On the Same Page - focus of article is on managing implementation consultants - Brief Article

MAKE SURE YOUR INTEGRATORS UNDERSTAND WHAT YOUR COMPANY WANTS AND NEEDS FROM AN HRIS.

John Ryder inherited a disaster more than a year ago when he became director of HR technology at Dynegy Inc. in Houston. An HRIS implementation at the 6,000-employee firm, which markets and trades energy, was 10 months behind schedule. "A lot pointed to a total failure to manage the relationship with the consulting partner brought in to help with the implementation," says Ryder, who since has been promoted to division vice president of HR.

Implementation consultants, also known as integrators, are indispensable to most HRIS, payroll and other large technology implementations because they bring knowledge and/or time that your HR or IT staffs lack for the project. But if not managed properly, they can be a curse instead of a blessing. This is especially true in HR because, experts say, many HR pros don't have the skills to manage a project in which staff and consultants work together.

At Dynegy, Ryder found numerous problems: The lines of responsibility for staff and consultants were not defined--no one knew who was in charge. It was not clear that there was an overall project manager. The Dynegy staffer managing the implementation fought with the consultants. The consultants thought they would have significant input on the direction of the implementation, but that wasn't what users understood. And no effort was made to organize the team to transfer knowledge from consultants to Dynegy staff.

Ryder, who chairs the HR technology management committee of the Society for Human Resource Management, hears many similar horror stories. "These are all common problems in HR implementations," he explains.

But consultants also have their side to tell.

"Clients can say, 'We don't have time to do a lot of planning; so, just tell us what it costs and build it,"' says Jay Stright, national practice leader for business solutions development at AGConsulting Inc., a subsidiary of Automatic Data Processing (ADP) Inc. in Roseland, N.J. "That's like saying, 'I don't know where I want my house; just tell me how much it will cost and build it.'"

The relationship with implementation consultants does not need to become a nightmare if the client pays attention to a few issues:

* Don't confuse strategic consulting with integration work.

* Engage in detailed planning before you retain outsiders.

* Maintain control over those you hire.

* Install procedures to resolve disputes and manage "scope creep."

"The secret to having an effective consulting relationship starts with knowing your business need and what you're looking for," says Naomi Bloom of Bloom & Wallace in Fort Myers, Fla. "Then, systematically look for the right match. Once you pick someone, give them a reasonable chance of success."

Strategy and Implementation Don't Mix

Bloom is a strategic consultant who does not do integration work in part because she wants to remain objective. She says many large consulting firms use strategic consulting as a loss leader to win multimillion-dollar implementation contracts. They have a vested interest during the strategy phase to win an implementation contract that plays to their strengths--not necessarily to the client's needs.

"It is better to buy the strategy work, pay what is necessary and not be obligated to do the implementation work with them," she says. "Help on an implementation should be a separate decision."

Strategic work should be done by a small internal team with an outside consultant who provides help in methodology, perspective, best practices and other areas, Bloom says. If the company decides to install an HRIS, a strategic consultant can provide advice in choosing a software vendor, identifying possible integration partners and finding outside project-management skills if the client doesn't have them.

Bloom says strategic consulting relationships should last no more than six months. Success or failure during an implementation grows from the strategic work done or not done, she adds.

Plan, Plan and Plan Some More

Once there's a strategy, make a detailed plan before hiring implementation consultants.

"The relationship with the consultant starts long before you even meet them," says Robert Jensen, assistant general manager of the department of general services for the City of Los Angeles. "We spent six months reviewing our business requirements before we sent out a request for proposal [RFP]."

Jensen's implementation project was the financial suite from PeopleSoft Inc. in Pleasanton, Calif. He had a successful relationship with the integrator, San Francisco-based AGConsulting. The project--$11 million for software, hardware and interfaces--took two years, with applications going live on time in early 2001. In contrast, another city department had trouble implementing PeopleSoft payroll and HR software.

"They didn't know their requirements and had to make a lot of changes," says Jensen. "Implementations are hard enough without major changes in the middle." (AGConsulting was not the partner for the payroll and HR projects.)

Jensen attributes his success with the consultants to detailed planning that set the criteria for resolving issues like scope creep, pay and accountability. The RFP spelled out the city's business requirements for financials and prioritized them as mandatory, highly suggested and nice to have. It defined current business processes and how they were to be re-engineered. It detailed the schedule, the scope of work for the consultants and the scope of work for Jensen's team, including his own IT people.

"The RFP took six months by a team of eight people working full time, interviewing 203 employees around the city," says Jensen. "It was worth every penny.

Most companies do not plan well enough and underestimate the size and impact of their HRIS project, says Jan Fretwell, principle of Beachside Consulting Group in Encinitas, Calif. Fretwell is not an integrator. She's a project manager-for-hire who specializes in HR implementations. Sometimes she's hired after things go awry, such as when a bad relationship develops between adopters and consultants. Relationships can sour due to lack of planning and definition before the consultants arrive, she says.

If a company hires her early enough, Fretwell helps with planning, cost estimates, the schedule, finding and vetting implementation consultants, training the client in project-management skills and managing the project.

