Should You Use Independent Consultants for Software TCO?

ByPrimary Researcher

Executive Summary

  • Can independent consultants be used to produce TCO estimates?
  • This article is an overview of how to leverage TCO.

Introduction

A company that is purchasing software may use this book or other sources to develop their own TCO. Generally, however, this is not a good idea. Purchasing companies do not have the experience with the application, and this experience is a critical component of performing the analysis. Optimally an IT analyst firm would provide TCO analyses, as they have the broadest database of TCO data points. The problem is that the cost of TCO analysis or really any consulting from the major IT analyst firms is often exorbitant.

Contacting a Consulting Company for TCO Calculation?

  • If you contact a partner at a major consulting company who works out of the SAP practice, you will hear about the great benefits of SAP.
  • If you contact a partner who works out of the Oracle practice—you get the idea.

So, if neither consulting companies nor IT analysts can be relied upon for dependable TCO analysis, then whom can a company turn to?

The Best Case Scenario

The best-case scenario here is to find an independent consultant through something like LinkedIn. An independent consultant’s experience in an application can be verified by the software vendor. However, a few rules should be followed to ensure that you control for bias as much as possible.

Requirement #1: Writing and Analytical Skills

The independent consultant must have writing and analytical skills. There are many types of skills available on the independent market. The most common type of consultant is a pure configuration consultant. This type of consultant knows the switches to turn on and off in the application in which he or she specializes. The consultant tends to have moderately good communication skills (the communications skills are often limited by the necessity to also have the ability to grasp the complex configuration of an application), but do not generally perform TCO analysis. A good choice is a consultant with a mix of implementation experience and analytical experience.

Requirement #2: Experience and Critical Thinking

The independent consultant should have many years of experience. This is important because when one is younger, it’s more difficult to see consistencies between many implementations; younger consultants do not have broad experience on a large number of projects. Part of what you are hiring this consultant for is his or her personal database of projects of a similar type.

Requirement #3: True Independence

When the independent consultant is hired, it should be made clear that the consultant will only participate in the TCO phase. If the independent consultant believes that he or she may gain more work after the selection, this knowledge will bias the independent consultant most likely in favor of the software vendor—so that he or she can then work on the implementation. Single sourcing in any service area is truly a recipe for failure. Hiring more experts for smaller pieces of work is a more effective strategy because it allows you to triangulate the information that is received from different entities. I do this myself when I hire attorneys or CPAs. There are various levels of expertise, and no one knows everything. It’s very easy to move outside of the service provider’s area of expertise, where another expert is a better choice.

Requirement #4: Varied Application Experience

When searching for an independent consultant, it’s important to find one with exposure to several applications in the area so that the consultant can compare and contrast for you the different applications. During software selection, multiple companies present to the prospect, and the independent consultant that you choose should be familiar with several of these applications.

Requirement #5: Lack of Common Positive Bias

During the interview with the independent consultant, determine if the consultant can see the positives and negatives of the applications that he or she will be helping you evaluate. If the consultant is simply a cheerleader for one application, then he or she will not be able to help you, even if quite knowledgeable in the technology.

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Conclusion

It is possible to find a good independent consultant who does TCO, but the problem is first verifying that they are truly independent. I am not aware of an independent consultant who performs TCO estimations for any of the major applications. However, the normal sources for TCO estimation, such as consulting firms, IT analysts, or vendors are not acceptable.