Consulting By Design

When Chip Ellis lost his job as director of IT for a San Francisco dot-com -just one week before the company was slated to go public- he did not have the stomach to return to the industry he knew best. “I wanted to stay in the Web-centric world as opposed to manufacturing,” explains Ellis, who had left a job as CIO of a Northern Bay Area manufacturer before jumping to the dot-com.

So he decided to leverage his skills into the consulting arena by joining the professional services division of Santa Clara-based Exodus Communications. “They were the 800-pound gorilla in the Web-hosting space and they were in a growth spurt,” says Ellis, a CIN member. Today, the future of Exodus, like that of so many companies, is uncertain – the company filed Chapter 11 in late-September.

He may not know it, but Ellis is part of a larger trend: CIOs, once ensconced in the corporate bureaucracy, are entering the consulting world in droves. Some leave corporate jobs because they are tired of the politics or the monotony. Others, like Ellis, strike out on their own in a spirit of adventure, seeking new skills and independence. But for the vast majority, say recruiting experts, consulting is a temporary -and often unwelcome- career move forced on them by a down economy. Many have no choice but to go solo: executive recruiting is off by 30% to 50% compared to last year, according to Joseph Daniel McCool, editor-in-chief of the trade publication Executive Recruiter News in Fitzwilliam, N.H.

Consulting: Look Before You Leap

Consider these tips from CIOs and recruiters before making the leap to consulting: 1. Determine your risk tolerance. Not all CIOs are cut out for the high-pressure, fast-paced world of consulting. “If you’re comfortable doing things the same way time after time, consulting may not be for you,” says CJ Rhoads, a technology management consultant in Reading, Pa. 2. Assess your skills. Communication -the ability to listen, speak, write well and convince others- is a big part of the consultant’s job. “You also have to be able to sell yourself and communicate the value you bring to an organization,” says Chip Ellis, a consultant with Santa Clara-based Exodus Communications. 3. Get your family on board. Can you withstand the possibility of not having an income for several weeks or months? Do you know how little you need to earn to survive? “Make sure your family is on board with the decision and understand the implications,” says Mike Howard, a consultant in Edinburgh, Scotland. 4. Determine a minimum wage. Some consultants are paid by the hour, others charge on a project basis. Howard follows the following formula from Dennis Russell’s book , Interim Management: 110% your former base salary for long-term contracts, 75% if you were very well paid. For short-term contracts, you might raise that to 150% of your base. 5. Be realistic but don’t undersell You may have to discount your fees, but don’t undercut yourself early in the game, says Danny Carrao, a CIO-turned-consultant, who recently left the consulting world to become CEO of Indianapolis-based Nineteenth Star, a film and video production company. “Giving clients a good deal is fine, but it will be hard to raise your fees after the first engagement,” he says. 6. Define Your Value The issue is not the expense but the potentially money-saving value a consultant brings to the table, as any CIO who has ever had a thorny and seemingly insoluble technology problem well knows. “In today’s market, the need for services is specific, immediate and tightly defined,” Ellis says. Even in a recession, “there will always be people who need and are willing to buy the services of a good consultant.” – Eva Marer

In some cases, consulting can work in the long-term: some CIOs find that they enjoy the diversity and excitement of consulting, and are able to make a living too. And even in the short term, consulting can provide valuable skills and experience to bring to the next job-interview table. The key is knowing whether you’re cut out for consulting – and how to make it work for you.

The Opportunity
Very few CIOs move to consulting willingly, says Tom Pettibone, an IT management consultant based in New Canaan, Conn., who also provides interim CIOs through his firm Transition Partners Company, headquartered in Reston, Va. Pettibone has seen an avalanche of resumes fall across his desk since early summer. Even top CIOs with 10 to 15 years of experience under their belt are among the jobless. In the tight-as-jeans job market of the past few years, CIOs could jump from job to job with impunity. Today, a backlash of anorexic IT spending after years of overspending means projects are being cancelled or deferred.

Even in the best of times CIOs have been the scapegoats of senior managers, says Jay Gaines of Jay Gaines & Co., a mid-size executive search firm in New York that specializes in placing senior technology executives in the financial industry. The need for enterprise or large divisional CIOs is down dramatically, he says, and many choose consulting by default.

As a result, most would-be consultants are not leading from a position of strength, according to Gaines. Notable exceptions are retired executives who choose to stay active and CIOs with large-cap credentials lured into the space by the smell of a sweet deal.

For example, Marty Stein, former vice chairman of technology and operations for Bank of America, and Don Hollis, one-time CIO of First Chicago, both built successful consulting practices after they retired. And Pettibone, former CIO with Philip Morris, left the corporate world when he got the opportunity through a colleague to structure the new business in an attractive way. Today he pays almost as much in income tax as he made in his final year as a CIO.

Yet not everyone seeks money or status. CIN member CJ Rhoads, formerly vice president of program office, information services with First USA, loves the independence and variety of working for herself. Her company Enterprise Technology Management Associates provides technology management consulting to banks and other financial institutions. She continues to turn down better-paying job offers because she prefers being her own boss and wants to stay in her hometown Reading, Pa.

Another CIN member, Mike Howard, a consultant in Edinburgh, Scotland, also chose to start his own company for geographical and practical reasons. He and his wife chose not to relocate when he was let go, along with about 60% of the staff, from Quadstone, a CRM software house. Even though there are only about one or two CIO job openings per year in the area, he saw an opportunity to provide technology management services to Edinburgh’s many small and medium sized enterprises that do not employ full-time CIOs. He is on track to make about the same income he made as an employee, yet he is only working two days per week and paying expenses that would normally be picked up by his employer. Taking a profit by deploying staff to small and medium-sized enterprises seems the way forward for his company BlueSpline Ltd.

Are You Cut Out for Consulting?
When hiring, Pettibone considers only CIOs of Fortune 500 companies with at least 10 to 15 years of experience. Yet he warns that even excellent CIOs can wash out as consultants. “I get the sense that there is an automatic feeling that you’ve reached the CIO level, now it’s easy to fall into consulting. That is simply not the case. These are two totally different jobs.”