Ask HN: Large IT project consulting approach | Hacker News Reader

Ask HN: Large IT project consulting approach

15 pointsconsult_it23 comments

My team of friends and I have been approached by the owners of $1b group of companies to implement some tech for one of their major subsidiaries.

The company mainly imports certain bulk products, stores and packages them. This involves quite a bit of engineering.

Other companies then buy the packaged product for onward marketing/distribution to end consumers. They're also now getting into manufacturing.

What we've realized though is, being a family business that grew fast, they lack IT in nearly all facets of the business.

We're engineers, new to IT consulting. The whole process, from proposal writing to price quotations is a major challenge to us.

1) Is there a standard approach to this sort of thing? We're thinking of studying all their operations, creating a process map, recommending IT pieces for all nodes, implementing from scratch where we don't find off-the-shelf software.

2) We decided to start with a small bit first, order management. However don't even know how to price ourselves. Any pointers on how to charge for our work?

I've spent time on the opposite side of the fence as someone who buys and manages enterprise IT solutions.

Process maps even at a high level are a good start to decide where you can add value in the quickest way. But make sure you question the business process and whether it's effective before just implementing technology around it.

In terms of project management, something like the Scaled Agile Framework (SAFE) will work in an enterprise environment if you're from an agile background. Minimum Viable Products work well in enterprises but it's often a huge mindshift for enterprise customers who think they need every feature.

Charging by day rate is your best option. Enterprise IT projects will generally overrun and scopes will increase. If you're charging by day, you're protected from scope creep.

Make sure you've documented what you're doing clearly and you've got a strong contract. If I need to challenge an IT supplier over what's been implemented, and I often do, the contract is the first place I started. A good contract and clear expectations is a positive thing for both parties.

Very helpful, much appreciated. I was worried about scope creep. Day rate sounds helpful. MVPs make total sense too.

Ive been involved in IT auditing and consulting for 13 years and through my experience, there is definitely a methodology that can be utilised or tailored to suite the clients environment, here are just a few high level pointers 1) Its important to initially gain an understanding of the business so yes as youve stated that would be a good starting point, document the entire business process so itl provide a clear picture of the business operations. - Arrange a workshop with key client representatives, together with the client decide on the business processes/sub-processes that the client would like to have automated and the ones that will remain manual - Your professional judgement and advise would be key here - Once decided on the automated processes, put together a functional specification which will detail the system requirements or what will be required from the potential software system to be implemented. - If you know of suitable Off-the-shelf software options to suite the requirements of the func spec then highlight them to the client as suitable options or you could put out a tender inviting potential software companies to market their software product to the client, motivating how their system will meet the requirements detailed in the func spec.

That would be a good starting point

2) You could either charge a rate per hour or divide the solution as a phased approach and charge a fee per phase

Hope this helps :)

Definitely helps, thanks. Would you advise starting by documenting processes in the entire business end-end, or would you focus on a particular segment first (e.g shipping, warehousing, order management etc), solving problems in that segment to full completion before even considering processes in other areas?

Well its all dependant on the clients requirements and the budget, if the client wishes to automate the entire business process, depending on the magnitude of the clients business operation, you together with the team need to take a decision as to whether it would be easier to break it down into segments or approach it in its entirety.

I cant give u specific tailored advice just by the information youve provided, all i can do is provide some high level guidance and pointers

Maybe initially it would be good to list all the business processes/ sub-processes to get an idea of what you dealing with and then perform a walkthrough of each business process/sub-process

The road forward is much clearer now. Thanks.

Glad I could help good luck

Based on my experience in IT consulting for large corporations, it's essential to have a high-level plan that outlines the work being done, the time it will take, the resources and the cost. On-going communication is an important element to maintaining a good relationship.

For pricing, we used hourly rates and we estimated it based on a costing tool for typical projects. However, since you're new, I'd say to come up with your best estimate and then add additional hours for any unknowns. Communicate that this is only an estimate and the cost will become much clearer when work commences.

Communication is key to your project's stakeholder. We provided weekly summary updates to the executive management on how the project is going, included the hours we've spent working and what we worked on, as well as how much costs have change since our original estimate.

Much appreciated.

No worries. Feel free to reach out if you have more questions.

It’s hard to give concrete answers without understandimg the business context but here are a couple of ideas to think about

1/ If you can’t scope work yet propose a discovery phase in which you’ll do whatever you think is needed to get to a scope of work. More importantly in this phase work out the ROI for their business of doing the work. You should be able to bid this fixed price - 3 of you for x weeks/months.

2/ Day rate consulting is safe but you may not be able to capture a fair share of the value you create. Pricing based on a percentage of their ROI over 3 to 5 years may get you a better deal.

At the end of the day what you are doing right now is sales. The companies budgets, your competition, how they like to work etc will all be big drivers of how you can operate. Make sure you understand all that.

Thanks. I like the idea of discovery phase for sure. Will consider.

We're also considering right to IP for things we develop from scratch, for future resale. We might propose a share of future revenues e.g 25%

Perhaps a phone call is a better way to sort this but I'll give it a try. If you want to get on the phone let me know, I'll rope in our business guy, between the two of us we got this.

Consultants come in two flavors, they can be just like employees but they get the crap work, or they are domain experts.

If you are going to be a 1099 "employee" you need to be aware that you are paying all the extras: social security, payroll tax, health insurance. I believe all the extras are about 30% but it varies based on your income.

Charging, I'd go time and materials almost every time. Stuff like this is hard to price, you just don't know how long it will take. So take whatever you think is a reasonable salary and I'd double it. Gutsy but see if they go for it. If you are good they will pay.

Good luck!

Just to piggy back off this, i highly suggest you incorporate, either as an s corp or an llc.

I think the tricky part for you guys is deciding how/who/what to pay each other. I wouldnt let the company your consulting to decide on that unless you are going to each be employees of the company.

Yep, plan is to incorporate. There's three of us, splitting equally. We're being engaged as a company.

Happy to give you a call, but allow me couple days to ruminate. FWIW, this company is based out of the US. They do have some operations in the US but this isn't their primary region.

Some communication from said company quoted below. Not sure if I'm missing any gotchas, given my relative inexperience in this sort of stuff.

"Let's break down your deliverables.. I want us to properly define my problem, current and future needs.

Then we review what's available in the market to see if it suits our needs.. finally, if we decide to develop our own software then we do"

I help companies set up and execute these kinds of things. Shoot me an email if you'd like to chat. Happy to give you a bit of free advice if it can help any.

Ok, appreciate the offer. Would be nice to chat with an experienced hand but allow me a couple days to ruminate.

Probably best bet would be to try and hire someone from a prof consulting firm specializing in IT consulting

Yes, this would be ideal.

"Quite a bit of engineering?" (in something other than the software sense?)

Yep, mechanical engineering. Though I'm less concerned about this part as it's their area of expertise.

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