This document provides an overview of building a successful consulting practice, including key success factors, strategies for consultant retention, project management best practices, and metrics for measuring financial performance. Some of the main points covered include focusing on customer satisfaction, communication skills, innovation, leadership development, managing projects effectively through planning, control, and communication, and monitoring key metrics like revenue, expenses, headcount, and contribution margin. The overall aim is to execute projects successfully and profitably while developing consultants and satisfying customers.

1. Building a Successful Practice
Making & Keeping it Profitable
Presented by:
Chuck Crafton
© 2001
Slide 1

2. Success Factors for a Consulting Practice
Customer Focus/Quality
Communication/Interpersonal Skills
Execution/Productivity
Team Participation
Innovation and Problem Solving
Leadership/Employee Development
Technical/Functional Skills
Slide 2

3. Success Factors aligns individuals and teams with
strategy in order to achieve business results.
Key Players
for the Future
Right Person in
the Right Job
Succession
Planning
Strategy
Major Business
objectives
Business
Results
Success
Factors
Planning
BU plans
to support
its objectives
Staffing
Performance
Management
Clearly defined
performance
expectations
Leadership
Development
T&D programs
that strengthen
critical skills
Slide 3

4. Goals & Mission
• Work Directly with AEs & BD/Channels in
the Territories to:
• Assist in -DRIVE- the Sales Strategy
- Sales Calls
- Briefings
- Proposals
• Deliver Solutions!
Slide 4

5. The Retention Triangle
The Work
•
Consultants are driven by:
•
•
•
Compensation
The work/assignment
The ability to learn new
skills and technologies
$
Learning
Slide 5

6. The Retention Triangle
The Work
The goal is to create an
environment where the focus of the
consultant is on the challenge of
the work that they are doing and
the constant ability to learn new
skills and Technology.
If the consultant looses focus on
the two non-monetary aspects of
their career, then the next best offer
will win them away!
It is the responsibility managers to
keep the focus:
$
Up and to the Right!
Learning
Slide 6

7. Control Your Own Destiny
Building Blocks Of An
Effective Organization
1.
2.
3.
4.
A sense of urgency
A commitment to excellence
A healthy discontent for the way things are
An appreciation for the awesome responsibility
of leadership
Slide 7

8. If you were going to be accused
of being a Project Manager,
would there be enough
evidence to convict you?
Slide 8

9. Project Management
• EVIDENCE of the 3 C’s and the 3 R’s
3 C’s:
– Command
• Organization
• Roles & responsibilities
• Strategic & Tactical Control
Slide 9

10. Project Management
– Control
• Plan (tasks, durations, dependencies,
resources, …)
• Risk Management
• Requirements Management
• Change Management
• Configuration Management
• Final Acceptance Definition
• Testing Strategy
Slide 10

11. Project Management
– Communication
•
•
•
•
Status Reports (internal, external, consultant)
Reviews and Approvals (signoffs)
Formal Deliveries
Action Items/Issues Tracking
Slide 11

12. Project Management
3 R’s:
– Requirements
•
•
•
•
•
Contract
Specifications
Standards & Constraints
Assumptions
Agreed to definitions, designs, deliverables
Slide 12

13. Project Management
– Resources
• Time (schedule)
• Talent (MSTR, client, and subs)
• Tangibles (equipment, travel, training, …)
– Revenue
• Budget vs Actual
• Timely Reporting and Invoicing
• Profitability
Slide 13

14. Primary Goal
Quality Deliverables,
On Time, On Budget,
with No Surprises, &
A Satisfied Customer!
Slide 14

15. The Challenges (1 of 4)
• Technology
• People
• Methodologies
• Personalities
• Hardware
• Biases / Opinions
• Software
• Cultures
• Networks
• Past Experiences
• Data
• Personal Concerns
• Applications
• Professional
• Support
Pressures
• Personal Values
Slide 15

