Introduction to Business

Information Systems and IT

Consulting
Vinit Thakur
 2

What is Consulting?
• What is a consultant?
▫ An advisor who is in a position to have some
influence over an individual, a group, or an
organization, but who has no direct power to
make changes or implement programs.
 3

Areas of Business Consulting

 4

General Types of IT Consulting

 5

Why need a consultant

 6

How Potential Clients Analyze

Consultants for Hire
1.Can you add something to company’s total output?
2.Will your expertise bring company any closer to its
goals?
3.Can you make company work more effectively?
4.Will you save company time and money?
5.Within budget, can you do a comprehensive and
effective job?
 7

What Makes an Outstanding

Consultant?
1.Acceptability
▫ Ability to get along with client
▫ Not so much what you say but how you say
2.Ability to diagnose problems
▫ One of most significant criteria
3.Ability to find solutions
▫ After diagnosis, suggest right course of action
 8
What Makes an Outstanding
Consultant?
4.Technical expertise and knowledge
¬Technical expertise in a field is important
¬Expertise comes from education, experience,
personal skills
5.Communication skills
¬Superior communication (written/oral)

 9
What Makes an Outstanding
Consultant?
6.Marketing and selling abilities
¬A good marketer and a good salesperson
¬Sell an intangible product
7.Management skills
¬Ability to manage a business
¬Ability to run projects
 10

Minimum Six-Figure Consultant

1.Eat, drink, and breathe customer service
2.Keep up with latest changes in your field of
expertise
3.Develop ability to identify problems quickly
4.Look for creative ways to solve problems
5.Use excellent communications skills
 11

Minimum Six-Figure Consultant

6.Be 100% confident that you will succeed
7.Be professional in everything you do
8.Be a people person
9.Be the best manager you can be
10.Give clients more than they expect
 12

Lecture 2
 13

Critical Skills for Consultants

• Interpersonal
• Consulting
• Technical
•

Interpersonal

Consulting Technical
 14

Before that….
Knowledge Acquisition Model
Reflecting back Probing Informing Recommending Instructing

Coach Teach
Facilitate Learn
Counsel
AHA!
KK School

Know we Know

Know we
Don't Know DKK KDK Don't Know
we Know
DKDK

Don't Know
we Don't Know
Experience Awareness
 15

Interpersonal Skills
• Listening
• Powerful questioning
• Empathy
• Articulating what’s going on
• Acknowledgement
• Intuition
ACTIVE LISTENING…
• is one of the most important skills of an
emotionally intelligent consultant


• builds trust


• encourages positive problem-solving



• takes practice


•
 Active Listening:
 Confirming Your Understanding


Step 1
 Use a confirming statement


Step 2
 Summarize key facts


Step 3
 Ask if your understanding is correct


Step 4
 Clarify misunderstandings (if necessary)
 Active listening:
Non- verbal
1.Eye contact
2.
3.*Pause/Silence
4.
5.Facial expressions that indicate you are
 present & focused


4. Body language



Discovering your negative listening habits
• Purpose:
 to help you gain self-awareness regarding
negative listening patterns that you may have
developed over the years.


 By being aware of them, you will be in a

position to do something about them
The Faker
• All the outward signs are there: nodding, making
eye contact, and giving the occasional uh huh.
However, the faker isn’t concentrating on the
speaker. His mind is elsewhere.

Lynn, Adele. B.. The Emotional Intelligence Activity Book p.69 ©2002 HRD Press
The Interrupter
• The interrupter doesn’t allow the speaker to finish
and doesn’t ask clarifying questions or seek
more information from the speaker. He’s too
anxious to speak his words and shows little
concern for the speaker.

Lynn, Adele. B.. The Emotional Intelligence Activity Book p.69 ©2002 HRD Press
The Intellectual or Logical Listener
• This person is always trying to interpret what the
speaker is saying and why. He is judging the
speaker’s words and trying to fit them into the
logic box. He rarely asks about the underlying
feeling or emotion attached to a message.

