Strategy•Jan 07, 2015
The Business of Building Software and the Adventures of Achieving Big Vision
Who do you use when you need to build a software solution or achieve a big business vision? As a full-service management and technology consulting firm, our clients constantly face this decision. Should you hire employees or bring in contractors? Or maybe get a consultancy to own the whole project?
To answer this question, I caught up with some of my friends and colleagues who have had to make this decision before:
Andrew M. is the director of application development at a major utilities company.
Chad Gaithers was the vice president of consumer insight at La Quinta when we worked together.
Chintan Shah is the vice president of data science, analytics, and business intelligence at Hyla Mobile.
Scott Covington is a vice president in the management consulting practice at Credera.
I posed the same question to each person: “Assuming you’ve already made the decision to build instead of buy a software solution, how do you decide who to use to get the job done?” Their answers provide excellent insight into the questions to consider when choosing someone to help build software.
Who Do I Trust?
Trust was the most important criteria that rose to the top during the interviews. Whether hiring an employee or bringing in a consultancy, it has to be someone you trust.
– “Do I feel like they are really thinking about my problem and trying to solve it, or are they just working to check off a list of requirements?” asks Chad.
– “Our best client relationships come from personal relationships where we’ve already established credibility and trust,” observes Scott. “In my experience, these relationships arise out of deep friendships. Trust leads the way as trusted friends and advisors will point honestly toward those with the highest integrity and greatest competencies in a given skill area.”
– Both Chad and Scott cite the trusted referral as a critical factor in picking an implementation partner. Scott calls it the “chain of trust.” “The referral is huge,” says Chad, “Also, do they turn down work that is not in their wheelhouse? That is a major trust builder.”
Do I Need Additional Skills or Capacity?
– Andrew uses a staff augmentation approach to build solutions. Andrew brings in contractors when he doesn’t already have the required skills on staff or when he just needs additional capacity to get a project done. “If I have the management manpower, I’ll just hire contractors to scale up,” he says.
– Chintan provided similar thoughts: “A consultancy makes sense if the project requires an area I am not familiar with. I’ll hire a firm with expertise in the target area.”
– Scott recommends that clients look to find a consulting partner when they need expertise to determine and achieve a vision, and when additional people can ramp up the speed to achieve specific goals. This could apply to corporate/market strategy, technology endeavors, or organizational structuring efforts—especially where revenue growth is central to the engagement.
Do I Need Someone to Own the Project?
– Chintan sees project ownership as one of the major benefits in going with a consultancy. “Executive oversight is critical for a consultancy,” he says. “Otherwise, what is the value if you have to manage it yourself?”
– Scott notes that you get more value out of a consultancy if you let them own it. “A consultancy has a reputation to uphold, so if they own the design and implementation then they will be very motivated to make the project successful,” he says. “Also, a consultancy brings its own methodologies, based on years of experience.”
– Chad values a consultancy owning the project: “If I get the impression that it [the project] will be a case study for the company, that’s a good thing because it means they are invested in its success.”
– On the other hand, Andrew prefers to keep project ownership “in house.” He states, “If I need to do a project, I’ll hire a software development manager and then bring in contractors to do the work. I don’t see any value in having someone else ‘own’ my projects, because at the end of the day, I am the one who will fail if the project does not achieve its business objectives.”
Do I Have Other Projects Going On?
Chintan values the breadth of a consultancy when multiple connected projects are executing concurrently. “Having one consultancy helping on multiple simultaneous projects provides the lift of a unified team across all projects,” he says. “They’re all going to work together to make sure all of the projects succeed.”
Do I Need to Reduce Liabilities?
– Chad points out that salaries are carried on a company’s profit and loss statement as liabilities. For a company looking to sell, minimizing liabilities by using contractors or a consultancy makes the balance sheet more attractive to potential buyers.
– Chintan prefers a contractor or contract-to-hire model for similar reasons. “I like to give people a trial period to see if they are committed, and see if the organization wants to commit to them,” he says. “If I have to reduce staff, it is easier to let a contractor go than an employee.” He references Department of Labor regulations and other government statutes that complicate the process of terminating an employee, whereas letting a contractor go can be as simple as a phone call to tell them not to come in.
Does the Project Justify the Cost of a Consultancy?
– Andrew needs to know that the people he hires have experience in his industry, and this can justify the cost. However, he typically won’t pay consulting rates for project management or business analysts. “I can find those skills at $100 per hour. Why would I pay more to get them from a consultancy?”
– However, Andrew does find certain strategic opportunities to be worth the price. “If we need a solution that is specific to our industry and there’s nothing like it in the market, that’s when we’ll go seek help to build a solution.”
– Scott quotes the following anecdote: “No one ever got fired for hiring McKinsey.” His point is that serious business challenges and serious opportunities require serious investment. “When it really counts, it is worth paying for the best,” Scott says. “The best in any field often achieve far greater outcomes than the cheaper equivalents, so cost per hour is often an apples-to-oranges comparison. I would rather pay more per hour to achieve a greater overall business outcome and greater performance in each hour.”
– Chad agrees: “When I have something that is important and urgent enough, I want to be able to pay more to make sure it is executed/implemented properly.”
Conclusion and Parting Thoughts
There are times when it makes sense to hire a consultancy to help achieve a big vision or create a custom technology solution, and there are times when hiring an employee or a few contractors is a better fit. Working through these questions will help make an informed decision.
And there is another factor to consider. The correlation between bedside manner and patient health outcome has long been studied—and for good reason. The correlation is strong. In 2011, a wealthy woman in Chicago made a $42 million donation to teach better bedside manner in medical schools due to an arrogant physician ignoring her intuition that something was wrong with her. Consultants with good “bedside manner” are more fun to work with and often clients report getting more done together when the teams collaborate well during the engagements.
Business and technology solutions ultimately affect people. And new ideas, business models, and technologies rely on adoption by people. So the bedside manner can also greatly enhance the business outcomes by helping people learn and participate in the changes more quickly and more deeply. The camaraderie of a highly skilled team is critical to achieve better business outcomes. In the end, along with solid business or technology acumen, matching the core values of a consulting partner, vendor, or employee with a business leader is a significant part of the success equation. Save yourselves the $42 million and choose someone with alignment of core values, competency, and great bedside manner.
If you are interested in learning more about Credera, feel free to contact us at email@example.com.