04 December 2009

Using Internal Consultants in Complex Projects

It was recently pointed out to me that a new advisor has started up that assists companies in setting up internal consulting groups. This started me thinking about the possible role that internal consultants can play in improving the way that complex projects are carried out in most companies.

The new advisor is clearing playing in on the trend for large, international companies to set up their own internal consulting groups. These internal organizations are usually staffed with alumni of well-regarded, blue-chip consulting companies, and are then used (sometimes, but not always) instead of external consultants. The paradox that I see from my discussions with executives is that opinions are evenly divided among those having a positive view and those having a negative view on the success of projects carried out by the internal consulting groups.

Some of the executives I speak to tell me that they do not have the typical issues that I usually see with internal teams carrying out complex projects due to the input of the internal consultants. Other executives tell me that even with the presence of internal consultants, their complex projects tend to have many of the issues that I raise and that their projects are therefore often not successful. Based on this, there seems to me to be an issue related to how these internal consultants are being used.

The typical way that they are used by most companies is that the complex projects are outsourced to the internal consultants instead of to external consultants. In other words, a team from the internal consultants group is a replacement for the usual teams of external consultants. This certainly has a number of positive aspects. It will certainly save the company the typically high costs of engaging an external consultant. In addition, the internal consultants have a number of advantages compared to the company's average employees. The internal consultants usually have strong analytical skills, are used to carrying out projects, have fairly high interpersonal skills, and typically know the consulting "tricks of the trade".

While the internal consultants have many of the positive aspects of external consultants, they, unfortunately, also have many of the negative aspects as well. Often, a team coming from the internal consulting group will be viewed as outsiders by the organizational units they are providing assistance to. The team from the internal consultants will typically not have in-depth knowledge of the specific area that the project is dealing with. In addition, it is my experience that internal; consultants often have their own political agenda. The reason many people have switched from a consulting company to an internal consulting organization is that they view this as a stepping stone to a corporate job. These people are therefore often viewed as being on the look-out for situations where they can prove that the current management is doing a bad job so that they can position themselves to take over.

In addition, internal consultants are often viewed as working for top-management, and not having the best interests of the local organization in mind. Finally, using the internal consulting group often brings with it many of the same issues as outsourcing a project to external consultants. A project carried out by internal consultants will typically meet resistance based on the "not invented here" syndrome, and will therefore have low buy-in, typically resulting in a delayed and/or less successful implementation.

My overall conclusion is that there is a role for internal consultants in complex projects. However, they should be given total control of projects only in a limited number of situations. Giving complex projects to an internal consultants group can be a good solution if a) the project is for top management, b) there are specific issues related to speed or secrecy (acquisitions, etc), c) there is a very high need for complex analytics.

In other situations, the internal consultants group should be used as part of the overall resource pool for staffing complex projects across the organization. The staff from this group will typically be extremely well suited for providing the required analytical and communicative skills to the team. However, as shown by the earlier comments made by executives in organizations using internal consultants, even projects staffed by internal consultants should not be left alone, as there is still a good probability that one or more of the eight deadly sins will be committed by the team.

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