Module 3


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Module 3

  2. 2. AM ITY GLO BAL BUSINESS SCHO O L Consultants are Not Liked!!! A person who takes your money and annoys your employees while tirelessly searching for the best way to extend the consulting contract!! Will hold a seemingly endless series of meeting to test various hypotheses and assumptions. These exercises are a vital step toward tricking managers into revealing the recommendation that is most likely to generate repeating consulting business!!! After the correct recommendation is discovered, it must be justified by a lengthy analysis. Analysis is designed to be as confusing as possible, thus discouraging any second guessing by staff members who are afraid of appearing dense!!!
  3. 3. AM ITY GLO BAL BUSINESS SCHO O L Consultants are Not Liked!!! Consultants use a standard set of decision tools that involve creating alternative scenarios based on different assumptions. Any pesky assumption that does not fit that does not fit the predetermined recommendation is quickly discounted as being uneconomical by the consultants. Consultants will often recommend that you do whatever you are not doing now. Consultants do not need much experience in industry in order to be experts; they learn
  4. 4. AM ITY GLO BAL BUSINESS SCHO O L Consultants are Not Liked!!! Consultants eventually leave, which makes them excellent scapegoats for major management blunders. Consultants can schedule time in your boss’s calendar because they don’t have your reputation as a troublemaker who constantly brings up unsolvable issues. Consultants often are more trusted than your regular employees. Consultants will return phone calls because it is all billable time to them. Consultants work preposterously long hours, thus making the regular staff feel worthless for only working 60 hours a
  5. 5. AM ITY GLO BAL BUSINESS SCHO O L Consulting Costs The Cost of initial analysis and assessment, possibly prorated over the expected life of the intervention. The cost of developing solutions. The cost of acquiring solutions. The cost of application and implementation of the intervention. The cost of maintenance and monitoring The cost of evaluation and reporting The costs of administration and overhead for the consulting intervention, allocated in some convenient
  6. 6. AM ITY GLO BAL BUSINESS SCHO O L Cost Vs Value How can you as a client determine if you are getting good value for the money you spend (or invest??) on a consultant???? Return on Investment Benefit to Cost
  7. 7. AM ITY GLO BAL BUSINESS SCHO O L ROI Net Benefits from Consultants AdviceROI % = Total Consulting Cost X 100 In most cases, isolating consulting effects and the “benefits” thereof is very difficult if at all possible….. May need longitudinal data Observable and measurable effects “will” take time to appear Even costs may have heads one may miss!!
  8. 8. AM ITY GLO BAL BUSINESS SCHO O L Benefit to Cost Ratio BCR = NPV of benefits divided by the NPV of costs Bt is the benefit in time t and Ct is the cost in time t. If the BCR exceeds one, then the consultant has delivered value!!
  9. 9. AM ITY GLO BAL BUSINESS SCHO O L How to Avoid Consulting Disasters The onus of that lies on both the client and the consultant It is a good idea to engage consultants for specific tasks and avoid carte blanche engagements Never a good idea to hire a consultant because you lack vision or have not been able to set clear goals for your company The deliverables will have to be clear, concise and actionable Don’t rush! Action should be based on results of careful observation and analysis and that takes time Consider it an investment, not a cost!