just did not have the depth of knowledge."
Clients must never hand over problems to be taken away, Mr Taylor advises. "As far as possible, consultants need to be treated as an internal resource assisting with specific objectives, or people will start to say: 'It's just a bunch of consultants imposing something on us.' "
The business of relationship management has become so critical to the consulting industry that some firms have given up on conventional pitching. According to John O'Rourke, operations director with Catalise, a small strategy implementation consultancy, interest in one-off transactions is dwindling in favour of long-term, close, strategic relationship building. "We sometimes spend six months understanding a business before we talk about a particular project."
The best buyers, he says, are often ex-consultants. They impose the clearest boundaries on a project, insist on quantifiable results and understand the margins consultants need to make a job desirable. "I think it is in the scoping of a project that clients get stitched up. If they don't do it tightly, consultants can come along and redefine the boundaries and what comes out at the end is a slideshow." While both sides agree projects must be clearly understood, it is the consultants who are, perhaps surprisingly, keenest on measuring results.
Mr Taylor recalls installing an enterprise resource planning system with the aid of consultants. What he wanted was "an efficient process". But the consultants insisted on performance indicators he felt to be "a little artificial".
Mr O'Rourke says consultants would be doomed without performance indicators. "If you do not have a baseline, you have no way of measuring progress. With the exception of strategy development, pretty well everything else consultants do can be quantified."
Mike Firth, a business development manager with the Welsh Development Agency, says consultants should be paid only for outputs, never for activity. However, he adds, the skills needed towards the end of a project can be subtly different from those bought at the start. "Needs change - you must factor that in when you hire people."
