When Orange County officials recently began the process of renewing the county's data center and telephone support outsourcing agreement, they realized that they would need specialized IT consulting help to determine how best to structure a new deal.
To get a better idea of how other government agencies have handled similar arrangements, and for advice about how to best approach the evolving information technology vendor environment, the county hired Gartner Group, a Stamford, Conn.-based research firm, to survey the market and make suggestions about what should go into the statement of work that will be the basis of the rebid proposal.
In addition to Gartner's IT expertise, however, the county also is making use of the firm's unique role in the information gathering process to gain a broader perspective on end-user attitudes.
"They are talking to our users, and I think they are learning a few things that we didn't realize," said Leo Crawford, the county's chief information officer. "Sometimes users are more willing to discuss problems with an outside source, and a consultant can be more objective in gathering that type of information."
In the increasingly complex public-sector IT environment, a consulting firm's ability to survey user attitudes or provide objective criticism often can mean as much to a proj-ect's success as the technical expertise it provides. As important as such non-IT functions are, though, they are not easy to quantify and are even harder to express as an explicit condition in a contract. As a result, the process of evaluating and selecting a consultant is more difficult than ever.
For state and local IT officials, the decision to hire a consultant is fraught with worry. From the outset, there is concern about whether a situation warrants the expense of taxpayer money for an outside expert. Once the choice to go ahead has been made, there is the question of which consultancy best fits the project at hand. But as Orange County's situation demonstrates, there are sometimes even more subtle issues that need to be addressed.
Navigating these obstacles may seem like a Herculean task, but a number of officials and consultants agree that there are ways to make the process easier. The consensus seems to be that hiring the right expert for a project requires a mix of instinct and experience and an ability to emulate the positive examples of others.
Instinct, for example, was an important part of the selection process when Michigan undertook several major IT projects in the early 1990s. As Michigan's CIO at the time, John Kost-now a consultant himself as vice president of marketing and business development for TRW Inc.'s public-sector solutions group-had to find a consulting firm that could provide ongoing expert advice during the installation and maintenance of a financial management system.
The state surveyed a host of big-name consulting firms for the $130 million project but decided to hire Spectrum-Maximus Inc., a relatively small, lesser-known company based in Austin, Texas.
"It was a very small firm for a very large project, but the arrangement worked out very well," Kost said. "The state has used Spectrum many times since, because the firm has proven its worth. It's important to remember that size doesn't really matter. Success is a function of the quality of the people, and that's what consulting always comes down to-how good the people are and whether they have done similar work in the past."
For some state and local IT shops, hiring a consultant is similar to managing an outsourcing agreement or working closely with a favorite vendor. The need to balance internal and external resources is the primary consideration in each case. The total external services segment of the state and local government market-of which IT consulting is a component-is estimated at $10.1 billion for 1999, and is growing at a rate of 14.5 percent annually, according to James Macaulay, a public-sector analyst at Dataquest Inc.
"State and local governments are increasingly looking to the vendor community for expertise," said Michele Grisham, public-sector manager for the Internet business solutions group at Cisco Systems Inc. "Although the profit motive tends to be the main driver for startup companies, as vendors mature, they can afford to cover all aspects of the market, so major vendors such as Cisco, IBM [Corp.], Unisys [Corp.] and Oracle [Corp.] all have large government sales divisions. The challenge for the vendor community is to find a champion within a state or local IT department who can show people what they can do with new technology."
An ability to smoothly integrate external resources often hinges on the degree to which specific objectives can be identified early in the evaluation process.
"You have to make sure that you are using a consultant for the right reasons and in the right circumstances," said Brian Callahan, director for organizational effectiveness for Delaware. "They are an excellent resource, but they have to be managed properly, and you need to make sure that you have specified their role in terms of their responsibilities and the length and nature of the engagement."
The need for clearly stated objectives and well-defined roles is particularly important when more than one consultant is working on a project. Indianapolis' ambitious outsourcing and privatization plan undertaken in the early 1990s is a case study in managing multiple consultants properly.
"If there are multiple contracts, they should be tied to common successes," said Michael Yoder, who was chief of staff to Indianapolis Mayor Steve Goldsmith during the outsourcing initiative. Yoder now is an executive consultant with the Convergent Group, a consulting systems integrator. "Each contractor's success should be tied to the success of the others and to the project as a whole."
Drawing on the strengths of each consultant while ensuring that there is no duplication of effort requires a powerful manager. "When you have multiple contractors, you need a strong person on staff to handle knowledge management, to make sure that all the relevant information gets to all involved parties," said Janine Faris, manager of IT program analysis for Mitre Corp.
- Patrick Walsh
Things to Do When Evaluating an IT Consultant:
Know what you need.
"It's really important that the objectives be clearly identified. A work program should be structured with finite, controllable and manageable steps. Then you can assign the appropriate resources."
- Mike Fabrizi, Mitre Corp. specialist in outsourcing and privatization
Hire an honest broker.
"Even though you hire them to protect your interest-to oversee the party that's building your system-the consultant had better be willing to go outside the chain of command and report when your own people fail to live up to their end of the bargain. They need to go beyond whoever is paying their bills and make the CIO aware that there is a problem."
- John Kost, vice president of marketing and business development, TRW Inc.'s public-sector solutions group
Sweat the details.
"You have to ask yourself, 'Who is going to manage the consultant? Who will the outside person report to? Who will manage their work? Where will they sit?' All those kinds of issues. In the [request for proposals], you spell out what the consultant is going to do for you, but you also have to work out the details of what you will need to do for them to make the arrangement work. You need to decide the details of how you will govern the engagement."
- Leo Crawford, CIO, Orange County, Calif.
Use your instincts.
"You need to determine the degree to which the service provider is a thought leader. Have they developed innovative government solutions in the past? And how early in the sales cycle does the vendor bring the project manager into the selling process?"
- James Macaulay, public-sector analyst, Dataquest Inc.