Paying for IT Incompetence

Traditionally most professionals, including information technology consultants, charge by the hour. Using this model, the client is charged for the actual time taken to perform the task. In theory this sounds fair, the provider is compensated for the time taken to complete the job and the client pays a fair rate based on then resources that were required to complete the task.

But what happens when it takes four hours to resolve a problem that would normally take one? And who should pay for the extra time required for an engineer or consultant to train or familiarise themselves with a solution?

Too often we hear from business owners who have been stung from surprise IT bills. The problems that require repeat visits or the projects that creep out of scope can add up significantly over a month. Compounding this are the issues that are actually caused by engineers and consultants such as software or security updates that break applications. The IT provider is rewarded with increased revenue if a job takes longer to complete, so what incentive is there to fix the problem properly the first time rather than just applying a band-aid and waiting for it to re-occur so the client can be charged again?

The other common method for charging clients is a fixed fee model where clients are quoted a fixed fee upfront to complete a job and if the job takes longer than expected this additional cost is worn by the provider. There is some drawback for the provider under this model. Firstly, they need to have a very clear understanding of the services they provide - this takes more time upfront to understand, define and scope the problem before a fixed fee can be determined. There are however a number of advantages to the client including:

• there is predictability around budgets with fixed fees being negotiated upfront - this means less risk is carried into the project by the client;
• the outcomes and scope of the task are more clearly defined;
• there is more motivation to resolve the issue properly the first time; and
• there is less time required monitoring timesheets or billing updates which reduces the complexity and time involved.

Fixed price fees are not for all problems and not for all providers but they can give certainty to clients and an incentive for providers to fix the problem the first time. Nobody wants to get into the situation where staff live with problems and are too afraid to call a service provider because they are afraid of the bill they will receive.

It is certainly worth exploring for those businesses seeking predictability and value from their IT services.

Tristan Hough

Managing Director

With over ten years professional experience in both private and public organisations, Tristan provides consulting, project management and strategic planning services to a broad range of industries including financial, healthcare and legal.

Tristan holds a Bachelor of Business Administration (IT Major) degree from Southern Cross University, as well as IT industry qualifications including MCSE, MCDBA and CCNA certifications.

Contact Tristan directly by emailing tristan.hough@myrtec.com.au