Why all project-based work should be fixed-fee

I was having lunch with a friend the other day who runs vendor management for a large IT organization, an organization that makes heavy use of consultants, contractors and outsourcing companies. He’s now been in the role for a couple years and has clearly developed some opinions on how (and how not to) manage vendors well.

The conversation started when I told him I like to fix fee most everything we do. His eyes lit up. He expressed frustration that leaders in his organization are usually so desperate to get an individual or company working immediately that they do not want to take the time to work through the project details. Instead, they agree to hourly rates without fully defining what the project will entail.

Before I go on, let me explain what I mean by a “fixed fee” engagement in contrast to “hourly” work. This means that the consulting firm and client agree to a flat rate to deliver a project with defined deliverables. The rate may or may not include expenses; I usually leave that up to the company’s preference. I do not consider fixed fee to include projects that have some sort of daily or monthly hourly cap; those to me are just daily or monthly (versus hourly) rates and arguably have more issues than a straight hourly rate, usually in neither parties’ favor.

I see so many organizations waste money on consultants for the very reason my friend expressed. I do think there can be good reasons to pay someone on an hourly (or daily or monthly) rate and I’ll cite some of those reasons later, but I firmly believe the buying company’s default preference should be to fix fee all consulting work. Here’s why:

1. It forces the client and the consultant to think through exactly what they want to get out of the project – deliverables, milestones, outcomes, etc. – versus vague approaches. This means fewer misunderstandings and missed expectations on either side, and better outcomes since objectives were agreed to up front.
2. Generally, consultants who are willing to fix fee work and are still in business are more knowledgeable and experienced in the type of work they are proposing, since without that knowledge and experience it is very hard to make fixed fee engagements profitable.
3. It forces the buyer to quantify the value of the project, up front. They must ask themselves “is it worth $50,000 to have this consulting firm create all the processes and templates for our PMO?”
4. Throughout the project, both parties are focused more on the desired outcomes versus the number of hours being worked. With good consultants, the buyer may even get more hours or more of the right hours because of this. A woman who does contract work for us who is extremely good at what she does and also very conscientious about her costs prefers to be paid on a fixed basis so she doesn’t feel “guilty” when she sometimes wants to spend extra time on something that she doesn’t think we’ll want to pay for! I am the same way with my clients.

So if I have you convinced, you may be wondering why you would veer from the fixed fee preference? I have at least a few exceptions:

1. If the client really wants a contractor, someone who is filling a full-time (or part-time) role within the organization, and wants to pay this person in a temporary versus employee manner. I don’t even consider this consulting work; this is contract work.
2. If the client has a very large and complicated project that will take a long time to define in a fixed fee structure, it may make sense to do a short “paid proposal” or planning phase up front. I like to fix these too, when possible, but sometimes hourly is more practical.
3. If the client truly has an urgent need that is not fully defined and needs a consultant to come in and figure out the situation, in a maximum of a couple of weeks. I had a CIO call me on a Friday afternoon and say she needed to run a quick re-organization and needed me there Monday morning for two weeks. We verbally agreed to an hourly rate and I showed up, but that was only after years of working together on a fixed fee basis that we both thought this exception was warranted.
4. If the consulting firm is truly only providing advisory services without a specific desired outcome or deliverable. Sometimes the client needs to have a consultant on retainer for advice, like they might for an accountant or attorney.

For project-based work, fixed fee is the way to go. Clients who don’t push for it either don’t have all the facts or are avoiding the tough thinking. Consultants who don’t push for it may be inexperienced or focused on the wrong things. Consider it. Now if that doesn’t rile a few people up, I’m not sure what will. I look forward to your comments…

Are introverts more or less stressed in the age of the internet?

I’m leaving on vacation tomorrow for over a week and nothing is planned. I’ve been working so much I haven’t had a chance to even think about where we are staying or what we are doing. So far I’ve made it as far as Dallas and I’m starting to look into hotels once I arrive in Europe. Before I leave the country tomorrow, all I know is that I need to call AT&T to turn on my data plan for my iPhone or I will be seriously crippled. I’ve been putting this task off for a while, despite its estimated two minute completion time.

My friend Scott, a fellow iPhone user and one of my traveling companions, just texted me the URL to activate my data plan after I had sent him the number and all the instructions to get set up. I can’t tell you how relieved I was not to have to call and have a two minute conversation with AT&T, despite the fact that they are usually very, very nice and helpful. I asked him (via text, of course) why I was so excited about this. He said “because you are an I”. It is true. I don’t particularly like talking to strangers. I really, really love that I can go click a button, even if it takes me a little longer.

