Lec_ITCO_ver2

Introduction to Business Information Systems and IT ConsultingVinit Thakur

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.

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Areas of Business Consulting3

General Types of IT Consulting4

Why need a consultant5

How Potential Clients Analyze Consultants for Hire1. 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?

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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

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What Makes an Outstanding Consultant?4. Technical expertise and knowledge

Technical expertise in a field is important Expertise comes from education,

experience, personal skills5. Communication skills

Superior communication (written/oral)

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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

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Minimum Six-Figure Consultant1. Eat, drink, and breathe customer service2. Keep up with latest changes in your field

of expertise3. Develop ability to identify problems

quickly4. Look for creative ways to solve problems5. Use excellent communications skills

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Minimum Six-Figure Consultant6. Be 100% confident that you will succeed7. Be professional in everything you do8. Be a people person9. Be the best manager you can be10.Give clients more than they expect

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Lecture 2

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Critical Skills for Consultants•Interpersonal •Consulting•Technical

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Interpersonal

Consulting Technical

Before that….Knowledge Acquisition Model

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DKDK

Don't Know we Don't Know

KDKKnow we

Don't Know

Awareness

KK

TeachLearnSchool

Know we Know

DKKDon't Know we Know

Experience

CoachFacilitateCounselAHA!

Reflecting back InstructingRecommendingInformingProbing

Interpersonal Skills•Listening•Powerful questioning•Empathy •Articulating what’s going on•Acknowledgement•Intuition

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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. *Pause/Silence

3. 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.


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.


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…”


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.


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.


Questioning Skills

Bloom’s Six Levels

• Knowledge• Comprehension• Application• Analysis• Synthesis• Evaluation

Knowledge

• Name• List• Recognize• Choose• Label

Relate Tell Recall Match Define

Level 1 – Recall

Remembering previously learned material, recalling facts, terms, basic concepts from stated text

Comprehension

•Compare•Describe•Outline•Organize•Classify

ExplainRephraseShowRelateIdentify

Level 2 – Understand

Demonstrating understanding of the stated meaning of facts and ideas

Inference

•Speculate•Interpret•Infer•Generalize•Conclude

Level 2 1/2 – Infer

Demonstrating understanding of the unstated meaning of facts and ideas

Application

•Apply•Construct•Model•Use•Practice

DramatizeRestructureSimulateTranslateExperiment

Level 3 – Put to Use

Solving problems by applying acquired knowledge, facts, and techniques in a different situation

Analysis

•Analyze•Diagram•Classify•Contrast•Sequence

SimplifySummarizeRelate toCategorizeDifferentiate

Level 4 – Break down

Examining and breaking down information into parts

Synthesis

•Compose•Design•Develop•Propose•Adapt

ElaborateFormulateOriginateSolveInvent

Level 5 – Put together

Compiling information in a different way by combining elements in a new pattern

Evaluation

•Judge•Rank•Rate•Evaluate•Recommend

DefendJustifyPrioritizeSupportProve

Level 6 – Judge

Presenting and defending opinions by making judgments about information based on criteria

Types of Questions1. Open

2. Probing

3. Closed

Open QuestionsSolicit more than a “yes” or “no” or other one-

word response

Aim to get someone to talk

Are useful when you want general information

Common lead-ins are what, how, and why

Solicit a “yes” or “no” or other one-word response

Aim to limit talking or to control direction of conversation

Are useful when you want specific information

Common lead-ins are who, which, would, are, can, have, do, is, will, and may

Closed Questions

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

Examples include:“Could you tell me more?”“Could you give me an example?”“Why was that?”“Could you expand?”

Probing Questions

The Funnel – Questioning Model

G.R.O.W. Conversation Model•Goal•Reality•Options•Wrap up

Lecture 4,5

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Second Critical Skill42

Interpersonal


Three types•Dynamos•Cruisers•Losers

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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

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


•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


•Openly and respectfully voice concerns & criticisms

Professionalism in Teamwork...•Be positive about the team members and

their work

Abrasive and Abusive Conduct...

•Blaming, discrediting & discounting

•Threats•Yelling & shouting•Angry outbursts or

loss of control

•Silence•Glaring eye contact:

“the look”•Abruptness•Snubbing or ignoring

others•Insults and put

downs• Ryan and Oestreich (1998)

What is Individual Professionalism?• An attitude• Pride• Responsibility• Being a team player• Honesty, trustworthiness, and loyalty• Adapted: David H. Maister, True Professionalism.

•Openness to critiques•Care about people &

goals•Accountability•Investment

Individual Professionalism Values...

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

Third Critical Skill56

Interpersonal


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Human Performance Improvement Model

Business Analysis

Client• Mission

• Goals Strategies• Org CFSs

• Expectations

Client Wants,Needs and Predictive

Business ValueEnhancement

Mar

ket

and

In

du

stry

An

alys

is Performance Analysis

Root Cause Analysis

Solution Identification

Performance Gap

Actual Performance

DesiredPerformance

Workforce Capability

Leadership &Motivation

Environmental

WorkforceCapability

Leadership &Motivation

Environmental

EvaluationSolution

Implementation

Solution Planning

Design,Development,Deployment

FundingMeasurements

Design, Development,Deployment

Funding

Measure BusinessValue Impact and Provide Feedback

Contracting Phase

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.

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Lecture 6

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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.

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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.

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Market Segmentation62

•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

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

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IT Industry Food and Value Chain64

Top 1065

Zefer, Viant, MarchFirst•Why this happens?•Going forward

▫Recent history of IT consulting▫New developments▫Some predictions.

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Stages Theory67

The Six Final Types-(2003-Nolan)68

Type 1

Type 269

Type 370

Type 471

Type 572

Type 673

Forces that Shape IT Consulting: A Framework

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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.

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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

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Organizational Components•Information Transparency: Freely Available•Boundaries Are Permeable in the Extended

Enterprise•Strategic Alliances•Outsourcing•Knowledge Management•Self-Directed Work

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

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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

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

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Future82

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

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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

Do you know him?86

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

Analytic Driver

AmiableExpressiv

e

Task

People

MotivationsType Likes… Dislikes… Objection

Driver(determined)

Power/Results

Wasting time

No time or need

Expressive(imaginative)

Attention Ignoring needs

No trust

Amiable(supportive)

Acceptance

Threats No hurry

Analytic(methodical)

Facts/Data

Guesswork No money

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 you will get the job done

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

fortune)

RFPLecture 10,11

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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.

RFP Process107

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?

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PricingLectures 13,14

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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

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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

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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)

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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)

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“The More Things Change, The More They Stay The Same . . .”French Proverb

Fee chart originally prepared in 1994 by CNNNJ member Werner Engelmeir

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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)

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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

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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!

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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

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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

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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!

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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

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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

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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

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