As companies continue to cut costs, consolidate staffs and eviscerate executive salaries, more and more senior-level IT professionals are eyeing corporate exits – or being shown them against their will.
For many such tech execs, the next step on the increasingly rocky, do-it-yourself 21st-century career path is independent consulting.
But do you have what it takes, or even know what it takes, to strike out on your own? Where do you find clients? Should you specialize? What about marketing and finances? Where can you get decent, affordable health insurance once you’re cut loose from corporate benefits?
How do you navigate the enormous cultural changes of minding your own calendar, developing and building your own marketing presentations and, horror of horrors, scheduling your own economy class air travel? How do you make your mark and find paying clients fast, when it seems like every other laid-off IT exec is setting out his own shingle?
To answer those and other questions, Computerworld rounded up a boardroom’s worth of former CIOs and other high-level IT professionals who successfully made the transition to IT consultant. Here are their hard-won answers and practical advice.
Find your niche
Whatever your depth and breadth of experience, simply switching your title and business card to “IT consultant” isn’t likely to land you a single client. Specialization is absolutely critical, according to successful CIOs-turned-consultants.
Eileen Strider, a former CIO at Universal Underwriters Insurance Group (since renamed Zurich Direct), is now a partner with her husband in their own consulting firm, Strider & Cline Inc. in Kansas City, Mo. Strider’s niche is reviewing large, often troubled ERP projects in the higher-education segment.
Jack Tugman, former CIO at the U.S. Army’s Fort Monmouth, N.J., base, has leveraged his military and Department of Defense experience into a specialty: He now helps companies develop their IT infrastructures in such a way that they can become suppliers to the DoD or other government agencies.
And Hernan Tocuyo, former CIO at FedEx Services (now called FedEx Office) who is now an independent consultant in the Dallas/Fort Worth area, specializes in nonprofits and small companies with no in-house IT staff. “They don’t have the expertise or the money for a full-time CIO. They may have a systems administrator or IT manager, but that person doesn’t know anything about accounts receivables systems,” he notes. So Tocuyo markets himself as a specialist who can come in and implement a system, then train those who remain on the job to run it.
“It’s important to specialize, and you should lead with those two or three things that you are best at. If you specialize in everything, people won’t know who you are,” says Laraine Rodgers, founder of Navigating Transitions, a Tucson-area consultancy, and former CIO for the city of Phoenix and Xerox Corp.
In addition to specializing, would-be consultants need to frame their services in the context of real-world needs, Rodgers says. “I created a business plan and tried to figure out my core value proposition.
I first listed the 50 things I do really well, and then made a list of the things I really love to do, and then another list of what’s needed in the market,” Rodgers recounts. Because “if what you’re passionate about isn’t what is needed, you ain’t gonna make a penny.”
Although it may be tempting to take on whatever work comes your way, it’s a real mistake to do so, according to the experts. Stick to your specialty. Otherwise, you run the risk of doing long-term damage to your credibility.
Companies also hire consultants for very specific reasons, notes Thomas Pettibone, a former CIO at Phillip Morris USA Inc. and founder and managing director of Transition Partners Co., a national management consulting company in Reston, Va. “Consulting is quite a bit different than being a corporate CIO,” he says. “The corporate job is all-encompassing and focused on improving all aspects of the company. The consulting role is very focused to an engagement, which is written in a particular way to solve particular problems in an organization.”
“Every single consulting job you do is like sending up a billboard on Main Street or in Times Square,” says Barry Mathis, a former CIO at Bradley Memorial Hospital in Cleveland, Tenn. (renamed Skyridge Medical Center) who’s now an IT consultant specializing in health care for H.I.S. Professionals LLC.
If you perform a job poorly because you’re not a specialist in that particular area, word gets out and the references fall off. “And references are a consultant’s life,” he notes.
Another option is to team up with consultants who specialize in areas other than you do and refer work to one another. “We consciously created a network of consultants both nationally and internationally,” says Strider. “We bring them in on projects and they refer projects to us. Always be on the lookout for connections,” she advises. “It’s more about connections than selling per se.”
Work that contacts file
Whether you left corporate IT on your own or have recently been downsized, don’t waste any time in getting yourself started. Chances are you left the corporate suite with a bulging electronic rolodex of vendor and CIO contacts. Resist the temptation to lay low a while and instead call or e-mail your network to let them know of your change in status and your new consulting endeavor.
“Once you’re no longer a CIO, it’s hard to get into the venues where [CIOs] are unless you have a lot of money,” says Strider. “One of the biggest differences is that when you have a corporate job, the work comes to you. When you’re a consultant, you have to go and find it. You need to use those CIO contacts as much as you can and build more right away because once you’re not one of them, it’s sure not easy.”
Also, you should now count among your best friends all of those vendors whose calls you tried your best to avoid as a CIO. Vendors know which companies just bought new software, where projects are being initiated and various tidbits of inside gossip from IT staffers.
“Vendors are calling me and linking me up with people to get jobs,” says Tocuyo. Among the valuable information he says he learned from vendors is that “J.C. Penney, Frito-Lay and other big companies in the area have openings but they can’t hire anyone. They’d rather have someone come in and do a [software implementation] job as a temporary,” he says.
Get involved with professional associations for independent business owners and city or regional businesses, advises Bill Farrow, who voluntarily left his CIO post at the Chicago Board of Trade in July and joined with several former colleagues from the finance and banking industry to start Chicago-based FC Partners Group LLC, a small, independent consulting firm.
“It’s very important to keep your technology network up, but it’s also important to extend that network beyond technology people because technology people aren’t the only decision-makers out there,” Farrow notes. “Get involved with the executive club in your city and with nonprofits in your community [because] you now have more in common with entrepreneurs than with technologists,” he notes.
