Clipping the ticket on time and materials!

Given, the shifts towards more client-centred eNaaS digital engagements underpinned by meterage based “as-a-service” consumption (consultation, solutions, delivery, support and management), time and materials [T & M] billing approaches, whether through task based “break fix”, clip-the-ticket or in design and delivery of managed contracts, will continue to present risks to the ongoing viability, survival and relevance of MSP-SR-IT’s. Indeed, this shift and tilt-towards pure-consumption IT, through eNaaS, will fundamentally reshape the technology sector partner market where the license-based margins and rebate models as and kick-backs will be see a transfer of value to benefit front-line outcome or client eNaaS engagements; clipping the ticket on time and materials approaches.

MSP-SR-CIT Managed Service Provider – Solution Reseller – Consulting Technology Firms

As detailed in the full white-paper - Clipping Tickets on Time and Materials, fundamentally, entrenched and reliance upon T&M billing structures

1. create misalignment incentives between IT firms and clients regarding the investment of time and resources in strategic planning.

2. are seen as an expensive cost-line when value and outcome are elusive or hard to measure

3. hinder the client-provider construct, reduces trust and erodes the potential for real, substance based, relationship development

4. creates a paralysis from or of constraints-based approaches; impeding client or business win pursuits

5. reduces the renewal options for MSP-SR-CIT's

Fundamentally, entrenched T&M billing structures create and extenuate a misalignment incentives between IT firms and clients regarding the investment of time and resources in strategic planning. Where, as opposed to deep long term outcome based engagements, MSP-SR-IT’s enter the market moshpit of hard fought regional competition, fighting endlessly and needlessly to win deals with Clients who may oppose or prefer to minimise billable hours, while IT firms may seek to maximise revenue through tactical execution rather than strategic consultation.

In this regard, fundamentally, T & M approaches incentivise IT firms to focus only on tactical executions with clients rather than the deep-engagement models necessary for MSP’s to know and meaningfully engage. This hinders the client-provider construct, reduces trust and erodes the potential for real, substance based, relationship development. Indeed, in situations where high-promises are made in sales pitches, yet where T & M billing shifts the bias of engagement &\or becomes the unfortunate focus of attention, and is based on the hours worked, less emphasis, often, is placed on investing time in understanding or delivering upon the client's long-term goals let alone crafting a comprehensive digital strategy.

As the T & M, fixed-billing, statement of woe or product-package selling approaches encourage such narrow or short-term focus on immediate tasks rather than long-term strategic initiatives, MSP-SR-IT' run big risks prioritising the addressing of wrongly diagnosed or immediate client needs to maximise their billable hours, neglecting the development of a vital, holistic, client-centered digital strategies. Often deflating the potential of what would otherwise be a promising engagement, the impact of this approach is as stifling or problematic for the client as much as it is also a characteristic of strategic drift for the MSP-SR-IT’s.

In presenting difficulties in client-engagements for accurately estimating project costs, T & M methods carry the overall engagement risk of being perceived as lacking accountability and alignment with client-goals or programme objectives. Sales and contracts are hard won at the best of times. However, often perceived as a “cut and run” high-margin "Dick Turpin" methods by client, then, for MSP,s there is also then, beyond winning, proving value and delivering - there is the oft-difficult challenge and pursuit of chasing payment!

eNaaS | Value Based Pricing

Conversely, in the eNaas model, value-based pricing and through long-game ‘as-a-service’ utilisation models, fosters deep client engagements. Indeed - as de-globalisation sets in, the regional imperative for shifting footing presents as major imperative to local business renewal through diversified digital engagement methods; as the waning effects of legacy methods implicate.

According - this starts and occurs by aligning “pricing” with the perceived organisational value of the services provided and the mechanisms to achieve them through clear, well-constructed, hard and soft outcomes. This mechanism is long game and maturity-based; adaptive, co-constructed, interest-based, negotiated (not pitched) and design-orientated, not sold. Such paradigm differences counter the engagement with a paralysis from or of constraints-based T & M approaches as value-based pricing encourages in-depth engagement to learn and realise a client goals and objectives.

