I was sitting next to Tony Poshek in the office this morning and he flipped me this story which I must say, I got a chuckle out of. Apparently, Iowa paid AT Kearney "more than $3.4 million" for a sourcing project which resulted in "fiscal year 2007 [savings] that were found in the auditor's report [totaling] nearly $2.9 million." This compares with a savings that Iowa and AT Kearney projected in the $10.5 million range.
What's the problem here and who is in the wrong? I'd say that it's probably not AT Kearney's fault (though, if history is any indication, their fees were probably significantly more than boutiques firms or other Big 5 providers which probably could have done a similar job for less). I'm guessing what happened is that Iowa failed to fully implement identified savings opportunities -- something that occurs far too much in strategic sourcing exercises led by consultants without skin in the game to make their recommendations stick.
In my view, this could have just as easily happened to any public or private sector organization hiring AT Kearney or just about any other sourcing consultant. My suggestion to avoid this type of thing is to make sure that your consulting partners play a key role in not just identifying savings, but implementing them as well. And base their upside on actual returns -- not just forecast ones.