Lynn, Adele. B.. The Emotional Intelligence Activity Book p.69 ©2002 HRD Press
The Happy Hooker

• The happy hooker uses the speaker’s words only

as a way to get to his message. When the
speaker says something, and frankly, it could
be anything, the happy hooker steals the focus
and then changes to this own point of view,
opinion, story, or facts. Favorite hooker lines
are, “Oh, that’s nothing, here’s what happened
to me…” “I remember when I was…”

Lynn, Adele. B.. The Emotional Intelligence Activity Book p.69 ©2002 HRD Press
The Rebuttal Maker
• This listener only listens long enough to form a
rebuttal. His point is to use the speaker’s words
against him. At his worst, he is argumentative
and wants to prove you wrong. At the very least,
the person always wants to make the speaker see
the other point of view.

Lynn, Adele. B.. The Emotional Intelligence Activity Book p.69 ©2002 HRD Press
The Advice Giver
• Giving advice is sometimes helpful; however, at other
times, this behavior interferes with good listening,
because it does not allow the speaker to fully
articulate his feelings or thoughts; it doesn’t help the
speaker solve his own problems; it prohibits venting;
it could also belittle the speaker by minimizing his or
her concern with a quick solution. Well-placed advice
is an important function of leadership. However,
advice given too quickly and at the wrong time is a
turnoff to the speaker.

Lynn, Adele. B.. The Emotional Intelligence Activity Book p.69 ©2002 HRD Press
  Questioning Skills



Bloom’s Six Levels

• Knowledge
• Comprehension
• Application
• Analysis
• Synthesis
• Evaluation
Knowledge
Level 1 – Recall
Remembering previously learned material,
recalling facts, terms, basic concepts from stated
text
• Name Relate
• List Tell
• Recognize Recall
• Choose
Match
• Label
Define
Comprehension
Level 2 – Understand
Demonstrating understanding of the stated
meaning of facts and ideas
• Compare Explain
• Describe Rephrase
• Outline
Show
• Organize
• Classify
Relate
Identify
Inference
Level 2 1/2 – Infer
Demonstrating understanding of the unstated
meaning of facts and ideas

• Speculate
• Interpret
• Infer
• Generalize
• Conclude
Application
Level 3 – Put to Use
Solving problems by applying acquired
knowledge, facts, and techniques in a different
situation
• Apply Dramatize
• Construct Restructure
• Model
• Use
Simulate
• Practice Translate
Experiment
Analysis
Level 4 – Break down
Examining and breaking down information into
parts
• Analyze Simplify
• Diagram Summarize
• Classify
• Contrast
Relate to
• Sequence Categorize
Differentiate
Synthesis
Level 5 – Put together
Compiling information in a different way by
combining elements in a new pattern
• Compose Elaborate
• Design Formulate
• Develop
• Propose
Originate
• Adapt Solve
Invent
Evaluation
Level 6 – Judge
Presenting and defending opinions by making
judgments about information based on criteria
• Judge Defend
• Rank Justify
• Rate
• Evaluate
Prioritize
• Recommend Support
Prove
Types of Questions
1.Open
2.
3.Probing
4.
5.Closed
Open Questions
üSolicit more than a “yes” or “no” or other one-
word response


üAim to get someone to talk



üAre useful when you want general information



üCommon lead-ins are what, how, and why

Closed Questions
üSolicit a “yes” or “no” or other one-word
response
ü
üAim to limit talking or to control direction of
conversation
ü
üAre useful when you want specific information
ü
üCommon lead-ins are who, which, would, are,
can, have, do, is, will, and may
Probing Questions

Definition:
 Questions that do not introduce a new topic
but allow you to probe further to find out more
information.


Examples include:


Q“Could you tell me more?”

Q“Could you give me an example?”
Q“Why was that?”
Q“Could you expand?”
The Funnel – Questioning Model
G.R.O.W.
Conversation Model
• Goal
• Reality
• Options
• Wrap up
 41

Lecture 4,5
 42

Second Critical Skill

Interpersona
l

Consulting Technical
 43

Three types
• Dynamos
• Cruisers
• Losers
Professionalism is Key to Consulting
Success
• Professionals agree to organization-wide shared
values
• Teamwork is a mandatory part of the
organizational culture
• Focus on relationship building
• Trust is the glue that holds the organization
together
 Adapted from: David H. Maister (1997) True Professionalism, New
York: The Free Press.
•
Investing in Professionalism...

• Explore new technologies

• Ask for assignments
• Take charge of your own learning
• Enhance your communication skills
• Master people skills
• Use downtime to acquire knowledge
• Pursue work that builds your assets
•
Professionalism in Teamwork...