To introduce yourself as a consultant and to find work, “you’ve got to shake a lot of hands,” agrees Moez Chaabouni, a former CIO and now an independent consultant and founder of My CIO LLC, which provides CIO services to small and midsize companies on an as-needed basis.
“I go to Chamber of Commerce events where they’re recognizing growing companies,” he says. Chaabouni also studies lists of best restaurants, best small entrepreneurs, fastest-growing enterprises and the like because companies on those lists “have been flagged by leaders in their industry segments.” They’re prime potential clients, he adds.
Setting up shop
Forget fancy office space at a high-priced address. It’s a big mistake, the experts say. “The appearance of your office is not important. Your clients don’t come to your office. You go to them. As a consultant, what you’re selling is you,” says Strider. “You’re selling your experience and services, methodology and skills. It’s the skills that you have in your head, and they don’t need an office.”
You do need a place from which to work, however, and that usually is a home office. But it can be difficult, at least initially, to stay focused working from home, says Tugman, who went off to work for more than 20 years at the Fort Monmouth base before it closed in 2006.
“It would be really easy to go and start doing the ‘honey do’ list, so what I had to do is set my hours and budget my time,” Tugman says.
You cannot assume that family and friends will automatically respect your work space and honor the working hours or the structure you’ve set up for yourself.
“You have to talk about your schedule. Lay out your ground rules. It’s got to be clear that the computer in dad’s office, for instance, is for business and not for watching YouTube,” says Mathis.
For help with printing, presentations and administrative support, get to know your local copy shop. “They’ll let you send them stuff online,” says Rodgers.
To elaborate: many local and national office supply chains offer services whereby customers can send electronic documents via e-mail in the morning and pick up completed PowerPoint or paper-based presentations hours later.
Mind your finances
Over and over, consultants say what scared them most about striking out on their own was the absence of a regular paycheck and company-provided health benefits.
“I was scared to death,” says Mathis. “I liked direct deposit.”
The best thing that newly minted consultants can do is educate themselves about the sales cycle of consulting services. It may take 12 to 18 months between an initial meeting and the time a contract for services is actually signed. For this reason, most consultants recommend having the equivalent of two years’ worth of expenses socked away in the bank.
“Chances are you won’t see a return for a good 12 to 18 months,” says My CIO’s Chaabouni. “You need willpower and reserves to sustain the lack of income for 12 to 18 months. You need to stick it out at least 18 months and maybe even longer given this economy.”
As for setting fees, Rodgers’ strategy is to charge what the market will bear, which means different rates depending on the location of an assignment. Even within Arizona, for example, she charges less in Tucson than in Phoenix.
Another pricing strategy is to make sure your fees are less than those of Accenture and the other big, national consulting firms, Rodgers says. If I can price myself equal to or less than them, it’s still excellent money” and makes her services attractive to clients, she says.
To find out what the big firms are charging, Rodgers says she asks consultants with whom she networks. She also often partners on projects with other consultants or firms and can see what others are charging that way.
Money coming in needs to be managed. Chaabouni’s advice: “Get yourself a good accountant, and pay your taxes before you pay yourself.” Because consultants get paid in large chunks on an irregular basis, “it’s so easy to get intoxicated by a big check that you may go on a spending spree,” he says. “If I get a check and I don’t make an immediate payment to the IRS, I may be hurting downstream. A good accountant will educate you and help you and keep you true.”
In addition to your own books, mind your potential clients’ finances as well. “If the client is a start-up and hasn’t been in business all that long or if their business model is shaky or there is some other red flag, demand prepayment or demand a retainer,” Chaabouni advises. “Make sure they have some skin in the game.”
Finally, as an independent consultant, health care insurance is bound to be one of your bigger expenses. There are several options. If you’re married, check to see if you can participate in your spouse’s health care plan.
Otherwise, various professional associations, such as the Independent Computer Consultants Association, a national nonprofit based in St. Louis, offer group health insurance plans for independents. A third option is teaching part-time at a local university as a way to become eligible for employer-based health care benefits at a reduced cost.
Navigating the cultural changes
As much as he hates to admit it, one of the biggest culture shocks for Mathis was learning to function without a support staff. “As embarrassing as it is, one of the most difficult parts for me of going from executive to consultant was I had to take care of myself,” Mathis says. “I was so used to someone taking care of my schedule and reminding me of appointments, and when all of a sudden they’re not there, it’s a culture shock. You’re your own salesperson and secretary.”
Changing your professional lifestyle can also be tough on your family, Mathis says. He spends a lot of time on the road, staying in hotel rooms. He books his own travel through an agency that charges him a flat fee of $20 per trip.
“When you’ve been traveling first class and the limo picks you up and someone is there to make sure all the arrangements are flawless and then you don’t have that level of support, it’s a shock,” agrees Computerworld columnist Bart Perkins, a former CIO and now managing partner at Louisville, Ky.-based Leverage Partners Inc.
“It’s a little bit intoxicating that people will pay me for what I know, but I travel a lot,” says Mathis. “People don’t buy services over the Internet. They’ll read your proposal, but they want you to come to them and present it. My wife will tell you there are times she wishes I was still a CIO,” he says.
On the upside, however, Mathis is able to schedule three- and four-week family vacations and get to more of his children’s ballgames. “I have seen 100% more of my kids’ games than when I was a CIO,” Mathis says.
“But in the middle of dinner if the phone rings and it’s a prospective client, I take the call,” he says. “When you’re only eating what you kill, and something comes across your path, you chase it.”