A new contracts administrator for a recent customer initially fumed over the average rates for our 12-week, 3-person BI platform app/dev proposal in contrast to those of another vendor for a 3-year, 12-person Java development project -- an apples-to-oranges comparison. Fortunately, the company's BI lead succeeded in persuading management that we offered expertise well worth a short-term "premium."
Unwise practice No. 3: Insisting that prospective consultants "prove" project ROI
Our consultancy is still occasionally tasked by prospects to demonstrate the "ROI of BI," although this requirement comes up much less often than it did 10 years ago. It's a legitimate business question to ask, but it can also be a red flag that the initiative doesn't have proper backing within the firm.
If the ROI question arises and the engagement is sponsored by IT rather than business, there may be problems ahead. To IT, BI is often just another application, much akin to order processing or SCM. Most successful BI deployments, though, are driven from key evidenced-based business practitioners who aspire to drive decision making with data and analytics. Successful BI deployments, for example, find ROI in the business through these criteria:
- The value of more timely data for decisions
- Improvements to the bottom line from better decisions
- The value of having analytics/reports they didn't have before, though it's often difficult to quantify "smarter" business
- The value sometimes serendipitously arising from a single insight (such as finding an unexpected pattern of fraud)
While we certainly help the business calibrate the costs and benefits of the improved decisions, taking ROI out of the business context is a mistake that signals business and IT are not aligned. It goes without saying that ideal situation is a partnership of the business, IT, and the consultancies.
Unwise practice No. 4: Expecting free, unlimited pre-sales consulting
Author, consultant and Harvard adjunct professor David Maister offers strong advice for professional services firms: Never respond to an RFP unless you have an in-house coach guiding your sales process. While we're less adamant than Maister, there are good reasons not to be just another pretty proposal. The likelihood of an unknown emerging in the process to win a bid is practically nil, and the main competitor is often not another consultancy, but rather no project at all.
We can think of four RFPs we were invited to participate in the last year, of which we submitted one proposal. Three of the four (including the one we submitted) didn't transition to full-scale projects, but instead to either a much less grand task or to no engagement at all. The fourth was awarded to a friend of the firm from a field of 12 applicants.
Companies sometimes issue RFPs as a means to educate themselves about different solutions. They then decide what to do after reading responses, often changing their minds when they see the price tags. We recently declined a small company's request to respond to an RFP, offering instead a few hours of free consulting with our top architect to discuss options and costs. Over the course of the discussion, the CEO acknowledged his company couldn't afford the solution he'd asked for in the RFP -- but in the end asked if we'd respond anyway.