[thelist] development time cost on new functionality

[Ken Schaefer]

Yet, empirically, major consulting companies that are in the business of making a lot of money, use these models. So, they are just doing it wrong?

I don't work in consulting anymore - I left ACN. But I work as an architect in HP Enterprise Services now, and I know that HP ES and HP GSS offer all three models: fixed price, T&M, product-based.

So, going back to Matt's post: T&M is not about "leaving money on the table". There's a right way to execute and a wrong way. And what is right in a particular engagement depends on the constraints, assumptions and even just the general policies of the client. It has nothing to do with leaving money on the table - neither Accenture nor HP are in business to do that.

Given that both of those two companies are reasonably successful, do a lot of deals, and generally have to have some smarts about them in structuring deal otherwise they'd be out-of-business pretty quick, I'm inclined to trust empirical evidence over the ideological "there is only one right way" inflexible opinion of a random guy on the internet.

Of course, I'm also just a random guy on the internet, so I could just be making this all up. Up to you guys to decide. :)

Cheers
Ken

-----Original Message-----
From: thelist-bounces at lists.evolt.org [mailto:thelist-bounces at lists.evolt.org] On Behalf Of Martin Burns
Sent: Wednesday, 20 July 2011 5:00 AM
To: thelist at lists.evolt.org
Subject: Re: [thelist] development time cost on new functionality


On 19 Jul 2011, at 16:20, Matt Warden wrote:

> That's just the way T&M works? The way T&M works is to leave money on 
> the table? It undervalues your offering? Does that really sound right 
> to you? Am I the only one who thinks this is all ludicrous?

T&M is just plain stupid[1] for all concerned except for the most uncertain of projects.

It trains you to be highly inefficient (see yesterday's Dilbert for detail) It trains the client to demand that you cut corners It encourages the client to meddle in your resourcing and demand veto power over who you're bringing in It limits the profit you can make

The only justification is for the initial discovery phase where you really don't know what you're in for - so limit it, and have its defined deliverables as being plans for a fixed price delivery.

Cheers
Martin


[1] Actually - there is a worse model: cost+