16. The Challenges (2 of 4)
• Budget
• Schedule
• Fixed
• Crisis Situation
• Shrinking
• Lost Opportunities
• Downsizing
• Hard to determine
• Outsourcing
• Harder to track
• ROI
• Hardest to manage
• Cost/Benefit
• Impossible to
• Usually
guarantee
• Willing to spend to
“buy back time”
underfunded
• Unable to fund the
“buy back of time”
Slide 16

17. The Challenges (3 of 4)
• Requirements
• Should be business
•
•
•
•
•
•
driven
Hard to define
Must be tangible
Managed Change
Interdependence
must be clearly
defined
Versionable
BINDING
• Expectations
• May be business
•
•
•
•
•
•
driven
Hardest to define
Intangible, a feeling
Changeable
Interdependence
often unclear
Easily Influenced
NOT BINDING
Slide 17

18. The Challenges (4 of 4)
• Client‟s Business
• Practice Business
• Crisis!
• Quarterly Revenue!
• Changing Strategies
• Product Issues
• Changing Agendas
• Support Issues
• Changing Personnel
• QOL Issues
• Urgent!
• Urgent!
• Resource Issues
• Resource Issues
• Organizational
• Organizational
Issues
Issues
Slide 18

19. The Problem with Projects
• Almost 45% of “large” software
projects will be abandoned prior to
completion
• Risks are proportional to size - the
larger the projects the more hazardous
the probable outcome
• There are many ways to fail and only a
very few ways to succeed
Slide 19

20. Twelve “Success” Attributes
• Effective project
planning
• Effective project
cost estimating
• Effective project
measurements
• Effective project
milestone tracking
• Effective project
quality control
• Effective project
change
management
• Effective
development
processes
• Effective
communications
Slide 20

21. Twelve “Success” Attributes
• Capable project
managers
• Capable technical
personnel
• Significant use of
specialists
• Substantial
volumes of
reusable material
Slide 21

22. Successful Project Technologies
• Accurate software
measurement
• Early use of
estimating tools
• Continuous use of
planning tools
• Formal progress
reporting
• Formal architecture
planning
• Formal
development
methods
• Formal design
reviews
• Formal code
inspections
• Formal risk
management
Slide 22

23. Successful Project Technologies
• Formal testing
methods
• Automated design
and specifications
• Automated
configuration
control
• Less than 10% creep
in requirements
• Use of suitable
languages
• Controlled and
measured
complexity
• Significant reuse of
certified materials
• Formal database
planning
Slide 23

24. Unsuccessful Projects Factors
• Excessive schedule
pressure
• Executive rejection
of estimates
• Severe friction with
clients
• Divisive corp.
politics
• Poor team
communications
• Naïve senior execs
• PM malpractice
• Unqualified
technical staff
• Generalists used
for critical tasks:
• Quality Assurance
• Testing
• Planning
• Estimating
Slide 24

25. Importance of Project Managers
• Deficiencies of the project
management function is a
fundamental root cause of software
disaster.
• Excellence in project management can
do more to raise the probability of
success than almost any other factor.
• This factor is common across all
domains of the software industry.
Slide 25

26. Malpractice
• Unaided manual (estimating) methods in
the context of large software systems can
be viewed as “malpractice”.
• Manual planning and estimating of
really large projects is “irresponsible”.
• If software project managers faced the
kind of malpractice litigation that
physicians face, keeping measurements
would be standard practice.
Slide 26

27. Who are our Customers?
• The Consultants
• The Customer
• The „Sales Folks‟
• Your Manager
Slide 27

28. The Practice Manager
• Is Responsible for:
• Sales
• Delivery
• People
Slide 28

29. The Practice Manager
• Can Not Be Successful Without:
• An Excellent Sales Team
• Excellent Consultants
• Excellent Customers
• An Infrastructure
• A Excellent Manager
Slide 29

