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IT Consulting Rates: Getting the Most from your IT Consulting Dollar

 IT Consulting Dallas

June 2013

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 IT Consulting Dallas

IT Consulting Rates : Getting the Most from your IT Consulting Dollar

it consulting dallas

It comes as no surprise that IT is a complicated and vast field. It is virtually impossible for organizations at any size level to maintain in-house expertise on every subject required to operate an efficient and effective IT shop. As a result, IT consulting has become big business. But how do you get the most out of your IT consulting dollar? Maybe these tips will help.

Let’s start by discussing the real reasons why companies utilize consultants. 

  • Don’t have the knowledge in-house. This is the most obvious reason. As discussed previously, there are many areas in IT that companies could potentially need assistance, and it is simply a bad business decision to try to keep this knowledge on-staff.

 

  • Have the knowledge, but don’t have the time. This happens more frequently than you might think. There is never any shortage of important projects for in-house staff experts to tackle, and many times the timing required when compared with the projects that need to be completed simply don’t match up.

 

  • Need someone to blame. Pardon me for being so blunt, but this is a pretty regular reason for using consulting. The relationship between IT and corporate management is frequently tenuous because there is a lack of confidence or trust in IT at the corporate level. This fact frequently leads to consultants being involved, especially consultants that work directly for the primary product vendor on the project, so that IT management can demonstrate to corporate that they have done everything possible to make that important project successful.

OK, so whatever the reason for your decision to use a consultant, what are the best ways to determine which consultant to use? This decision is always about risk and ownership. The more important and/or difficult a project is, the more risky it is to the IT decision maker that is hiring the consultant. For these same reasons, the consultant must (in my opinion) be responsible for successfully completing the project, not just designing or advising on it.

The more important the project, the more likely the IT decision maker is to want to spend more money on the consultant and/or have the primary vendor directly involved thinking that they will get the best advice. Unfortunately, many times you don’t necessarily get good value the more you pay. Let’s take a look at typical consulting fees in the virtualization portion of the IT market:

 

  • $100-$125/Hour for journeyman general IT consultants
  • $150-$180/Hour for Sr. Consultant with specialization
  • $200-$225/Hour for Managing Consultants
  • $300-$350/Hour for consultants working for the manufacturer/software vendor

it consulting dallas  

 

Hiring a consultant is very much like hiring an employee. Here are some tips to cut through the fog:

  • Interview prospective consultants. Have them meet all of those on your team that would need to work with them. This is a chance to determine if the consultant knows his/her stuff, but it is also an opportunity to make sure they can work effectively with your team.

 

  • Watch out for “Teachers”. There seem to be a lot of consultants in this industry that have great credentials, but have never actually implemented anything. We all know that the real world is frequently quite different than the classroom. Credentials are important and necessary, but make sure that your consultant has actually had experience successfully implementing the project in question. References are also very important.

 

  • Is it worth paying extra to have the vendor involved? My answer here is “sometimes”. There are a couple of things to watch out for here. For those of you that have been around a while, you probably remember when IBM was king of the IT world, and there was a common belief that when buying products or services from them “you could always buy better, but you could never pay more…”.  Vendors always charge big dollars for their consultants, and if you get one of their senior people, this can be acceptable, but they frequently provide their junior consultants for the same price and/or require a two man team for a project unnecessarily. They also subcontract in senior consultants from companies like ours, but charge the big fees because they can. Is it worth paying $300/Hour to the vendor to get one of our senior consultants when you can contract with us directly for $175/Hour? There is a lesson here. If you are going to engage a vendor, make sure it is one of their employees and then interview and reference check them like any other consultant hire.

 

Finally, once you have your consultant selected, there are several ways you can contract their services:

  • Annual Retainer. If you expect to have many consulting needs over the space of a year, then this can be good. Since there would be a long-term commitment for services, the effective hourly cost will be reduced, and you will also get the benefit of regular general advice as a byproduct of the retainer arrangement.

 

  • Fixed Fee Proposal. This is typical, but will necessitate a detailed statement of work to protect the consultant from “scope creep” and to set the expectations of the customer as to what they will  receive. The consultant will also need to build in a percentage of the time allotted  for contingencies. This can make the fixed fee proposal good from the guaranteed cost perspective, but probably not the cheapest way to go. For some projects, this is not possible because the project may have too many unknowns to accurately estimate the amount of time required to complete it.

 

  • Pre-Pain Block Time or Time & Material. These are both hourly arrangement, with block time paid in advance for a certain size block, and T&M billed on completion. Block time is usually less per hour since a chunk of time is paid for in advance. These are usually more cost-effective that fixed fee and a good way to go if you trust your consultant and feel they have your best interests in mind.

 

  • Hourly rate not to exceed. This can be a very good approach as well assuming the hourly rate is reasonable. Since the consultant is taking all the risk by allowing the project to be paid hourly and capping the total expense, the hourly rate us usually the highest for this type of arrangement.

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