Selecting High Technology Consultants and Subcontractors
Henry F. Garcia, C.P.M.
Henry F. Garcia, C.P.M., Director of Administration, Center for Nuclear Waste Regulatory Analyses, San Antonio, TX 78238, 210/522-5148.
82nd Annual International Conference Proceedings - 1997
Abstract. High technology organizations require the services of consultant and subcontractor specialists in the development/design of a product or delivery of a service. Many organizations often include these specialists in their proposals to leverage securing a contract from a potential client. Purchasing professionals should improve on the methods for identifying, qualifying, and selecting technically competent specialists if their organizations expect to consistently win contract awards in an intensely competitive business environment.
Introduction. Managers in high technology organizations employ the services of recognized computer consultants and subcontractors to support their core technical staff (full-time employees) in product development/design or service delivery. Others use these specialists to complement their core staff in providing both specialized design and consulting services to private and public sector clients. Further, these specialists form an integral resource especially when service organizations are working on several technically complex projects concurrently. The effective use of these consultants and subcontractors will produce a more efficient allocation of total direct labor costs within high technology manufacturing and/or service organizations — specifically those employing computer scientists and engineers.
This paper will focus on presenting particular methods for identifying, qualifying, and selecting technically competent computer specialists for inclusion in an organization's proposals as well as working with core technical staff in the conduct of individual projects. Further, this paper will:
- Explain the utilization of cross-functional teams in locating, approving, and choosing qualified computer specialists,
- Describe the mechanics for establishing a strategic partnering agreement to identify, qualify, and select these specialists, and
- Illustrate the application of cross-functional teaming and strategic partnering in the performance of value and cost analysis as an alternative approach to selecting these specialists.
Outsourcing of specific core competencies to these specialists represents a more effective use of a high technology organization's staff. Purchasing professionals should be knowledgeable of the most appropriate methods for selecting computer consultants and subcontractors. These methods are applicable to most organizations irrespective of their operation in either the private or public sector.
Consultant and Subcontractor Demand. The use of consultants and subcontractors among organizations has increased as business enterprises are confronted with increased competition and government entities are faced with decreased budgets. The popular and business media has chronicled a fundamental response from business and government to the effects of global competition and balanced budgets. Since the last national recession (1990-91), numerous firms have continued to reduce the size of their core staff, the federal government has diminished its workforce, and several state and local governments have slowed their employment growth rates. Although aggregate employment in the United States continues to grow, albeit at a decreasing rate, many middle managers and other long-term employees (experienced core staff) have fallen victim to corporate and governmental downsizing.
The expanding emphasis on project management in private and public sectors has accelerated the demand for consultants and subcontractors, especially those in the information technology (IT) field. In the private sector, business executives' support for project management has been based mainly on their awareness that lean manufacturing has protected "fat engineering" and global competition has become both time- and cost- based. Strong executive management support for project management in the public sector has been attributed largely to the global rise in concession as well as research and development contracting, which has focused attention on time and cost overruns in public works and major systems development projects. High technology organizations are experiencing a trend toward planning, scheduling, executing, monitoring, and controlling projects to meet critical performance and cost targets. They use competent computer consultants and subcontractors to assist them in executing these projects. They offer three primary reasons for hiring IT specialists.
- Downsized organizations do not have the "right" personnel nor the time, to plan, schedule, execute, monitor, or control specific key technical projects.
- Project complexity, exacerbated by technological advancements, has precluded an organization retaining the requisite expertise (core competencies) to compete effectively.
- Core staff can expand their expertise by outsourcing their technical requirements to consultants and subcontractors in order to satisfy these requirements without increasing the number of employees.
In addition to avoiding employment costs, these organizations can effect cost savings by engaging IT consultants and subcontractors to address the fluctuations in demand for their technology-intensive products or services and to obtain independent and novel perspectives on product development/design or service delivery. Using consultants and subcontractors, however, is not a panacea for solving an organization's management, employment, and technical problems. Identifying, qualifying and selecting technically competent computer professionals and/or firms can be facilitated through the use of a cross-functional team approach.
Cross-functional Team Approach. The cross-functional team approach to resolving key business issues or problems dates back to the early 1950s. It has experienced a resurgence to mitigate the negatives of staff specialization and department independence and to exploit the positives of participative management and functional interdependence. More recently, a cross-functional team, like one found in a modern project management configuration, constitutes an ad hoc group from the organization's various departments which has been brought together to meet specific objectives such as new product development/design or service delivery. Analogous to a project management team, core staff members are assigned, full or part-time, to a cross- functional team based on their expertise for a certain duration. The team leader usually represents the department most affected by the particular key business issue or problem and the other team members are those with roles crucial to the successful resolution of this issue or problem.
