
Ask HN: Large IT project consulting approach - consult_it
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.<p>The company mainly imports certain bulk products, stores and packages them. This involves quite a bit of engineering.<p>Other companies then buy the packaged product for onward marketing&#x2F;distribution to end consumers. They&#x27;re also now getting into manufacturing.<p>What we&#x27;ve realized though is, being a family business that grew fast, they lack IT in nearly all facets of the business.<p>We&#x27;re engineers, new to IT consulting. The whole process, from proposal writing to price quotations is a major challenge to us.<p>1) Is there a standard approach to this sort of thing? We&#x27;re thinking of studying all their operations, creating a process map, recommending IT pieces for all nodes, implementing from scratch where we don&#x27;t find off-the-shelf software.<p>2) We decided to start with a small bit first, order management. However don&#x27;t even know how to price ourselves. Any pointers on how to charge for our work?
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tooba
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.

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

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Mad_Max
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 :)

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consult_it
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?

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Mad_Max
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

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consult_it
The road forward is much clearer now. Thanks.

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Mad_Max
Glad I could help good luck

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tixocloud
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.

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consult_it
Much appreciated.

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

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markbarrington
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.

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consult_it
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%

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luckydude
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!

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supercanuck
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.

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

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consult_it
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"

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DanielBMarkham
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.

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

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

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consult_it
Yes, this would be ideal.

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

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