30. Surprises!?!
• Never Surprise the Customer
• Never Let Yourself be Surprised
• Never Surprise Your Manager!
Slide 30

31. The Practice, By the Numbers ...
JULY
Actual
LOCAL CURRENCY (in 000's)
Consulting Revenue
Learning Center
Client Site
ASEP
Self Study
Education Revenue
AR Risk
Net Transfer Revenue
TOTAL REVENUE
Bonuses
Commissions
Training Documentation
All Other COR Expenses
COST OF REVENUE
Payroll
Benefits
3rd Party Consulting
Expense
3rd Party Education
Expense
Temporary Help
Staff Costs
Travel
Travel Reimbursement
Entertainment & Meals
Entertainment & Meals
Reimburse
Net Travel
% of
Budget
Budget
530
0
0
0
0
0
2
0
532
515
0
0
0
0
0
0
0
515
103%
0%
0%
0%
0%
0%
0%
0%
103%
33
6
0
0
39
33
10
0
0
43
100%
63%
0%
0%
91%
189
35
30
217
49
0
87%
73%
0%
0
0
0%
0
254
11
(1)
1
0
0
266
19
(14)
2
(1)
0%
96%
58%
5%
50%
-2%
11
6
200%
Recruiting
Employee Training
Training Documentation
Relocation
PR/Marketing
Occupancy Allocation
Depreciation
Telephone Expenses
General Administrative
All Other Operating
Expenses
OPERATING EXPENSE
0
1
0
0
0
(10)
3
1
2
0
0
5
0
0
0
2
6
2
1
0
0%
17%
0%
0%
0%
-500%
49%
33%
217%
0%
263
289
91%
TOTAL EXPENSE
302
332
91%
CONTRIBUTION
MARGIN
230
43%
183
36%
126%
122%
2
12
12
2
0
28
2
0
2
30
0
30
0
6
14
11
2
33%
86%
109%
100%
33
3
0
3
36
0
36
0
85%
67%
0%
67%
83%
0%
83%
HEADCOUNT
Associate
Consultant/Educator
Senior
Principal
Total Billable
Managerial Staff
Non-Managerial Staff
Total Non Billable
Total MSTR Headcount
3rd Party FTE Equivalent
Total Adj. Headcount
Slide 31

32. Payroll Multiple
• Consultant‟s Annual Base x 3.5
• $75,000 x 3.5 = $262,500
• Answer / Annual Billable Hours =
Minimum Hourly Rate
• $262,500 / 1500 = $175
Slide 32

33. Keep Your Eye on Expenses
• Spend the Money Like it‟s Your Own
• Control What You Can
• Watch What You Can‟t
• Do The Right Thing for Your Folks!
• Consultants Should Think This Way
Also
• Reimbursable Expenses
• It‟s the Customer‟s Money!
Slide 33

34. Things!?!
• Do Things Right!
• Do The Right Things!
Slide 35

35. Know Your Customer
Or
MBWA
Slide 36

36. Execution
• Consultant Development
• Bi-annual Performance Reviews
• Training Plans
- Mission Critical
- Professional Development
- Personal Development
• Advancement Criteria
• Recognition Events
• Spot Bonuses
Slide 37

37. Best Practices
• The Triple Threat Manager
• Business Development - Sales
• Business Management - Delivery
• Consultant Manager - Mentor & Develop
Slide 38

38. Best Practices
• PM Handbook
• Policies & Procedures
•
„Rules of Engagement‟
• Project Checklists
• Identification
• Planning
• Startup
• Execution
• Close-out
• Post Review
Slide 39

39. Best Practices
• Consistent Delivery of Quality
Services/Solutions
• Project Definitions
• Status/Engagement Reports
• Client Satisfaction Policy
• Client Survey
• Change Control
• Project Quality Review
• Risk Assessment
• Proposal Template & Library
• Training Procedures
Slide 40

40. Excellence
Excellence is ultimately....
persevering when others think the task
is too difficult,
risking more than others think is
healthy,
caring more than many think is prudent,
and
expecting more than others think is
possible.
Slide 41