• Take responsibility rather than making excuses

or blaming each other
•
▫



 Responsibility

 Source: Adapted from Kathleen Ryan and Daniel Oestreich (1998), Driving
Fear Out of the Workplace, 2nd edition, Jossey-Bass.
Professionalism in Teamwork...
• Openly share information
Professionalism in Teamwork...

• Collaborate on important issues

Professionalism in Teamwork...
• Focus on a common purpose-don’t get sidetracked
by details
Professionalism in Teamwork...
• Value each other’s background
Professionalism in Teamwork...

• Openly and respectfully voice concerns &

criticisms
Professionalism in Teamwork...
• Be positive about the team members and their
work
 Abrasive and Abusive Conduct...

• Silence • Blaming, discrediting & discounting

• Glaring eye contact: “the look”
• Abruptness
• Snubbing or ignoring others
• Insults and put downs
• Ryan and Oestreich (1998)
• Threats
• Yelling & shouting
• Angry outbursts or loss of control

•
What is Individual Professionalism?

• Openness to critiques
• An attitude
• Care about people & goals
• Pride • Accountability
• Responsibility • Investment
• Being a team player
• Honesty,
trustworthiness, and
loyalty
• Adapted: David H. Maister, True
Professionalism.
•
Individual Professionalism Values...

• Tolerance
• Passion for excellence
• Team cooperation & leadership
• Competence
• Respect and trust
•
 56

Third Critical Skill

Interpersona
l

Consulting Technical
 57

Human Performance Improvement Model

Contracting Phase
Business
Analysis Performance Root Cause Solution
Client Analysis Analysis Identification
•Mission
•Goals Desired
Environmental Environmen
Strategies Performance tal
•Org CFSs
•Expectatio
ns
Leadership & Leadership
Client Performance &
Motivation
Wants, Gap Motivation
Needs and
Predictive
Business Actual Workforce Workforce
Value Performanc Capability Capability
si syl a n A yrt s udnI dna t ekr a M

Enhanceme e
nt

Solution Solution
Evaluation Implementation Planning
Design,
Measure
Design, Development
Business
Development ,
Value Impact and
, Deployment
Provide
Deployment Funding
Feedback
Funding Measuremen
ts
 58

RCA
• End users of this specific application had
discovered bad data in one of the database tables
in the production system. Other people on the
team looked into the problem and determined
that it was caused by a missing database trigger.
Not missing as in forgotten to be added
originally, but missing as in the trigger existed at
some point in the past, but no longer did.
 59

Lecture 6
 60

Overview of IT Consulting Industry

• The global IT consulting market is large at US$
185 billion . The US is the largest market,
accounting for approximately 50% (US$ 89
billion) of the global market, followed by Europe
and Canada
• Globally, the manufacturing sector is the largest
consumer of these services. This is the case in
the US market as well, with manufacturing being
followed closely by the banking and financial
services vertical
• Globally, the market is highly fragmented with the
top five players accounting for 27% of the
market.
 61

Overview
• There are a large number of boutique consulting
firms who have expertise in specific
technologies/solutions
• The IT consulting market is highly correlated with
economic cycles, as these services are project-
based and discretionary.
 62

Market Segmentation
• System integration involves detailed design,
implementation and management services to
link applications (custom or pre-packaged) to
each other
• IS consulting includes advisory services to help
clients assess their information technology
needs and formulate system implementation
plans
• Network consulting includes management of
Network Life Cycle, development of next
generation IP based networks and multimedia
capabilities
 63

Market Segmentation
• Custom application development and
maintenance includes creation of custom
applications and increasing functionality
(maintenance) of existing applications
• Business/strategy consulting segment
encompasses services such as strategy, process
improvement, capacity planning, best practices,
business process reengineering (BPR), needs
assessment, and change management
•
 64

IT Industry Food and Value Chain

 65

Top 10
 66

Zefer, Viant, MarchFirst

• Why this happens?
• Going forward
▫ Recent history of IT consulting
▫ New developments
▫ Some predictions.
 67

Stages Theory
 68

The Six Final Types-(2003-Nolan)