Indeed, even the construct of “pricing” becomes less of a focus as clients feel valued when MSP-SR-IT’s providers are on the ground, deeply engaged have and take the time to understand their real and unique challenges in order to improve the alignment between services offered and client expectations. eNaaS engagements, therefore, as empowered by as-a-service, consumption and meterage-for-all based, value-based pricing incentivise MSP-SR-IT’s service providers to focus on transformative, deep engagement, outcomes rather than inputs or resource-allocation spreadsheets or margin drivers.

ALL CARE – MUTUAL MATURITY

With a shared risk between the client and MSP-SR-IT’s in achieving desired outcomes, long-game incentive-based, even tiered based, outcome-derived pricing structures reward for exceeding performance targets. Accordingly, the real risk MSP-SR-IT’s service provider face, with this approach, is that client organisations really benefit from such journey where results-oriented approaches require MSP-SR-IT’s themselves to keep at pace with an approach that directly impacts their own ability to build capability, deliver tangible outcomes and bottom line results; where clear accountability for delivering this value, to clients, becomes the means or currency to advance both parties states of maturity (within deep-engagement digital strategy journey’s).

Thus, eNaaS value-based pricing in consumption IT methods is based on the principle of co-creating value with clients. Measurement of value delivered through quantifiable metrics and benchmarks, regular reporting and assessment of progress towards achieving value-based goals are features of this consumption-based approach. To achieve this, eNaaS driven value-based pricing delivered through consumption Digital-IT methods relies on these continuous feedback loops, through high-trust deep engagements, to ensure that the services provided are aligned with the evolving needs and expectations of the client. Design thinking methods facilitate this iterative process by enabling frequent check-ins and adjustments based on client feedback, resulting in a more responsive and adaptable service delivery model.

Design thinking methods enable MSP-SR-IT service providers to collaboratively identify and prioritise the features and functionalities that deliver the most value to the client. This ensures that the pricing model is directly tied to the perceived value of the services provided, leading to greater client satisfaction and willingness to pay.

By engaging clients in co-constructed design process from the outset and through a maturity-based journey, MSP-SR-IT service providers can ensure that there is a clear understanding and alignment of expectations regarding the scope, timeline, and deliverables of the project. This helps to mitigate potential misunderstandings or discrepancies, synonymous with the pitfalls of T & M methods, between what the client expects and what the provider delivers, leading to smoother project implementations and fewer disputes or, worse, client-attrition over value-elusive or delivery-risk pricing.

As deep eNaaS client engagements facilitate real, ongoing feedback and collaboration between providers and clients, MSP-SR-IT service providers can continuously refine and improve their offerings based on client input to avoid, reduce or even enjoy these risks. This, together with outcome-activity-based reward as well as value-stage-based reward opportunities, ensures the MSP-SR-IT is also able to strategically, practically and financially equip themselves with high-quality talent; even attracting and incentivising this talent with ahead-of-market remuneration, even life-style and economic constructs that involve and invoke loyalty, development and skin-in-the game mutual benefit; – a life-business version of Theory-W approach to outcomes.

In terms of competitive advantage, delivered by or through a more metered ‘consumption’ system for a whole of strategy and long-game whole of engagement approach, value-based pricing sets service providers apart from competitors who use legacy or traditional pricing models. eNaas Value based pricing, therefore, is a symbiotic construct where deep client engagements foster strong, long-term relationships based on mutual trust and respect. Rather than rigid, prescriptive, “you can have anything you want as long as it’s this” contracts, service flexibility and adaptability become the new brand ideals for MSP-SR-IT as model of engagement, outcomes and benefits enhance both parties. 

With shifting all-digital to opex, Clients are able to access, and are willing to pay for, premium for services that consistently deliver value. Such differentiation, based on value proposition for true eNaaS, is trend-relevant and strengthens market position, enhancing the longevity of MSP-SR-IT business with client acquisition efforts. Regionally and for the technology-sector, this is a renewal or a new market cycle; and this creates and sustains a high reward and high-innovation construct that enables a quality localised response to de-globalisation.