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12 Steps to Beat Your Service-Provider Addiction
eastbayted writes "It starts off simply enough: Your company signs on an outside firm to help you finish an important app dev project on deadline. But then they convince you they can be of service in getting other work done at your company, and you agree. Before you know it, your organization has become far too dependent on this team of outsiders on whom you're wasting a ton of money and perhaps not getting much in the way of a return. InfoWorld has devised a 12-step program 'that can help wean you off unhealthy dependencies on service providers, consultants, and outsourcers — without having to check into the Betty Ford Clinic or make a tearful confession on Oprah.'"
http://www.infoworld.com/archives/emailPrint.jsp?R =printThis&A=/article/06/08/28/35FEservices_1.html
The key problem is (apart from the fact that inviting a large consultancy firm into your organisation is like inviting Tom Cruise into your marriage) that closed applications depend on a small skill pool that can be easily turned against you.
For many larger organisations, a straight-forward way to create a competitive market for services is to either open-source major systems, use existing open source applications (which is still difficult), or mandate that any new custom software must be open sourced.
For government departments, especially, this policy would improve quality and cut costs significantly, simply because anyone wishing to offer their skills would have access to the information they need.
My blog
The print version: http://www.infoworld.com/archives/emailPrint.jsp?R =printThis&A=/article/06/08/28/35FEservices_1.html
This comes through incompetence - it is too easy to hire outside help, and not setup an exit strategy (you listening, bush and blair?), when you don't understand the problem and won't ask for help. It is easier to get outside help than realise what you will need in the long term, and start hiring people. Oh, but when you need a new secretary, that gets done within the week.
Too many non-IT (and I am sure this happens in other departments) people are put in to manage IT infrastructure, and because they have in the past, feel the need to be making the important decisions. This is what happens.
And hire someone like IBM, and you will never get rid of them.
Step 5. Seek out expertise. Yes, that's a good reason to bring in external people. You don't have the skills in house and it's not cost/time effective to hire or train your own staff.
Step 8. Hire knowledge you need. Sounds pretty much like step 5 to me.
As for step 12: Give yourself over to a higher power -- your employees.
So, who's going to do their jobs while they "work side by side with the consultants"? Oh, I know. let's get more consultants in.
This article looks like it was written by the very people you're trying to get rid of. They can give you pretty prsentations and high-level bullet points. However, when you look under the covers at the substance. it all disappears.
Use consultants when you have an extraordinary need, if you really have to.
Better to have them do the mundane stuff, and train you own people to do the cutting edge, interesting, high-value work....... Assuming they're good enough.
politicians are like babies' nappies: they should both be changed regularly and for the same reasons
Interestingly the article doesn't point out to the reader that they also need to pay attention to the reasons why the service provider got called in in the first place, any why they needed to stay so long. There's an underlying issue there (be it manpower, organisational ability, wrong executive sponsorship of projects, skills, poor control of scope creep, etc.) The underlying issue needs to be addressed or you will be back in the same situation before you know it.
"tearful confession on Oprah."
But on a positive note, a trip to Oprah could result in an iPod, a digital camera, or a sighting of a crazed Tom Cruise.
Dr. Phil on the otherhand is just an ass.
Hey, careful there! I'm one of those external helpers that a company depends! But I'm neither costly nor incompetent! In any such discussion, it's always helpful to remember that there are often more than one kind of apples: the rotten ones, and the tasty ones!
If a train station is a place where a train stops, what's a workstation?
Incidentally I would think a large percentage of slashdot readers are in outsourcing.
South Australia seems to have an addiction to its EDS contract, ;-)
but there are more students studying IT, hopefully to take jobs
in SA Gov't, to help position itself in an EDS-free place, "any
day now"...
A EDS-story has been cirulating in recent years:
The Adelaide Crows (Aussie Footy Team) needed a web site, &
EDS (reportedly) won the contract, after submitting a bid
which estimated it would take 4+ weeks and cost Au$ 32,000.
In fact, the project took just 2 weeks... Too bad a local
South Aussie web making business couldn't have been the
winner, in this case.
(SA also has a "whole-of-gov't" contract with Microsoft,
that calls for penalties whenever a non-Microsoft server
is added to the gov't N/W in contract's scope, ie, for
the first time (replacing an -old- UNIX server by the
same -old- version of UNIX may not lead to a penalty).)
How do such contracts get written or won?
