Question: Getting consultant performance tied to results

We are a large manufacturer of consumer appliances. Our firm has recently retained consultants to migrate several legacy IT applications to our main ERP system, and retrain our employees on the new processes.

Unfortunately, although most implementation has been completed by the consultants, we are nowhere near recognizing the productivity benefits that were promised at the beginning of the project. The quality of employee training might be key to this.

Our project is currently on T&M basis, and we want to re-negotiate to add performance based payments, so the consultants are vested in showing actual results (they promised earlier) tied to our ledger.

What is the best way to approach this topic with them?

3 Expert Insights

Straight up. If you guys can't be direct with them about what's upsetting you and what your concerns are, then the relationship is already out of balance. They may or may not want to shift to new metrics however any consultant worth their salt would be willing to adjust unless they thought they couldn't deliver on the performance based payments.

What will be important on your end, is that your company do everything possible to ensure that the training 'sticks'. I've seen plenty of great training pass through the employees just because they don't want to change so implementation is slow, fragmented or even unconsciously stalled. If someone isn't using what the consultant brought then it's on the company not the consultant. No consultant/training, no matter how brilliant and valuable, will be implemented if the people receiving it don't take it actively on board. The quality of employee training is only as good as the people who are being trained are committed to it.

This is not an excuse for consultants to offload responsibility as they should be taking some of these factors into account in the contract.  I would definitely advise against T & M contracts in future unless they have very strong performance metrics that are enforceable.  Often they are a drain on the bank account of the company because it's like an open checkbook.

ERP implementations are among the toughest IT projects, but that is no excuse: to not get the results you anticipated (and were promised) would, as Dolly Parton once said, "fry my grits"!

Truth and reality.  The truth is that many consultants will say they like performance type contracts, but the reality is that most do them only when we are required to and very rarely if ever for IT integration projects.  Why?  They depend on too many factors outside of their control, and we consultants like controlling our own destiny (and other things as well).  :)  

You have two problems.  One is the implementation, the other with the consultant.  The first you can deal with, whether it is redoing the work, more / better training, etc.   Check your contract to see if there are any clauses that would indicate that there was a certain standard that they were expected to meet.

The second, the relationship with the consultant, is more problematic.  You must talk with them directly and let them know your feelings about the lack of performance as based on the contract and their promises, and figure out where you go from here.  Converting to a performance-type contract may not work - the consultant won't want to do that without some incentive ($$$) to do this.  However, if there is sufficient incentive, whether it is actually $$$ or the threat of a lawsuit, they might consider it.    

Be sure to have the contract language regarding expected results and scoping documents handy, as they will refer to those in the negotiations.  

Remember, YOU own the project and its direction, and they work for you.  Good luck!

As a manager and/or consultant in many similar such projects (more than I can count!), the following comment is critical:  "...we are nowhere near recognizing the productivity benefits that were promised at the beginning of the project."

You have to ask yourselves honestly who "promised" the productivity gains.  Was it really the consultant, or did you fall prey to an overzealous software sales person?  And how did you (or the sales person) determine those projected gains?  Could your expectations have exceeded the practical results an experienced IT team would have promised?  

ERP software is a sound step toward raising productivity, but after implementation sometimes the customer will discover that they have merely "paved over the cowpaths", rather than built a new freeway.