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It's Time to Take Control

It's Time to Take Control

Fed up with the failure of consultant-led enterprise software projects, CIOs are demanding more (and less) from the big consultancies or doing without them altogether

In November 2001, Deere halted its plans to roll out R/3 across the company and fired IBM. Deere's new plan is to install ERP only " where it is absolutely needed" , says Dyer. (IBM Global Services did not respond to repeated requests for comment.) All of the consultancies we spoke to for this story acknowledged that business process improvements are the weakest link in big software projects. But they say that's often because their clients don't believe they need it or don't want to pay for it.

" A lot of times the client just doesn't want to do it," says Jeff Balentine, global leader of Deloitte & Touche's technology, media and telecommunications group in Dallas. " They see it as touchy-feely stuff, and they don't want to pay for it." But these companies are often the ones that complain about their projects when they are done, he says. " They get it done fast and cheap, and then they say: Â'Where's the wow?' We as consultants need to stand our ground and say we need to do the process improvements."

But to improve processes, you have to reorganise the company, and that creates tremendous internal resistance. " These projects create winners and losers inside the company," says Dave Duray, global SAP leader at PwC Consulting, which is headquartered in New York City. " Everyone signs on and then when you start to deploy it, the individual managers see that their administrative staffs are going to be taken away and centralised and they say: Â'I don't want that.' That's when management has to step in and be tough, and I don't think they have been. At that point [consultants] should stop and say: Â'We're not going to do this. You're wasting your money.'" But consultants won't walk out. " If the client insists on something that's a bad idea, then we'll do it," acknowledges Cap Gemini's Parkinson. As a result, he admits, " I don't know of any engagement where we were allowed to do everything necessary to guarantee the client's success."

Time to Push Back

But Owens Corning's Johns does not believe consultants can ever successfully drive change in a client's company even if they're given the mandate to do so. Johns learned this lesson the hard way. In 1997, less than a year into its SAP project, Owens Corning renegotiated the contract with Deloitte Consulting to take back control of the project. Owens Corning employees didn't want to listen to Deloitte. They wanted their bosses to tell them what to do, Johns says. So the new contract stated that project responsibility remained with Owens Corning and specified the roles and responsibilities of all consultants on the job and what they would be paid. Instead of paying them on a pure time and materials basis, the new contract stipulated that the consultants would get their hourly fees only after they delivered specific pieces of the project by certain dates. " The time payments got everyone's attention," says Johns.

The issues of cost and pricing create the most distrust between consultants and their clients. Wayne Hall, CIO of The Nautilus Group, the manufacturer of Bowflex, Nautilus, Schwinn and Stairmaster health and fitness products, sent out a detailed RFP for his ERP project and hired all five consultancies that responded, asking them each to do small projects that would feed the eventual ERP project. Despite spending months at The Nautilus Group getting to know the company and its processes, all five came in with bids of $US3 million to $5 million, less than half of what Hall expected.

So Hall sent the RFP back to one company, Emerald Solutions, along with more information and detailed specifications. Emerald revised its bid to about $US5 million. Then, after he hired Emerald, the estimate ballooned to $US15 million. Hall believes the consultants purposely lowballed the initial estimates to get the job.

His CEO took one look at Emerald's bid, Hall says, cancelled the contract and turned to Hall and said: " Wayne, you do it." Hall had to rebuild his IT department to staff the ERP project. He hired Deloitte (which also submitted a $US3 million initial bid) to work on specific slices of the project.

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