Type 1
 69

Type 2
 70

Type 3
 71

Type 4
 72

Type 5
 73

Type 6
 74

Forces that Shape IT Consulting: A

Framework
75
 76
Perspectives of the IT Organization
and the CIO
• IT is now an established function
• The roles of IT in some companies are being
redefined
• How IT Organizations are transforming
▫ Business analysis to understand the needs of the
businesses.
▫ Technical architecting to oversee and interface
between IT and business systems.
▫ Project management to implement change
consistent with the practices of the company.
▫ Management of IT processes.
 77
Perspectives of the IT Organization
and the CIO
• Transformation o CIO- from technical to strategic
• Many CIO’s say they will do less outsourcing in
the future.
• Off-shore suppliers are providing an increasing
share of IT services
•
 78

Organizational Components
• Information Transparency: Freely Available
• Boundaries Are Permeable in the Extended
Enterprise
• Strategic Alliances
• Outsourcing
• Knowledge Management
• Self-Directed Work
•
 79

Technology Components
• Real Time Messaging
• Data Warehousing
• Directory Technology
• Virtualization
• SAAS
 80

Externalities Impacting IT Consulting

• Componentization
• Recombinant and temporary consortia
• Firm as a set of business processes
• The Applications Portfolio Conundrum
• New limbs of IT consulting services
•
 81

Future?
• Scenario #1: “Giants Prevail”
• Scenario #2: “Same Old, same old”
• Scenario #3: New “Emerging Edge” Players
• Scenario #4 – New Non-U.S. Players
•
 82

Future
 83

Going Further
• Customer Acquisition
• Contracting fundamentals
• RFP basics
• Pricing principles in IT consulting
• Risk mitigation
• Practical exercise
▫ Understand the problem
▫ Estimate efforts
▫ Pricing
▫ Submitting Proposal

Customer Acquisition and
Contracting

 IT CONSULTING SKILLS Lecture 8,9

Customer Acquisition
• “The easiest sales take place in an atmosphere of need”…
combine need, competency, and passion
• There is never a good excuse to cold call
▫ Word of mouth, referrals, networking the way to go
• If you really have to start from scratch, ask:
▫ Do you have strong experience in the target industry and with
the type of issues?
▫ Can you cite a third party to validate your work?
▫ Can you visit the target economically and reach people who can
help pave the way?
▫ Can you speak in front of key managers at an external event or
publish something or meet informally?
• Less is more, rifle not shotgun
 86

Do you know him?

Xavier Renou
Preparation
• Consulting is a relationship business:
▫ Know the name of the “economic buyer” who
signs the checks, arrange to meet them (give me
5 ways), act as a peer.
▫ Avoid gatekeepers
• Ten techniques to infiltrate:
▫ Become a customer, perform pro bono work,
create a study, engage in civic activities, write
about your prospect, become a visiting
professor, write a letter of praise, befriend an
employee, serendipity, meet the buyer socially
If the buyer comes to you…
• Become more prescriptive, less diagnosis
▫ Presumably they like what you are offering
• Provide options on how to use you (not why)
• Find out what the budget is
• Provide one option above budget
• Be prepared to “walk away”
Relationship Building

