Consultants - How to Realise Benefits to the It Clients

The value in an approach of managing benefits is the mutual realization of the value a project has made in an organization” How could a consultant set up monitoring and measurement system that illustrates the realization value for client’s organization? How could they use the Benefits realization approach as a part of their marketing strategy?

Answer:

Fingham (1999,pg 349 ) has explained consulting business as an amalgamation of management (client) needs together with consultant identities, in essence how both sets of interests and identities feed off each other. But, irrespective of the concept of matching identities, it is important to understand that a client while selecting a consultant would prefer experienced consultant with demonstrated outcomes of projects undertaken by him.

Here, Sedera et al(2001) have demonstrated that uncertainty of benefits (Enterprise Systems implementations) in projects directed the need for monitoring and measuring project’s performance. However this concept could be generalised to other non IT related sectors as well, as a client organization may perhaps prefer a consultant who has documented results of his previous projects and are clearly understandable.

Now a question arises, how a consultant can (specifically an external consultant) demonstrate his realization value for a client organization. Studies by Barua et al., 1996; Martinsons, 1991; Mukhopadhyay et al., 1997; Sharba et al., 1988, as cited in Sedera et al(2001) demonstrate some traditional methods of measuring performance which are mentioned below:

Return On Investment [ROI]

Economic Value-Added [EVA]

Net Present Value [NPV]

Internal Rate of Return [IRR]

Return On Capital Employed [ROCE]

Hence after the project has been implemented, figures like ROI (money gained or lost on an investment relative to the amount of money invested), ROCE (comparing earnings with capital invested), IRR (yield on the investment) would help a consultant realize their project’s benefits for client organization. At the same time, the results obtained from the past projects could be shown to the new/potential clients (keeping confidentiality and ethical practice in mind). These results could act as a marketing tool/strategy for a consultant to attract new clients and retain previous clients.

Vickers (2000), cited in Sedera et al(2001) states that cost justification in manufacturing is straight forward, where the tangible benefits are much larger than the intangible benefits and further explains that cost justification in services(service sector) and human resources is harder to demonstrate. Moreover Rosemann et al (2001) quote “Intangible assets usually bring long term, sustainable benefits to organizations, while financial benefits are mainly focused on short-term improvements” which shows the importance of measuring intangibles as well in consulting business.

Considering a balance scorecard approach by Kaplan and Norton, 1992, 1996, 2000, as cited in Sedera et al(2001), could be used as a measurement system for other sectors where not only