Vetting the Consultants

After Ryder sized up Dynegy's problems, he killed the project, fired the consultants and started over. "We could spend $8 million to fix the platform or spend $13 million to get the right platform," he explains. He then had the opportunity to practice the lessons he preaches. Chief among them: Hire consultants who are right for the job. He urges HR practitioners to be thorough in their due diligence. Implementation consultants not only need the right general skills, they must have experience with the system to be installed.

Decide beforehand what kind of partnership you want with the integrators and pick them accordingly, says Emily Eason, president of Eason Consulting LLC in Seattle. Like Fretwell, Eason is a project manager-for-hire. She urges clients to study consultants' skills, make sure the interpersonal chemistry is right, check references and be sure the consultants' philosophy works for them. She says this is all more difficult if the adopting company has not done a detailed plan. "The lack of clarity around what role they want their consultants to play is the path to madness," she says.

When Ryder began to interview consultants for the second implementation, he wanted to find a consulting firm that could live with little or no customization of Dynegy's new platform--PeopleSoft 8.0. He didn't want consultants who would disagree with the decision to avoid customization. "Some of the potential integrators we talked to thought we were crazy [to avoid customization]," Ryder recalls. "We didn't hire them."

Be Picky About Individuals, Too

Eason and others urge HR technologists not to relinquish control over which individual consultants go to work on the project. "Never contract with anyone who doesn't give you total control over who you have on your working team," says Ryder.

Just as you vet the firms, you also must vet individuals, Ryder says. Get resumes. Interview them--at least by phone. Talk about how you will work together. Make sure each individual is comfortable with the planned approach. Ryder says contracts should declare that, short of unforeseen circumstances, the client controls which individual consultants to keep or release.

Without contractual safeguards, some consulting firms bait and switch, Eason warns. They bring in their most experienced, talented employees to kick off an implementation, then soon reassign them elsewhere and send in more junior people. Some also might try to put junior people on from the beginning. "These tactics are not acceptable," she says.

Manage the Consultants

As Ryder found at Dynegy, the management structure must make clear who's in charge. "The consultants are there to share technical expertise, not to run your project." Ryder says companies without expertise in project management should hire an outside project manager who is not allied with the integrators.

It also helps to have standard management procedures, says George Payton, HR project manager for divestitures at International Paper Co. in Memphis. International Paper is divesting eight individual units that are no longer part of its core business in forest products. It is implementing an HRIS across the entire company to serve 108,000 employees who will remain after the divestitures, but it needs a different solution for the eight businesses it is selling and their 12,000 employees. International Paper decided to outsource payroll and other functions for the businesses being divested to ADP.

The solution creates an interesting twist on the consulting relationship. For each business unit, there is an initial period when an ADP team does the system implementation work. Then there's an ongoing relationship while ADP runs payroll and other functions.

Payton holds two weekly conference calls to consider implementation and service issues. One is between Payton and about 20 ADP consultants at the various sites. The other is between Payton and HR managers at the sites. A few ADP managers also join the first part of this second call.

Several metrics also were established to make sure the new service works. These monthly reports include how quickly calls to the employee service center are handled and how long it takes to handle each call. To ride herd on expenses, Payton gets a weekly report stating which ADP employees worked for each business unit and how much it cost. "We check these reports against the monthly ADP invoices for payment," says Payton.

Managing Scope Creep and Other Disputes

An implementation contract is a revenue stream for the consultants. If not carefully managed, the stream can turn into a gusher of cost overruns for the client. If you have a detailed plan in place, a proper contract and have vetted the consultants, then it comes down to how effectively you manage the project, Ryder believes.

Well-intentioned users, the internal staff or the consultants can be the cause of scope creep. But the money to pay for it usually ends up in the consultants' hands because they have resources to do the extra work.

"Scope creep is the potential for billable hours," says Ryder. "This is where you need to own the project, not the consultant." He says the project manager also has the responsibility to make available to the consultant the right staff members at the right time. Otherwise, consultants can legitimately claim they can't get their work done.

Jensen's contract with AGConsulting spelled out the definition of scope creep as well as procedures for resolving it. Some firms won't agree to a fixed-price contract, but AGConsulting did. The contract allowed Jensen to hold out 15 percent of the total price until all the work was completed. "IT implementations are notorious for failure," he says. "There's something about withholding a certain amount of money until everything works that keeps consultants around."

Jensen's system required 700 unexpected fixes that showed up during a test run. AGConsulting and PeopleSoft had to throw extra experts into the fray to make the fixes in a reasonable amount of time to save their own profit margins, Jensen says. It didn't cost the City of Los Angeles anything extra.

Eason says the client-consultant relationship is ripe for ill feelings when projects run over on cost. "The client always feels they're paying too much anyway, and the consultants feel the client never listens to them."

In the best situations, client and consultants work to sort things out, which means that trust in each other is crucial, Eason says. Trust starts by being honest from the beginning. "If you don't have a trusting relationship how can you tell each other something's wrong and work together to fix it?"

Bill Roberts is a freelance writer based in Los Altos, Calif., who covers business, technology and management issues.

COPYRIGHT 2001 Society for Human Resource Management
COPYRIGHT 2001 Gale Group