Task

People
Motivations
Type Likes… Dislikes… Objection
Driver Power/ Wasting No time or
(determined)
Expressive Results
Attention time
Ignoring need
No trust
(imaginative) Acceptanc Threats
Amiable needs No hurry
(supportive)
Analytic eFacts/Data Guesswork No money
(methodical)
Rebuttals
• No time/need
▫ Show how the buyer’s power or results will be
enhanced – de-emphasize how good you are.
 Cite examples of other trusted organizations
doing it
“To make the best use of your time, there are just
four things I’d like to know”
“What is the most fundamental issue you wish
you could solve tomorrow?”
• No trust
▫ Let the buyer get comfortable with you
Use anecdotes, ask a lot question about the
buyer’s background, find points of commonality,
LISTEN
Rebuttals ctd.
• No hurry
▫ Buyer wants assurances, guarantees, references,
pilot tests etc.
Provide references and testimonials, provide “fail
safe” options and contingencies, create sense of
urgency (the timing is never perfect – show ‘em
it could be a hell of a lot worse), provide a
guarantee (if possible)
• No money
▫ Provide details of cost savings, focus on value not
fee, stress investment not cost, offer options,
money-back guarantee, provide analyses:
spreadsheets and charts showing ROI.
Contracting
• Setting up the first meeting…telephone questions
▫ What do you want to discuss?
▫ Who is the client for the project?
▫ Who else will be at the meeting?
▫ How much time will we have?
▫ Do you know that you want to begin some project,
or are we going to discuss whether to do
anything at all?
Contracting
• Before you negotiate the contract…
▫ Ask who the client is (including the less visible
parties)
▫ Elicit the client’s expectation of you
▫ State clearly and simply what you want from the
client
▫ Say no (or postpone) a project with less than
50/50 chance of success
▫ Probe directly for your client’s underlying
concerns about exposure and vulnerability
▫ Discuss directly with the client why the
contracting meeting isn’t going well when it isn’t
Contracting Process
After the Agreement…
• Ask for feedback about control and commitment
▫ “Is this project something that you really want to
see happen?”
▫ “Do you feel you have enough control over how
this project is going to proceed?”
• Give support
▫ “Starting a project like this takes some risk on
your part and I appreciate your willingness to
take that risk with me”
• Restate Actions
▫ Make sure you and your client know what each of
you is going to do next
Common Problems
• Client has low motivation
▫ Perhaps the client is feeling coerced by his or her
boss
Go back to source – avoid the use of go-betweens
▫ Start with a small step project
“Is there any way we could set this up so that you
don’t feel …stressed/losing control/waste of
time”
• Ceaseless negotiations
▫ Including defining the problem to death
No more than 20 mins or 35% of meeting on
problem
• Credentials
▫ Tell a war story, name their concern, reassure that
Contracting Observations
• Ground rules for contracting…
▫ A contract should be freely entered
▫ You can’t get something for nothing
There must be consideration from both sides
▫ All wants are legitimate.
You can’t say “You shouldn’t want that”
▫ You can say no to what others want from you.
Even clients.
▫ You don’t always get what you want.
▫ You can contract for behavior but you can’t
contract for the other person to change their
feelings
Contracting Observations ctd.
• You can’t ask for something the other person
doesn’t have
▫ You can’t promise something you don’t have to
deliver
• You can’t contract with someone who’s not in the
room (such as a client’s boss). They need to be in
the room.
• Contracts are always negotiable.
▫ Be grateful they are asking to alter the contract
rather than doing it without a word
• Contracts require specific time deadlines or
duration
• Good contracts require good faith (and good
 100

RFP
 Lecture 10,11
Request For Proposal (RFP)

In the area of IT consulting

Main Topics
• What is RFP?
• High level stages of RFP.
• Composition of “ideal RFP”.
• The weak points of the RFP.
 What is an RFP?
RFP is the business process a
company executes in order to find
the vendor and/or product that
best meet their criteria.
In the Industry the RFP belongs to a
family of documents which have
structure resemblance.

• RFB – Request for Bids.

• RFI – Request for Information.
• RFQ – Request for Quotation.
•
A Simplified List Of The High Level
Stages In The RFP Business Process
Include:

• Specification: Company specifies the

hardware/software/services requirements and
general project constraints (time, cost, process
etc) and issues an RFP document to candidate
vendors.
• Proposal:Vendor assesses the requirements and
delivers their response, witch includes their
proposed solution, constraints, and cost estimate.
(sometimes a customization of an existing vendor
product may be proposed).
A Simplified List Of The High Level
Stages In The RFP Business Process
Include:

• Evaluation: Company evaluates the responses

and select a vendor based on a consideration of
how well their proposal meets the requirements
and satisfies the project constrains, notably time
and cost.
• Implementation: Company and vendor
implement the solution.
 107

RFP Process
 108

Sample RFP
• Answer following questions
▫ Identify the structure of RFP?
▫ Who has prepared RFP and for whom?
▫ What is the scope of SPMC?
▫ Why is SPMC required?
▫ How the bids will be evaluated?
▫ How much is EMD? What are the terms and
conditions pertaining to EMD?
▫ When is the last date of bid submission?
▫ What are the strategic advantages of this
contract?
▫
 109

Pricing
 Lectures 13,14
Types of Contracts
• Fixed price or lump sum: involve a fixed total price
for a well-defined consultancy project
• Cost reimbursable: involve payment to the
consultants for direct and indirect costs
• Time and material contracts: hybrid of both fixed
price and cost reimbursable, often used by
general IT consultants
• Unit price contracts: require the buyer to pay the
seller a predetermined amount per unit of
service. Mostly, per hour in the case of major
league.
Cost Reimbursable Contracts