There are very few palms to be greased & a company like
EDS has a lot of "grease" to offer, or so we suppose...
There is sometimes reasons to outsource; the logic is, thats not a key focus of our business, so why do we have a department that costs us x amout nper year, where as with an oursourced company, the costs go up and down, depending on how much we use them (based on volume).
For example, Progressive Enterprises (which is now owned by Woolworths Australia) outsource their employee payment processing to a company, rather than having a dedicated staff for the job, they have a fixed cost with the company who provides the services, so in the long run its cheaper.
With that being said, however, the problem with IT is that it is different; it is alot more complicated than outsourcing employee payment processing, and if you cock it up, because IT touches every facit of corporate ladder, everyone in the organisation can feel the effects of the cock up - its not a good thing, believe me.
The solution, managers need to realise that once they've entered a realm which they're unsure of, they should ask for advice; talk to their IT personal, and get their feedback, now sure, some will respond negatively, whilst those who are professional will give honest and frank advice on the merits and downside of going down a certain avenue in the quest to save money.
Atleast one with with asking your own IT staff, atleast their assessment of the risk is going to be alot more frank than asking a so-called 'consultant' who has vested interests in half a dozen service providers, who provide him or her with kick backs with each customer he or she forwards.
Many companies get outsourcing wrong, particularly in IT, because they have have managers who don't know how things work, they've never written a line of code or put in a server in their lives and don't seem to have a learning gene inside them. I work in a company who has a contract with a financial company for a major system, and honestly, I think we're the only ones who care sometimes. Of course we're the only ones who knows how the app works. We're certainly the only ones who seems to know what's going on, and if something happens even remotely related in the general area of our system we have all sorts of people in the company instantly hanging on to our apron strings and phoning us up. I suppose it's because many boring companies, like financial ones, just can't attract the right people who can think for themselves - hence they become even more dependant on outsourcers and consultants than they otherwise would be. When you see how many of these companies operate, you can see why.
;-).
This part of the article I always worry about:
You must roll out a major enterprise app on a tight deadline and you don't have the bodies to pull it off. So you borrow some money from next year's budget and hire a global services firm to help.
This never works - ever. Managers of IT projects who don't know much about IT seem to have this incredibly bizarre idea that IT people, programmers and analysts are all interchangeable. You can drop someone from a project two months away from the deadline, bring someone else in who knows nothing about what's going on and the new person will instantly hit the ground running. They also do it again, and again, and again and again. They also equate getting bodies on the project directly with getting it done faster. If something is late and obviously a complete mess it instantly becomes a resource problem. Not that I like calling 'people' 'resources'.
I've seen it time and again. Company gets an outsourcing company and consultants in to develop a system because they don't have the people or the expertise. Said company has no real idea what the requirements are in terms that they can get over to the consultants, they have no real idea exactly what they want these consultants to do and the whole thing becomes a mess with the outsourcing company, quite rightly, creaming off whatever money they can because of the ignorance and lack of clarity from the main company. The company then starts to bitch and whine about the 'leech' outsourcer and the relationship deteriorates. Rinse and repeat the process for the next outsourcing company.
The article can be summed up thus. Fire the useless people in your company and employ good people who can define requirements well, and consequently, can lay it on the line to outside consultants exactly what they want. The consultants will then actually be much happier, because they will know what it is they've got to do - something they probably haven't had much of
I am one of those hated consultants, and I see things pan out three different ways:
1. Never ending project. This one usually seems pretty straight forward and then management keeps extending. When those extensions are because they see the value of me doing more, that's fine. But more often than not, it's because they can't get their own staff to pick up the new challenge. Typically that's a result of under staffing.
2. Scope creep. Essentially I'm brought in for something small, and groups are constantly adding on more tasks. When this is combined with the "never ending project" above, I basically become entrenched. I don't mind if it's interesting work, but all too often, after the first few months, I'm doing things that won't apply to any other customer and have stop growing. When I'm on a project like this for 3 times the original duration, I tend to get antsy and weight the cost to the relationship of not signing the next contract to extend. If the work stays interesting, I'm happy to be paid consulting rates for full time employment.
3. The right way. Not many people successfully do this. The thing these customers have had in common is that the staff wasn't overworked and were truly interesting in learning what I was doing and taking over. Also, the work I'm doing typically involves drawing from experience at my previous clients and vendor training. Any extensions are usually to do something above and beyond the original contract, and not to maintain what I've developed.
