Red Flags to Watch Out for When Working With Consultants

Many consultants market themselves as prestigious and valuable players for their target industries, but the real challenge is knowing which firms can deliver on their promise (within scope, on time, and on budget).

This challenge of finding a great consultancy was well covered by an industry expert named Karen Phelan in the book “I’m Sorry I Broke Your Company - When Management Consultants Are the Problem, Not the Solution."

Phelan worked at Deloitte in the 1980s, as well as Gemini Consulting in the 1990’s, and various other big name firms. This article will refer to her work, as well as other writings, to highlight the red flags to look out for when searching for an automation consulting company.

Do your consultants bill transparently?

McKinsey, a leading consulting firm, assessed over 100 company sites spanning three continents, and various industries, and found that companies were paying 30-50% more than necessary for contracted services (Seven Ways to Stop Wasting Money in Contractor Management, 2017).

Given the fact that contractors are bought in for a specific project, and that consultants have an ongoing relationship with their clients which span various projects, it's fair to reason that companies can overpay just about the same with a consulting firm.

To get a better understanding of whether your own vendors (consultants or contractors) are worth the cost, you might want to dive deeper into their invoices.

Do they openly share the amount of hours worked and what the time was spent on? Or are they simply charging a total rate for specific line items, with little room to understand at a more granular level what the investment went towards?

McKinsey’s findings indicated the following activities helped improve cost with business partners:

McKinsey goes on to establish that companies ought to audit even small spend (since it usually goes unnoticed by those approving it, but can add up over time). They also recommend that delivery-date deviations are recorded (compared to what was agreed upon).

Do your consultants specialize in everything?

If your consultants are supposed to deliver RPA development, but they fancy themselves experts in strategy, governance, or other matters, it should serve as a red flag (Bock, 2020).

It's not uncommon for software development contractors who have been beaten in bids by consultants to band up and form their own consulting agencies. Such practices blur the lines between contracting (short-term delivery) and consulting (strategizing and partnering for the long-term).

On the smaller end of consulting firms, you want to watch out for whether the company is simply a trusted partner in managed services (providing services for already implemented systems) or if they are actually established as a consulting firm. If you end up with a contractor overreaching into strategy and digital transformation, the negative ramifications may include decreased employee morale, missed deadlines, and other failures. For larger firms, you'll want to watch out for paying partner prices and getting a boilerplate solution that isn't tailored to your industry. Although the scope of what a larger firm delivers may be met on time and within budget, a boilerplate solution may not necessarily move the needle for your business's bottom line.

For more best practices to factor into your cost management approach you may want to review this McKinsey article.

Are your consultants not graded by their ability to cut-costs even though its their biggest selling point?

Consultants often establish relationships with their clients which sell RPA as a cost-cutting endeavor, but the reality is that goals presented in sales pitches are as likely to come to fruition as they are unlikely not to.

Before deciding on consultants' contract renewal, it’s important to consider how much was saved versus what was marketed. Many clients will initiate a proof of concept period with a vendor to confirm the quality of their work as well as the cost. It's important to note that while a proof of concept can validate the vendors' capabilities in implementation, it doesn't validate the costs that will be incurred to maintain and operate automation in the long-term.

Do your consultants seem to glaze over the details?

As Bech summarized in 2019, no one can predict the future, not even consultants. Phelan’s book highlights the tendency of consultants to fly in, have a few workshops, and sell the ‘future vision’ to a handful of leaders.

‘And yes, consultants may travel all the time but as an unknown former worker of [a big consulting firm] tells “at some point I was annoyed. That was when I didn’t have rest for two months. I landed somewhere, worked the whole day and left again. Sometimes I even forgot where I was. There was no rest, only the current Project.” (Ariane Breyer, 2012).’ (Ena-Mar GmbH, 2018)

If your consultants engage in 'relationship building' where they merely fly in and shake hands for deal signing or project closing, then you may want to thread carefully. Working with partners that move at this pace doesn't mean that details are surely to get missed, but it can mean not being able to get the necessary value if your company isn't able to keep up during the allotted time.

The problem with consultants is that what should be their primary focus, helping their clients businesses succeed, often gets overshadowed by their priority to make money.

Do your consultants treat your business as a machine to be fixed?

Consultants that treat your business as a machine will fail to see the value that your people bring to the table.

Are your consultants just using your company for clout?

If the company you’re working with has never had a client in your industry, or you're their biggest client (in the industry or in general), it’s possible that they may benefit more from your company's clout than you will from using their services. You can notice that this might be happening if a firm provides a much lower rate than the rest of the competition (since they may be willing to eat into their profit margin for a chance of working with your company).

It sounds silly, but I've seen it all. In one instances, a mid-level consultanting agency used the brand name recognition of their client to win new deals (even though the endorsement was never formally made).

The threat of hiring a bad consulting firm is that they’ll take everything they learn in your business, use the addeed reputation of working with you to charge more, and use the newly gained knowledge to solve your top competitors' problems.

Communication is poor or begins to supplement internal communication

If you are relying on consultants to communicate between teams, as Phelan remarks in her book, “that is an expensive way to communicate.” Given the fact that consultants charge a high rate to drive costs down, you probably want to put an abrupt end to any newly minted bottleneck that involves third parties as the 'glue' between internal teams.

Do your consultants throw around Intelligent Automation, Hyper Automation, and AI Like hotcakes?

RPA delivery consultants are great at taking repeatable tasks that occur in high volumes and implementing automation that reduces costs. However, you should start to question their proposed value when they begin to speak about artificial intelligence, intelligent automation, or ‘hyper automation' with little to back it up academically. There's a big difference between having an RPA partner that can deliver IT solutions, and having a digital transformation partner that can deliver the strategy and business acumen necessary to truly take advantage of cutting edge technology in a way that is compliant, scalable, and profitable.

RPA may overlap with AI, in the sense of the computer vision that it uses, and its algorithmic way of working. However, RPA developers and solution architects don't have the same skillset that's needed for an AI data scientist to succeed.

Footnote:

The term 'Robotic Process Automation' is used due to its popularity in the industry. Process automation is a clearer term that'll ideally replace 'RPA.'

References:

Bech, H. P. (2019, November 2). I’m Sorry I Broke Your Company - Another Problem with Management Consulting. https://www.linkedin.com/pulse/20140910061505-170840-i-m-sorry-i-broke-your-company-another-problem-with-management-consulting/

Bock, D. (2020, June 9). 14 warning signs you’ve hired the wrong consultant. https://www.archbow.com/amp/2017/10/09/14-warning-signs-youve-hired-the-wrong-pharma-consultant

Ena-Mar GmbH. (2018, December 8). Consulting Stress Factors: Things that make your consultant job suck (sometimes). Consultiful. https://www.consultiful.com/consulting-stress-factors/

I’m Sorry I Broke Your Company: Is Consulting Always a Good Thing? – Results Map®. (n.d.). https://www.resultsmap.com/blog/im-sorry-i-broke-your-company-is-consulting-always-a-good-thing/

Schools, D. (2018, July 23). Consultants and writers are NOT entrepreneurs. But this will make you great at all three. Medium. https://entrepreneurshandbook.co/consultants-and-writers-you-are-not-entrepreneurs-d5d8020c7688

Seven ways to stop wasting money in contractor management. (2017, December 21). McKinsey & Company. https://www.mckinsey.com/capabilities/operations/our-insights/seven-ways-to-stop-wasting-money-in-contractor-management