• Cost plus incentive fee (CPIF)

▫ Buyer pays seller for allowable performance costs
plus a predetermined fee and an incentive
bonus
• Cost plus fixed fee (CPFF)
▫ Buyer pays seller for allowable performance costs
plus a fixed fee payment usually based on a
percentage of estimated costs
• Cost plus percentage of costs (CPPC)
▫ Buyer pays seller for allowable performance costs
plus a predetermined percentage based on
total costs
•
Contract Types Versus Risk
 113

Who Sets A Consultant’s Fees?

• The Consultant?
▫ Sets the breakeven rate
▫ Responsible for marketing the service
• Other Consultants in the Field?
▫ Their rates establish what is reasonable
• The Consultant’s Client?
▫ Makes the final hire/no hire decision
▫ Must be convinced the value is worth the rate
 114

The Consultant’s Point of View - 1

• There are 241 days in a year after subtracting 104
days for weekends, 10 days for holidays, and 10
days for vacation
• That means you could bill 8 x 241 or 1928 hours in
a year
• In reality, if you work really hard you will book
about half that number (say 1000 hours)
 115

The Consultant’s Point of View -2

• Assuming 1000 billable hours, then
▫ Revenue = 1000 x Rate
• Consultants in IT charge rates of from $ 50 per
hour ($ 400 per day) up to and exceeding $ 250
per hour ($ 2000 per day).
• Hence, consultants’ gross revenues range from
$50K to in excess of $250K (per year)
 116
“The More Things Change, The More They Stay The Same . . .”
French Proverb
Fee chart originally prepared in 1994 by CNNNJ member Werner Engelmeir
 117

The Consultant’s Point of View -3

• Profit = Revenue - Expenses
• Expenses
▫ Your salary
▫ Staff salaries and fees (bookkeeper, accountant)
▫ Retirement Plan Contribution
▫ Taxes
▫ Insurance (medical, liability, E&O)
▫ Office expense (rent, equipment, supplies)
 118

Factors that Effect Your Rates

• Your experience
• Your knowledge
• Your credentials
• Your field(s) of expertise
• Your availability
• Referrals from previous clients
• Referrals from peers
 119

Other Consultants - 1
• Let’s say, after some calculations, you’ve figured
that you can just scrape through if you charge $
500 per hour for your services
• The next step is to check with other consultants
who do work in your field and find out what they
charge
• Chances are, you’re going to need to rethink your
rates!
 120

Other Consultants - 2
• Your peers determine a range of what is
reasonable to charge for your services
• Before talking to prospective clients, do a sanity
check and talk to other consultants about what
their rates are
▫ Networks are perfect for this
• Sometimes a client will tell you what he or she
pays for consultants
 121

The Client’s Point of View - 1

• Assume that the client knows the going rate
• Clients are willing to pay more than the going rate,
but only to obtain tangible added value
▫ Example: Expert witness consultants with a
proven track record for convincing judges and
juries may win a case worth millions!
• The consultant has to show the added value
 122

The Client’s Point of View - 2

• It costs a client more than salary to have an
employee on board. The loading factor is the
number that, when multiplied by the salary, is
the cost to the client
▫ Cost of Employee = LF x Employee Salary
• The loading factory is typically around two but
ranges from 1.8 to 3.0
• The client knows the loading factor --- ask!
 123

The Client’s Point of View - 3

• With a load factor of 2, an employee earning a
$100K salary costs your client $200K per year
• If you can perform the work of a full time
employee with 1000 hours per year, then a $200
per hour rate is breakeven rate.
• Breakeven Consulting Rate = Equivalent
Annual Salary / 1000
▫
 124

Are Fees Negotiable?

• Yes, to a degree
• Have a standard rate in mind and quote that rate
• If you have recently increased (or decreased)
rates, explain why to the client
• If there are circumstances that justify a lower or
higher rate, explain those circumstances to the
client
 125

Consultant’s Fee Setting

• Minimum fee is set by the consultant’s cost
structure
• Typical fee is set by what comparably qualified
consultants charge for comparable work
• Maximum fee is set by the added value the
consultant can demonstrate to the client