It's not a bad thing to be at a customer forever if you are always doing something new and doing it faster and therefore cheaper than their internal staff could have done. It's bad when they keep you there to maintain their environment, and it's bad for both the customer and for the consultant, the good consultants at least.
Try consulting with the Government.
They are under pressure to cut staff and currently most non-DOD (in the US) organizations are feeling a serious crunch. Once they hire someone, it is near to impossible to fire them, hence they acrue a large amount of dead wood. Their hiring process takes months and sometimes years. This is compounded by budget cycles, hiring restrictions, quotas, background checks, and clearances.
For many of these organizations, it is MUCH easier and faster to get a "beltway bandit" to fill in and actually do the work. Some organizations are mainly management staff running pools of contractors (for example NASA). Is this the best use of Tax Payer Money?
Note, I are one of dem contractors.
Why do companies hire consultants? Most of the time, it's because they don't have the skills in house to develop a project. Getting a consultancy firm in is often easier and quicker than trying to hire all the developers you need. Also, it's easier to adapt the number of consultants than to manage your own IT staff when the team size varies.
On the other hand, as long as the consultants are there, the company does not acquire the skills needed to take over the project. Shuffling around consultants is still easier than building up your own staff.
On the third hand, when a consultant stays with the same client for a long time, their market value deteriorates. Their prime asset becomes "knowing the customer". That makes it harder for the consultant to go away.
How can a company deal with this?
WWTTD?
What the hell is service provider addiction? I get the internet addiction thing, but I've never said "I NEED Comcast... none of this other crap will do!!".
I can't be the only one who had to read the story and say "oooooooh".
m0nstr42.blogspot.com
I like the turn of phrase "far too dependant" coupled with "wasting a ton of ...". Perhaps its just me but if you are dependant on something how can you be wasting something else on it? Dependant means you MUST have it, therefore you can't waste anything else to get it. Sort of like wasting time breathing air with oxygen in it.
Companies use consultants for a variety of purposes:
"As far as getting the application to do what you what, your options are very limited. But getting it to do things you don't want, the sky's the limit! and it will be much cheaper..."
FTFA: So instead of hiring a contract programmer, you could use Primavera for Services to identify in-house developers who haven't got a lot on their plates, Seka says. In that way, you could gradually transfer work from an outside source to an inside one, without abruptly ending the relationship with your outsourcer.
Except that "in-house developers who haven't got a lot on their plates" are also generally the ones who are unmotivated, lazy, and much prefer to hide in the cracks while collecting their paycheck. The good ones don't stay idle for long - they'll find work to do if necessary. You can try transferring work to the Wallys, but they just simply won't do it.
How do such contracts get written or won? There are very few palms to be greased & a company like
EDS has a lot of "grease" to offer, or so we suppose...
It may not even be like that. Consider your average consumer, who is boldly manipulated by any marketing agency who can buy air time. Now consider what happens when you take the top people from that agency and put them in the room with an executive. It's like a pack of dogs on fresh meat.
A friend of a friend mine worked for a few years hot-shot company that was negotiating giant contracts with the California government. As the salesmen slipped thing after thing past, he felt an overwhelming urge to get up and move to the other side of the table because it was so unfair. Government bureaucrats had no defense against these sharks. Of course, he sat still until the urge passed. He had payments to make on his Porche, and you can't do that on a government salary...
(I work for one of the largest global outsourcing services companies.)
One thing I don't see mentioned in the comments so far is mention of a very popular reason that companies decide to outsource. It's related to Step 5: seek expertise. Companies outsource because they do not want to be in the IT business! It may make a lot of sense to outsource some or all of IT so that you can focus on the bottom-line: your product or service. You can treat IT like a utility. How many companies run their own power plant?
Better requirements. Better tracking.
Are there really companies out there who bring in consultants and don't write formal requirements (INCLUDING training your staff to take BACK the project at the end) and don't rack that they're getting what the hell they paid for?
Personally I don't think these places need a 12-step plan to save them, they need to die off naturally and let those who know how to manage their resources get the business.
Something stinks of "free Gov'mint money" in this article... defense contractor, something similar...
+++OK ATH
He had payments to make on his Porche, and you can't do that on a government salary...
Of course you can. Just depends on the government position. For instance, the guy that delegated his job to review the contracts to the lower level bureaucrats who ended up not doing the job well.