The Demand for ROI: What Consultants Should Deliver

The Demand for ROI: What Consultants Should Deliver

Business Analysis ROIIn evaluating business performance, business analysts, requirements management experts, and business leaders are all looking at the ROI. When bringing in consultants for new projects and processes, the focus on ROI stays in place. As clients, businesses are seeking tangible improvements in ROI. In return, consultants are becoming more and more prepared to demonstrate their impact.

Both clients and consultants want to see the effect on the bottom line – before they sign on the dotted line.

Jack Phillips explores this topic in “The Consultant’s Scorecard — Tracking Results and Bottom-Line Impact of Consulting Projects.” He underscores the point that not tracking ROI can be hazardous for both businesses and hired consultants:

  • Wasted resources – When not focusing on the results that count, too much money can be wasted on interventions that are not defined and measured.
  • Burned-up staff time  – Phillips reminds us that consultants often have to consume a significant amount of staff time to provide them information and bring them up to speed.
  • Negative effect on staff morale – This wasting of employees’ time affects morale. Because consultants report back to management, employees don’t see their contributions and only seem consultants as taking up time and creating work.
  • Poor advice – When not tracking to ROI, consultants can give poor advice that results in reduced profits and increased expenses.
  • Damaged careers – Supporting the wrong consultants can be detrimental to a manager’s career.

With this much at stake, it’s imperative to have a solid ROI assessment in place that clarifies

  • That various stakeholder groups can respond to the consultant at timeframes throughout the project
  • Whether specified learning has occurred
  • If and how well approaches are actually implemented
  • The actual business impact of the changes implemented
  • The financial return on the consulting investment, stated as a ratio or percentage
  • Intangibles measurements not converted to monetary measures

To accomplish this, Phillips goes on to explain 10 ROI criteria. He states ROI should be:

  1. Simple, with no complex formulas, equations, or involved methods
  2. Economical or financially viable to implement
  3. Credible, following logical steps
  4. Theoretically sound from a research perspective, using commonly accepted methods
  5. Able to account for all variables that may influence ROI
  6. Versatile, so it can be adapted to other consultancies
  7. Flexible, so it can be applied before and after the project
  8. Adaptable, so it works with hard and soft data
  9. Able to take into account the costs of the consultancy
  10. Proven, with a successful track record in a variety of circumstances

How can you be sure your consultant delivers results?

Phillips recommends businesses thoroughly check out a consultant before signing on. They should ask about their track record with other projects. They can also ask for a conditional guarantee of results, outlining specific timeframes, activities, or levels of support. Another good idea is to define the scope up front, including the expected duration, activities, deliverables, and results.

Other groundwork ideas in hiring a consultant are:

  • Have the consultant perform a needs assessment or analysis. This can help determine the expected impact and the learning needs and preferences of staff.
  • Ask the consultant for an ROI projection before starting the project and at the halfway point.
  • Identify multiple objectives, such as increased sales, greater customer satisfaction, or improved brand recognition.
  • Develop an evaluation plan to specify how and when data are collected, analyzed, and reported.
  • Create a data collection plan and an impact analysis plan.
  • Communicate with stakeholders – Let all stakeholders know the objectives from the consulting assignment and keep them informed throughout the process.
  • Isolate the effects – Try to account for seasonal variations and other factors that may confuse the results of the consultancy.

Improve ROI with Enfocus Solutions

If you’re not looking to hiring a consultant, there are alternatives. Enfocus Requirements SuiteTM empowers companies to achieve high levels of business analysis maturity and capability by improving quality and reducing cycle times. By combining software, a collaboration vehicle, and training in one solution, Enfocus Requirements Suite TM make it possible for companies to complete projects on budget and on schedule, improving their ROI.

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