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IT Consulting Rates: Getting the Most from your IT Consulting Dollar

Val King
Posted by Val King on Jun 10, 2022 2:25:24 PM

It comes as no surprise that IT is a complicated and vast field. It’s virtually impossible for organizations at any size level to maintain in-house expertise on every subject required to operate an efficient and effective IT shop. As a result, IT consulting and managed services have become big business. But how do you get the most out of your IT services dollar? The following are some tips that may help.

Let’s start by looking at the real reasons why companies utilize consultants and service providers:

  • Lack the knowledge in-house. This is the most obvious reason. There are many areas in IT that companies could potentially need assistance, and it’s simply a bad business decision to try to keep this knowledge on-staff.
  • Some skill sets are rarely needed. When you need a high-level expert in a given technology, you need them, but there is no reason to carry this resource on payroll when they’re available for short engagements, relatively on-demand.
  • Have the knowledge, but don’t have the time. This happens more frequently than you might think. There is never any shortage of important projects for in-house staff experts to tackle, and many times the timing required when compared with the projects that need to be completed simply don’t match up.
  • Need someone to blame. Pardon me for being so blunt, but this is a pretty regular reason for using consulting. The relationship between IT and corporate management can be tenuous because of a lack of confidence or trust in IT at the corporate level. This fact frequently leads to consultants being involved, especially consultants that work directly for the primary product vendor on the project, so that IT management can demonstrate to corporate that they have done everything possible to make that important project successful.

OK, so whatever the reason for your decision to use a consultant, what are the best ways to determine which consultant to use? This decision is always about risk and ownership. The more important and/or difficult a project is, the riskier it is to the IT decision maker that is hiring the consultant. For these same reasons, the consultant must (in my opinion) be responsible for successfully completing the project, not just designing or advising on it.

The more important the project, the more likely the IT decision maker is to want to spend more money on the consultant and/or have the primary vendor directly involved thinking that they will get the best advice. Unfortunately, many times you don’t necessarily get good value the more you pay. Let’s take a look at typical consulting fees in the virtualization portion of the IT market:

  • ·$150-$185/hour for journeyman general IT consultants;
  •  $185-$225/hour for senior consultant with specialization;
  • ·$225-$275/hour for managing consultants;
  • ·$275-$350/hour for consultants working for the manufacturer/software vendor

Hiring a consultant is very much like hiring an employee. Here are some tips to cut through the fog:

Interview prospective consultants. Have them meet all of those on your team that would need to work with them. This is a chance to determine if the consultant knows his/her stuff, but it is also an opportunity to make sure they can work effectively with your team. Make sure you are talking to the person that will actually be doing the work.
  •  Watch out for “Teachers.” There seem to be a lot of consultants in this industry that have great credentials, but have never actually implemented anything. We all know that the real world is frequently quite different than the classroom. Credentials are important and necessary, but make sure that your consultant has actually had experience successfully implementing the project in question. References are also very important.
  •  Is it worth paying extra to have the vendor involved? My answer here is “sometimes.” There are a couple of things to watch out for here. For those of you that have been around a while, you probably remember when IBM was king of the IT world, and there was a common belief that when buying products or services from them “you could always buy better, but you could never pay more…” Vendors always charge big dollars for their consultants, and if you get one of their senior people, this can be acceptable. However, they frequently provide their junior consultants for the same price and/or require a two-man team for a project unnecessarily. They also subcontract in senior consultants from companies like ours, but charge the big fees because they can. Is it worth paying $325/Hour to the vendor to get one of our senior consultants when you can contract with us directly for $200/Hour? There is a lesson here. If you are going to engage a vendor, make sure it is one of their employees and then interview and reference check them like any other consultant hire.

Finally, once you have your consultant selected, there are several ways you can contract their services:

  • Annual Retainer. If you expect to have many consulting needs over the space of a year, then this can be good. Since there would be a long-term commitment for services, the effective hourly cost will be reduced, and you will also get the benefit of regular general advice as a byproduct of the retainer arrangement.
  • Fixed Fee Proposal. This is typical, but will necessitate a detailed statement of work to protect the consultant from “scope creep” and to set the expectations of the customer as to what they will receive. The consultant will also need to build in a percentage of the time allotted for contingencies. This can make the fixed fee proposal good from the guaranteed cost perspective, but probably not the cheapest way to go. For some projects, this is not possible because the project may have too many unknowns to accurately estimate the amount of time required to complete it.
  • Pre-Pain Block Time or Time & Material (T&M). These are both hourly arrangements, with block time paid in advance for a certain size block, and T&M billed on completion. Block time is usually less per hour since a chunk of time is paid for in advance. These are usually more cost-effective than the fixed fee and a good way to go if you trust your consultant and feel they have your best interests in mind.
  • Hourly rate not to exceed. This can be a very good approach as well assuming the hourly rate is reasonable. Since the consultant is taking all the risk by allowing the project to be paid hourly and capping the total expense, the hourly rate is usually the highest for this type of arrangement.

So, there you have it. Some tips and things to consider for getting the most from your IT consulting dollars. Whitehat Virtual Technologies is the IT department every company wishes they had. Whitehat removes technology as a barrier for companies, free to be their best, grow and go where mission and market take them with confidence knowing the right IT expertise is always there to support them.

Whitehat Virtual’s clients benefit instantly from the collective experiences gained managing thousands of end-users worldwide, blazing new trails following the well-traveled paths with those that have been there before. Discover how Whitehat Virtual can help you realize the benefits of a managed IT services model here, then reach out to see how we can help.

Whitehat Virtual Technologies is the IT department every company wishes they had. Whitehat removes technology as a barrier for companies, free to be their best, grow and go where mission and market take them with confidence knowing the right IT expertise is always there to support them.

We've been recognized by Expertise.com as a leader in our industry, and we have a long list if clients that consider us their irreplaceable IT partner. 

Whitehat Virtual is technology rocket fuel for companies that depend on technology to grow. Clients benefit instantly from the collective experiences gained managing thousands of end-users worldwide, blazing new trails following the well-traveled paths with those that have been there before.

With every ticket we close, every issue root-cause we identify, every process we set in place or project we complete, Whitehat gets better and better at fulfilling our purpose.

This is Whitehat Virtual Technologies This is who we are. This is what you could be a part of. Discover how Whitehat Virtual can help you realize the benefits of a managed  IT services model here, then reach out to see how we can help.Contact us today

Topics: Managed Services, IT Strategy, Financial Services