A cross-functional team allows each team member to offer his or her discipline expertise to ascertain whether outsourcing for specific computer specialists is proper under current core staff availability constraints. If such constraints exist, these team members can use their expertise in the IT field and familiarity with competent professionals and/or firms to recommend a limited number of recognized consultants and subcontractors from whom to request proposals. Prior to developing a proposal along with its statement of work (SOW), however, the typical cross-functional should carefully delineate any prerequisites for identifying, qualifying, and selecting technically competent IT professionals and/or firms. In addition, they should thoroughly understand and quickly recognize the salient pitfalls to avoid when hiring these professionals and/or firms. Some of these prerequisites include:
- Determining the requirement for their expertise and the rationale for not using core staff,
- Discovering the existence of any potential conflict of interest and the need for their executing a nondisclosure agreement,
- Deciding on the expected duration of any resultant agreement and the associated costs, rates, and/or fee relative to the nature of the expertise required and the existing budget for engaging a consultant and/or subcontractor,
- Defining the number and managerial level of the approval authorities, and
- Describing the quantity and scope of reports consistent with the SOW.
Some of the salient pitfalls include:
- Entertaining the exclusive engagement of consultants and/or subcontractors recommended by or affiliated with hardware or software suppliers, since these professionals and/or firms have a "natural bias" for predicating their resolution of the key business issue or problem on the use of one or more supplier's hardware or software,
- Engaging these professionals and/or firms for all the wrong reasons, (e.g., as a vehicle (scapegoat) for effecting change, a way to implement unpopular decisions, a technique to instill fear or dread throughout the organization, and a means for reaching consensus),
- Establishing extension of staff through vague project assignments with inadequate project descriptions, open-ended contract arrangements, and ineffectual methods of measuring performance,
- Eschewing objective qualification criteria to accept those professionals and/or firms which profess political affiliations with the organization's management, portend serious consequences to the organization if not selected, and parade their prestige instead of their relevant accomplishments, and
- Enlisting professionals and/or firms to only report their findings þ leaving implementation strategy and decisions to the organization's management or staff.
After delineating these prerequisites and understanding as well as recognizing some of the salient pitfalls, the team members responsible for identifying, qualifying, and selecting technically competent computer consultants and/or subcontractors should:
- Define the key business issue or problem (i.e., the nature and scope of the project) and establish the requirement for and the feasibility of hiring a consultant and/or subcontractor to provide special IT support,
- Determine the desired result from the project and clarify operating limits of a consultant's and/or subcontractor's support in this particular project,
- Document any interdependencies and identify all stakeholder groups (i.e., staff working with the potential consultant and/or subcontractor) corresponding to the project,
- Develop the estimated resources, time, and costs for executing this project, and
- Decide on the requirements for communicating the consultant's and/or subcontractor's project activities (i.e., pre- and post-project expectations and reporting).
Subsequent to taking these steps, the cross-functional team can begin identifying, qualifying, and selecting technically competent IT professionals and/or firms. Regardless of their familiarity with competent professionals and/or firms in the IT field, team members should initiate a thorough search of various sources from whom to solicit a proposal. Locating these professionals and/or firms involves:
- Checking with similar organizations as well as recognized experts in the IT field and soliciting referrals and recommendations from these and other associates, competitors, and suppliers,
- Researching published directories (e.g., Consultants and Consulting Organizations Directory) and listings (e.g., Better Business Bureau and Chambers of Commerce),
- Accessing professional and trade associations (e.g., Encyclopedia of Associations and National Trade and Professional Associations of the U.S.) as well as consulting or computer trade associations (e.g., Independent Computer Consultants Association and The Professional and Technical Consultants Association), and
- Reading or writing advertisements for consultants and/or subcontractors with specialized technical skills.
After identifying potential consultants and/or subcontractors, the cross-functional team can start qualifying those IT professionals and/or firms that already have been found.
The qualification of each consultant and/or subcontractor will form the basis for selecting the most appropriate professional or firm to satisfactorily resolve the key business issue or problem in collaboration with the core staff in the stakeholder department(s). In the qualification process, team members should:
- Consider the size and scope of the key business issue or problem as well as the expected expertise for its resolution,
- Evaluate not only the educational, technical, and certification credentials but also the management, interpersonal, and presentation skills of the consultant and/or subcontractor staff for compatibility with the organization's culture and practices,
- Establish whether each consultant and/or subcontractor has the available labor and capital resources to meet project milestones on-time and within budget, and
- Present a briefing to the potential consultant's and/or subcontractor's management or pre-proposal conference for interested consultants and/or subcontractors, as may be appropriate, to explain the origin and/or background of this issue or problem, provide the rationale for engaging IT professionals and/or firms to resolve the issue or problem, and identify the organization's staff with whom they would work.
After the qualification process has been completed, the cross-functional team can initiate the selection process.
Team members should use their collective proficiency to craft a detailed Request for Proposals (RFP) addressing the nature and scope of the key business issue or problem and defining the performance criteria, quality specifications, budgetary ceiling, and delivery schedule requirements. After receipt of these proposals, these team members employ their expert knowledge and considerable experience to examine each proposal for demonstration of the most technically sound and innovative approach for resolution of the organization's key business issue or problem consistent with the provisions stated in the RFP.
