Why Consulting Practices Fail

By McCall, Kenneth M. | The National Public Accountant, September 2001 | Go to article overview
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Why Consulting Practices Fail

McCall, Kenneth M., The National Public Accountant

Boomer Consulting, Inc. has been in the consulting business for almost 20 years. For the past two years, we have coordinated an association of accounting firms engaged in Information Technology (IT) consulting called The Boomer Network, or "Boomer-net" for short. Firms join Boomer-net for many different reasons, and come from many different backgrounds and structures as they launch their consulting practices. Our work shows us that while there is no way to guarantee success, there are some sure indicators which point toward failure. This article will point out some of the pitfalls to avoid, drawing on lessons painfully learned from firms that tried and failed.

Lack of Prior Preparation

Before ever thinking about getting into IT Consulting, a firm must ensure that its "own house is in order." The internal firm technology must be a model that can be proudly shown to others as a demonstration of how to do it right. For example: Does your firm have up-to-date computer hardware, software, and networking infrastructure? Do you have secure reliable highspeed connection to the Internet? Does everyone in the firm have full time desktop access to the Internet? Do your employees have secure, reliable, and easy to use remote access to your network, so they can use network resources from a client site, a hotel room, or at home? Are your software applications up-to-date, standardized, and properly licensed? Are you moving towards a paperless environment with stored document images, and the free flow of electronic data from one application to another? Do you have a strategic technology plan for your business? If you can answer "yes" to most of these, you may be ready to step toward IT consulting. If most of the above indicators do not describe your firm, then pause, upgrade your internal systems, and only then think about taking your skills to the outside world. How can you recommend state-of-the-art solutions to clients if you haven't adopted them yourself? What will you do when a prospective client says, "Let me come to your office and see how YOU do that." Consulting firms that succeed have up-to-date internal technology. Firms that fail often do not.

There is more to getting your own house in order than just internal systems, however. Take a look at your partner (or shareholder) agreements, and your owner compensation plans, and ensure that you are postured in a way that supports development of a new business practice. A successful move to IT consulting may require one or more partners to shift part of their client load in order to free up time for consulting. Does your compensation plan provide an incentive to do this, or is it a disincentive? For example, if all owners are paid set salaries and set end-of-year distribution percentages, there is no incentive for them to take on additional clients from the partner starting the consulting practice. That would mean more work for the same pay-a situation that is doomed from the start. A sure indicator of future failure is a set of owner agreements and a compensation structure that serve as a disincentive to restructure workload, and create flexibility in new business development. Once again, make sure your own house is in order before you try to get into consulting.

Lack of Leadership

The successful establishment of an IT consulting practice requires real commitment on the part of the parent firm. There will be a need for initial financial backing, a shared vision of the goals and objectives sought, and a realistic appreciation of the timeline and milestones to follow. Overnight success is rare and unlikely, and it will take patience to wait for success to unfold. Therefore, it is imperative that there be a "champion" of the consulting effort within the firm, This person must be an owner, one who has the credibility to represent the consulting team, and the clout to fight for resources at the table where decisions are made. It is most helpful if this person is one of the leaders of the IT consulting group but at a minimum he or she must champion the cause.

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