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  Practical Terms
IT Cortex internal arrangements and organization.

Money speaks sense in a language all nations understand.

Aphra Behn, The Rover


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In a spirit of transparency toward both its customers and its consultants, IT Cortex makes no secret of how its fees are shared and its resources secured. This page describes, in a nutshell, the practical internal arrangements taken within the IT Cortex network.

Fee Allocation

Contract fees are (normally) split according to the following rule:

  1. 15% for the IT Cortex network itself (covering the brand name, the definition of the services, the selection of the methodology and tools, the invoicing and administrative costs and, last but not least, the fiscal support and assistance). This latter aspect is a significant added value of IT Cortex for its consultants and also possibly for its customers.
  2. 10% for providing the lead (typically mentioning that customer X, with Mr. or Mrs. Y as contact person, has a business need Z). The weight of this contribution tend to increase in a tight market. The lead fee still applies for follow-up contracts.
  3. 10% for the sales (i.e. meeting with the prospect, putting together the proposal and securing the resources). This fee can be split among several consultants. (In the case of an answer to a call for tender, lead and sales fees are combined).
  4. 65% for execution (i.e. performing the actual consulting work).

In case a specific consulting tool (e.g. a methodology, a simulation tool, etc...) needs to be part of the proposal its utilization fee is paid to its owner (be he, or she, part of the IT Cortex network or not) off the total proposal fee. The income balance is split according to the predefined rule. Similarly, if IT Cortex subcontracts some work, this cost is taken off before splitting the remaining fee. Those external costs are of course taken into account at proposal stage but no uplift is applied to them.

When IT Cortex performs an assignment as part of a consortium it takes into account each contribution to the global business proposal in determining how its allocated fee will be split (e.g. the business can be brought in by other members of the consortium and not by members of the IT Cortex network; similarly the assignment can be performed under the brand name of another member of the consortium).

When a private or public organization spontaneously contacts IT Cortex, the lead fee is added to the network fee.

Should a project overflow and take longer than planned the daily fee of the consultants in charge of its execution will shrink in the same proportion. This will bear no effect on other fees. This is justified by the fact that the consultants completing the assignment have signed-off the proposal.

Payments

IT Cortex pays its consultants as soon as it receives the money from its customers. Its bank statements are open to all its consultants.

Partial payments by the customer respect the predefined fee splitting (i.e. no party gets paid first).

Typical Arrangements and Internal Organization

Some IT Cortex consultants are just providing leads (typically senior executives who want to slow down their professional activities but who are still nurturing business relationships).

Consultants providing the lead usually determine who will participate to the sales effort and put together the proposal. Consultants, who will perform the actual consulting work are selected at proposal stage. In which case they need to accept the proposal (i.e. feel comfortable with it) and commit themselves (contractually) in case the proposal is won.

There are no level and no hierarchy whatsoever within the IT Cortex network. The customer replaces the boss or the manager or the partner. IT Cortex will shun consultants with poor performance and favor those who satisfy - or delight - their customers (especially in a tight market). The network auto-organizes itself and auto-improves its business fitness as explained in Our Organization.

When there is a difference in seniority and skills among several consultants assigned on the same project the global execution fee can be split according to agreed-upon keys (defined at proposal stage).

Every IT Cortex consultant is senior, experienced and motivated and therefore does not need to be "managed" - even though some coordination is necessary in large projects. Project coordination is part of what is termed as project execution from the IT Cortex perspective. It does not justify claims for higher fees.

Every consultant is free to join and leave the network (on the condition that he/she has fulfilled his/her commitments, i.e. typically complete the assignments that he/she has accepted). IT Cortex is also free to allocate resources on incoming projects. Therefore the network acts as a open business market, with suppliers and consumers. This market does not demand any entry fee nor departing fee.

The network fee and the lead fee remain due, during a period of two years, by consultants who secure, for themselves, follow-up contracts with a customer, while having worked for that same customer - or any related company - under the IT Cortex umbrella.

Every consultant is free to work partially for himself and partially for the IT Cortex network - for different customers, within the constraints of his/her commitments.

Tools and methodologies are never forced upon consultants performing an assignment. They are therefore not used as an additional rent benefiting the IT Cortex network.

IT Cortex does not employ permanent members of staff.

Key Success Factors of a Consulting Network

As experience has shown, the key success factors of a successful consulting network reside in:

  1. avoiding greed (similar networks have failed by the combined effect of a market downturn and the  excessive greed of their founders)
  2. having a large and diversified skill mix among the consultants (strengths and weaknesses of each consultant are quickly known within the network and new assignments are staffed accordingly)
  3. respecting the freedom of each consultant (freelance consultants are independent by nature and this bend of character needs to be respected)
  4. ensuring that independent consultants have more interest to join the network than to work on their own or through agencies (like interim management agencies).
  5. setting-up a virtuous "give and take" circle whereby consultants who contribute the most to the network are also the ones who receive the most from it.
  6. allowing flexibility within the "self-organized" arrangements taken by the network members.

Additional Remarks

  1. The overhead costs of a consulting network (i.e. the network, lead and sales costs in IT Cortex case, totaling 35% of its fees) are significantly lower than the corresponding costs of a traditional consulting business (i.e. all their costs, except execution). Consulting companies working with permanent members of staff spend a much higher proportion of their income managing and training their junior consultants, hiring and firing their staff according to the market evolutions, maintaining administrative personnel, leasing expansive office space and lavishly remunerating their partners (at least during favorable market times).
  2. The 2001-2002 market downturn has almost vaporized all margins in the traditional consulting business by the combined effect of a lower occupation rate of permanent consultants and the price war raging in a shrinking market, thereby highlighting the need for a very flexible cost structure (as the one achieved in consulting networks).
  3. Networks of freelance professionals are not limited to high fly consultants. Professional networks of gardeners, accountants, cleaning personnel, etc... are also successful when properly set-up and organized.
  4. Customers are the first beneficiaries of a lean cost structure which is directly reflected in the daily rates associated with a given skill level (to compare apples and apples).
  5. Good independent consultants can secure a net income significantly higher than their permanent counterparts - even taking into account their idle time - because of their more favorable fiscal situation. This guarantees the availability of top-notch consultants and their superior commitment and motivation.

Additional information about partnering with IT Cortex can be obtained by contacting us.

IT Cortex 

Brief History ] Our Organisation ] [ Practical Terms ]