In addition to selecting the proposal that describes the best approach, the team members should select the proposal that thoroughly:
- Identifies the consultant and/or subcontractor staff who will actually perform the work, irrespective of any claim to provide good support, resources, and back-up,
- Describes the nature and scope of similar engagements and presents documented results in resolving like issues or problems for other organizations,
- Illustrates a clear and comprehensive description of the approach to be taken without hiding behind buzzwords or relying excessively on technical jargon, and
- Documents the consultant's and/or subcontractor's technical limitations, their understanding of the organization's potential implementation restraints, and their appreciation for the project's size, scope and budget constraints.
Of course, other selection criteria should be evaluated, but space limitations preclude the inclusion of a complete listing of these criteria.
Subsequent to choosing the most appropriate consultant and/or subcontractor, the cross-functional team should recommend that senior management consider establishing a strategic partnering agreement with the chosen professional and/or firm. Such an agreement would not only meet the organization's immediate needs but also provide the organization with competent and long-term technical support familiar with its specific IT issues or problems. Further, instituting a strategic partnering agreement would create an interdependent and mutually beneficial business relationship conducive to facing the organization's competitive environment.
Strategic Partnering Agreement. Consolidation is one of the major trends in business practices today. Many major organizations, even those in the public sector, are reducing the number of consultants and subcontractors with whom they do business. Several of these organizations are developing partnering agreements or strategic alliances with the remaining professionals and firms. Credibility and continuity of support are joining price as important factors in choosing IT consultants and/or subcontractors. As a professional and/or firm demonstrates technical competence and mutual concern for their client organization's competitive interests, their price for the engagement becomes less a factor than the communication of trust and commitment to service in their selection as an alliance partner.
Establishing a partnering agreement with the most appropriate consultant and/or subcontractor involves:
- Defining the organization's competitive advantage through the consultant's and/or subcontractor's contributions in product development/design or service delivery,
- Allowing the consultant's and/or subcontractor's knowledge of the organization's competition and their expertise in the specific IT requirements to facilitate the appropriate technical response to the organization's proposal requests,
- Establishing a functional awareness and specified knowledge of each partner's requirements and expectations for addressing the organization's competitive demands, and
- Matching the consultant's and/or subcontractor's technical strengths with the organization's performance expectations.
The resultant agreement or alliance should demonstrate a firm commitment to achieve mutual benefits to both parties, based on open communication, reciprocal cooperation, and trust. Moreover, this agreement or alliance should evidence an appreciation for the competitive advantage available to each partner and the bilateral support for any adjustments to the underpinnings of the agreement or alliance.
An Alternative Approach. The systematic and thorough approach to the procurement of the "best buy" in terms of the function to be performed by a product of service is integral to the performance of value analysis. More recently, the cross-functional team approach to conducting value analysis is similar to that mentioned previously for identifying, qualifying, and selecting technically competent computer consultants and/or subcontractors. Many organizations prefer to involve core staff from the various functional departments to perform the detailed analytical work associated with value analysis. When support and cooperation are provided by all "interested parties," this approach is far superior to the more traditional one where procurement or contracting staff perform value analysis in support for a specific source selection. Moreover, the cross-functional team approach is a better choice because each functional team member contributes his/her expertise to offer a more inclusive analysis, and they carry this analytical skill back to their departments for applications in other areas. Taking advantage of a partnership with the selected consultant and/or subcontractor will permit the employment of their special expertise to the conduct of the value analysis process. This additional proficiency, coupled with those skills from core staff members in the functional departments, will contribute a holistic viewpoint to this analytical process.
A review and assessment of actual or anticipated costs associated with a proposal for the procurement of a product or contracting for a service is essential to the performance of cost analysis. This analysis requires the application of experience, knowledge, and judgment to the data in the proposal to estimate procurement or contract costs. When combined with value analysis, the exercise of analyzing the probable cost of a product or service can be performed by a cross-functional team. The team applies its technical, financial, and operational experience and knowledge to forming a collective judgment relative to source selection based on the function to be performed by and the cost of a product or service. Although consultants and/or subcontractors, in an existing partnering arrangement, usually do not provide any input to the cost analysis process, they may share prevailing wage data, industry time of completion benchmarks, prevalent profit margin expectations, and other (e.g., materials, communication and travel) relevant cost information. An organization can fully exploit a partnering agreement or strategic alliance with an IT professional and/or firm by fostering a collaborative approach, through the combined efforts of the organization's cross-functional team and the consultant and/or subcontractor's staff, to analyze the functionality and cost of a product or service described in a proposal.
Conclusion. High technology organizations can use the services of recognized computer consultants and subcontractors, when working on several technically complex and concurrent projects, to complement their core staff in providing both specialized product development/design and service delivery to their clients. Identifying, qualifying, and selecting these specialists can be effectively accomplished through the use of cross-functional teams and strategic partnering agreements. This collaborative approach will produce a more efficient method of consultant and/or subcontractor source selection.
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