Every few weeks, another article tells us the world is moving from T&M to outcome-based consulting and how this is common place. Not from what we see, yes there is more talk and openness about this, but it’s still far from the norm.
Outcome-based technology delivery is still a long way from becoming the norm.
So why is the shift proving so difficult?
1. Outcomes are harder to measure than time
Time is simple, you sign off a time sheet and that’s it. Outcomes require more work upfront. You need to agree what the problem is, how to measure success and there have to be challenging conversations when things don’t work as they should.
2. Enterprise organisations are built around inputs
Procurement teams are usually measured on reducing day rates and demonstrating savings.
Technology teams have traditionally managed people, projects and capacity.
Consulting firms sell people, often arranged into pyramids & driven by utilisation.
The whole system is built around inputs: People, days, rates and utilisation. Outcome-based delivery changes the fundamentals.
3. Many organisations haven’t defined the real problem
It’s easy to say: We need a new data platform, we need to modernise our legacy estate, we need an AI strategy. It’s much harder to explain why and measure that impact on the business upfront.
That connection between technology, business outcomes and value is where effective delivery starts.
4. Technology changes constantly
Even the best discovery cannot predict everything. Downstream dependencies appear all the time and are never visible upfront. Architecture decisions change, regulations change & business priorities evolve.
An outcome that looks clear on day one may need to be refined six months later. That makes outcome-based delivery harder than billing for time.
If the problem is genuinely complex and uncertain, it’s only fair both sides share some of the risk?
5. Value is often harder to see than expected
AI projects provide a great example of this. Build a tool that creates efficiencies in productivity. Reduce your head count but increase licences, governance, consumption / tokens or technical debt.
The technology changes, the way people work changes. Suddenly, the outcome you thought you were buying is not quite as straightforward as it first appeared.
So what needs to change?
Companies need to get better at defining their biggest challenges, agreeing the outcomes they need and measuring value.
Consulting firms need to take greater responsibility for delivery, rather than simply supplying more people.
Procurement teams need to focus on value, not just price and welcome uncertainty.
That is a significant shift. All parties need to move away from a body to an outcome and measuring the value that outcome delivers.
Summary
At esynergy, we have been making that shift for some time, both internally and externally, using this model with our suppliers and customers alike.
We have a unique model and way of working which allows us to do this. We have seen much happier and engaged customers and associates delivering the work and have been able to track the value in most engagements. Typically, we measure through social, political and economic value and tie these back into short payment cycles attached to this value. This creates greater alignment to value realisation.
It’s far from simple, there is no one size fits all and it doesn’t work for every engagement. But it’s much better than tracking time and materials. I suspect outcome-based technology consulting will follow the same path: widespread adoption, but much more slowly than the headlines suggest.
If you would like to learn more about what we do and how we work please reach out. I’ll share the practical steps, the lessons we’ve learned and the mistakes we would avoid next time.
