Costs Count but Talent Wins: 3 Vendor Talent Management Strategies that Improve Outcomes and Lower Costs

Cost pressures on large IT-enabled business transformations can be intense.  It is not surprising that program managers often become blinded to the risks they take in opting for lower cost resources in an effort to satisfy the C-suite.   The effects of poor quality talent are undeniable — we have all seen it.

• Code peppered with errors leads to an extended time for testing and remediation
• Business process designs that satisfy 80% of the transactions leave 20% in limbo
• Businesses crash and burn as a result of a poorly planned go-live

Large enterprise business process or IT initiatives can last three to five years, some with a considerable turnover on project teams.  That means talent management should be an active, ongoing pursuit – not a “once-a-year” discussion or occasional agenda item.

While not intuitively obvious, top talent from top-tier firms and low costs are not mutually exclusive.  In my experience, project leaders who apply a handful of proven talent management strategies have the opportunity to reduce average per-hour consulting costs by 10-15% annually. More importantly, they will increase their project’s likelihood of success and the ability to generate tangible value for the business.

Here are three talent management strategies that, when implemented aggressively and consistently, drive project success:

Sweet Spot Targeting

Most of the big consulting companies have what I call “talent sweet spots,” areas where their clients see higher ROI. To find your vendor’s sweet spots, look for and focus on the following types:

• Athletes – Athletes are versatile individuals with multiple functional disciplines and skill sets on their validated résumés. Assuming their skills match your project needs, athletes can help you avoid bringing in two or more additional consultants.
• Recently promoted talent – While this might seem counterintuitive, recently promoted talent is valuable because it has been recently endorsed by your vendor’s leadership and it guarantees you an extended stay at the current rate. In other words, you avoid sudden jumps in your rate because someone assigned to your project is due for a promotion.
• “Newbies” – Typically, you can negotiate 50% rate discounts on fresh hires straight from college. In some cases, they may be free. Though newbies have no real experience, they are often eager to make a positive impression and, if they don’t work out, your partner will likely comp them for you.
• Managers and Senior Consultants who have spent their careers with one firm – In my experience, these levels are where real value sits with big systems integrators and consultants. These folks have been there long enough to build corporate relationships that can be leveraged but have not yet jumped ship or checked out to have a life. The corollary to this rule is to stay away from partners and the firm’s more experienced new hires. Making partner is a game of attrition and, at many firms, partners are not necessarily the most skilled or knowledgeable people. New hires into the management or senior consulting ranks don’t have the internal network and typically you can get this same level of experience by utilizing independent consulting firms.

Aggressive Rotation

It is easy to get caught in the trap of keeping the same people on the project over the whole course of the project. Some corporate IT leaders even seem to prefer the continuity, based on the argument that they don’t want to lose the investment they have made in educating project resources and that it also takes too long to bring new people up to speed. The fact of the matter is that you are short-changing your company by not changing talent. Rotating 20% – 30% of your talent on a scheduled basis allows you to:

• Get rid of bottom performers – You should evaluate external consulting talent in the same manner as internal talent (though perhaps not as formally). With consultants, you have the opportunity to get rid of the bottom 15% at almost any time you like.
• Bring in fresh ideas in a particular subject area – Over the course of 12-18 months, you likely have tapped into 80% of the experiences that an individual consultant has to offer. By rotating, you open up the opportunity to bring in fresh ideas to solve problems.
• Look for cost-reduction opportunities, especially in senior talent – I believe most of the value from the highest-priced talent comes during a relatively short period of time after they’ve engaged. That’s why you should periodically replace a portion of your most experienced consultants with lower-cost resources. The same technique should be applied to those individuals your consultants may be targeting for promotion.

Structural Cost Reduction Planning

Over time, IT leaders should plan for step changes in consulting rate levels with the goal of reducing overall project costs. To get there, a good deal of planning and forethought is necessary. I recommend collaborating directly and openly with your consulting partner to achieve year-over-year cost reductions in talent by:

• Keeping documentation up to date
• Taking more work off-shore through well-established delivery processes
• Continuously shifting responsibility from the consultant to your company or another firm
• Using internal accelerators to reduce the talent level necessary to complete work
• Finding resources closer to the key project sites and locations to reduce travel and living expenses.

The bottom line is that talent management is underrated as a means to reduce project costs and generate more value. Using these techniques, you can achieve annual savings of 10 – 15%. Yes, it takes work – proper planning, attention to detail and willingness to engage with your vendors and consultants regularly and openly – but the potential pay-off is enormous. As I like to say, costs count, but talent wins.

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