Cringley makes IBM cringe

In a post titled Big Blues: Why IBM is in trouble Robert X. Cringely is tough on IBM.  What caught my attention in particular was the IBM consultant who commented they are expected to be billable 93.5 % or almost 1950 hours a year.  Sounds like they are just removing 2 weeks of vacation and a week of holidays out of the possible 40x52 hours in a year.

If true, it should be a red light for IBM clients.  Read more at TechSpend.

Comments

[sr]

Hello,

Interesting article and I would agree with Robert Cringley...check out the latest on IBM in BW at
http://www.businessweek.com/magazine/content/06_23/b3987093.htm

I get a feeling that BW praises companies without doing too much research.. I know for a fact that the opportunity market place project/pro market place was scrapped a few years ago...so wonder what the author smoked on his way to the interview?

[Thomas Otter]

Your point about 93% billing reminds me of the old but vaguely funny joke about the management consultant who died at 38.

He arrived at the pearly gates, furious that he wasn't able to execute on all of his Stephen Covey filofax entries.

He asked the welcoming commitee "why me? I dont smoke, I go to gym, I wear my seatbelt.."

St Peter answered. "There must be some mistake here. We added up all the hours you billed and we figured that you were 102."

[viinnie mirchandani]

Thomas, you must mean this...

http://dealarchitect.typepad.com/deal_architect/2006/02/sox_humor.html

may be the PwC consulting team which IBM acquired is trying to keep up with the hours the accounting brethren is able to charge courtesy of Sarbanes...

[viinnie mirchandani]

SR, thanks for link. BW has some of the best enterprise tech coverage in MSM. But they tend to be pretty soft in their analysis. I critiqued their analysis of interview with IBM CEO a couple of months ago at

http://dealarchitect.typepad.com/deal_architect/2006/04/ibm_innovative_.html

[Thomas Otter]

Yes,
guess I should read all your blog history...To your point I wonder if SOX would have picked up the overbilling...!-)

[viinnie mirchandani]

Thomas, careful...not proven there is over billing at IBM clients. But if there is, and SOX helps find it, it would be kind of payback I have been asking for companies to show for the cost of SOX - see

http://dealarchitect.typepad.com/deal_architect/2006/04/the_unexpected__1.html

[Thomas Otter]

Didnt mean to point fingers at
IBM of course, hence the judicious use of
!-)
Nice to see you giving someone other than the my employer flak though..

Off to the other Sapphire now, the one without ms. Crow....

[viinnie mirchandani]

Thomas, now you sound like Oracle...Vinnie's so mean to us -) I am just as tough on Accenture, EDS, Microsoft, Verizon, Infosys....

enjoy Paris. I had to re-read your comment when you said there would be no MS. I thought you meant your Duet partner!

Crow was excellent ...I am sure you can find other entertainment in Paris!

[Thomas Otter]

I'll blog from Paris, if there is anything interesting. (or even if there isnt) vive le france etc....there is broadband in the hotel but at 20 euros a day....

[James Governor]

surely many consulting firms overbill? doesn't make it acceptable, but it is common practice.

[Manoj Ranaweera]

I worked for two large global consultancies for more than 10 years. KPI for any consultant is level of utilisation. You are expected to hit 100% (not always achievable). Only those who are seconded to another organisation or those on long-term contracts tend to hit this figure. This KPI has an adverse effect on the business development, as senior consultants are expected to generate new business whilst fee earning. This was one of the biggest dilemmas faced by the industry. So, I am not one bit surprised by IBM’s targets. Funnily enough they ought to aim higher.

Averagely, I believe we were aiming for a figure in high 70s for each profit centre. Not quite 100%. This is due to imbalance in supply and demand.

In fact in two consecutive years, I hit 100% as I was seconded to a FTSE100 company.

[viinnie mirchandani]

James, the issue is more IBM is already over priced in its SI and outsourcing deals - Compared to boutique/offshore If (and we are speculating) they are charging clients more due to more chargeable hours, it will be a signficant issue for their customers.

Manoj, for more junior staff or seconded staff or on long term outsourced deals the higher metrics are justificable. For others, given the out of town travel, sales proposal time common in services etc etc, I would have to disagree that anything over 80% is justifiable...

[Manoj Ranaweera]

Vinnie, you are right in a way...customers are more educated these days and internet has allowed them to be better informed. Whether you or I like it, consultancy is all about billable utilisation, especially on T&E deals. In lumpsum deals, you operate between making high profits to high losses; specially if the contract is not water-tight and you let the client change scope many time at no additional cost to the client. Try working in the Middle East...scope creep is part of the culture.

I think what matters at the end of the day is has the consultant achieved the objective. And does the overall cost justify the benefits? If not, perhaps one can draw the conclusion, that it was waste of money. In this process both consultant and client can screw the other. But in most cases, consultants do make money..I assume in IBM's case they make xxx load of money

[vinnie mirchandani]

Manoj, I will also take shameless credit for making buyers smarter -) That's what my company does - helps them negotiate tech deals.

I have a top 10 list of low payback tech investments - what I call IT "empty calories"

item 1 - software vendor annual maintenace
2 is outosurced contracts signed over 18 months ago

A large portion of IBM's revenues come from these two ...