It made me wonder if this internet world helps or hurts true introverts. I’m borderline, and I still absolutely love avoiding live people who I don’t already know. Except American Airlines; I always feel like they know me, maybe because they can reference all of my highs and lows for the last 15 years in Sabre. But seriously… if the true definition of an introvert is someone who gets his/her energy from within versus other people, how does that relate to online communications? For me (only a mild introvert), I love interacting via websites, email, text whenever possible with people I don’t know so well and that gives me energy to focus time in person with those who I do know well…

I love DropBox

I’m not usually one to write rave product reviews, but I can’t help myself. We’ve been using DropBox to share files at Thought Ensemble for the last couple weeks and this simple solution has addressed a big need for our company. Before one of my friends told me about DropBox a couple of weeks ago, we’d been searching for a document management solution, ideally a free one, to bridge the gap until we are big enough for something like SharePoint. We tested out Google Docs as well as many other free and paid solutions, but none met our basic needs. When it came down to it, they were all more difficult than emailing documents back and forth.

DropBox is not actually advertised as a multi-user file sharing solution; it is actually geared towards a user who wants to access files from multiple computers. It allows for automatic syncing of files between these computers. Sounds pretty basic, yes, and I’ve heard of similar products, but never thought about using them for file sharing across users.

When one of my friends suggested DropBox as a solution to what I described as our needs, we decided to check it out. Claudia, our office manager, set up several folders and shared with me, and then I shared some of mine with her. We shared some of the folders with John. In our various folder structures, the three of us tested ease of access, searching, sharing, privacy, simultaneous updates, everything we cared about. And this simple tool did it all. But the real test came when Jim returned to town and we got him incorporated and using DropBox in just a few minutes. Time will tell, but so far, it is better than any solution we’ve used at past companies. It isn’t scalable, but for a small set of people, it is very easy to use and so far is free.

Here’s what I love about this product:

• I can find the files as fast and easy as any files on my desktop. DropBox shows up as another root folder in my Mac Finder window, just like the Desktop, or the Documents, where I find the rest of my files.
• I can search natively using my Mac. Those of you who have Macs know how speedy and accurate the Mac search is with two keystrokes. Everything in DropBox is local, so I can search it anytime, even if I’m not connected.
• I can access my files anywhere! All I have to do is log into drop box and I can reach them. Apparently they even have an iPhone application coming soon…
• We can modify files simultaneously. We’ve been using this extensively on our current project to archive and organize all the client files as well as store all our notes and deliverables. I keep everything on DropBox versus on my local drive (but the beautiful thing is it IS on my local drive!). We keep our company sales pipeline in an Excel spreadsheet and all of us update it as we have changes, rather than trying to email around updates. In the case that multiple people update at the same time, Drop Box tells us there’s a conflict. That’s only happened once so far.
• If we want to share files with clients, and don’t have easy access to SharePoint, we can quickly set up a file sharing folder and share with them.
• If we need to get back to previous versions (in all honesty, I haven’t used this yet), DropBox keeps the history of what’s been changed.

So I just thought I’d tell the world how much I love this product … so far. Hope a few more people find it useful!

Why it is more fun to be a client than a vendor

To all my fellow service providers, I think you will get a kick out of this video. I've watched it three times in the last few days and it continues to make me laugh.

To all our Thought Ensemble clients, I'd like to take this opportunity to thank you for NOT behaving like this! So far, we have been very lucky...

Geek Squad vs. Genius Bar vs. IT Help Desks

This has not been the best of weekends. I woke up Saturday morning on a mission to complete a slew of client deliverables, internal work, community committee projects and “home administration”. I planned a packed calendar to get it all done, but did not factor in contingency for technology issues. I won’t go into the gory details, but I spent the weekend tethered to a wall due to broken wireless, counting the seconds and minutes go by as my new Comcast internet connection crawled, rebooting my computer multiple times due to freezes and continually clicking away sync error messages in my Mail program. This morning I spent two hours researching and I hope fixing the sync errors, later to find that the suggested Apple solution had apparently fixed the problem but had lost a few critical emails sent yesterday in the process and refilled my inbox with the 100 messages I thought I had processed in the wee hours of the morning.

By Sunday night I’d had it with my Mac’s unusually poor behavior and decided to refocus my attention on my probably unresurrectable PC. One of my “home administration” projects was trying to recover it from its blue screen disease one last time to get my Quicken financial file off of it so that I could find another way to catch up on my personal bills and company expenses. I was out of ideas and so I headed out to Best Buy to find the Geek Squad.

Geek Squad guy was very happy to see me and very eager to help me, to the extreme that I wondered if someone this happy was going to be smart enough to fix my problem. When he took my computer, but gave me back the power cord, I told him he’d need it to turn on the computer. He said with a sly grin, “Oh, don’t worry, I’m not even going to turn it on!” Quite pleased with himself, he marched off like a super hero to pass it off to someone in the backroom and came back out to consult with me. “How much is this file worth to you?” I pondered why I felt so desperate to have 13 years of financial history and decided it was worth a few hundred dollars. He talked me through the various potential prognoses and how much they would cost, mostly to prepare me for the fact that it might be out of my stated budget. But then he dug deeper: he actually wanted to really solve my problem, the problem that has me keeping a 7 year old PC on life support because Intuit can’t build a version of Quicken that will support my needs on the Mac. He wanted to talk about dual booting my Mac, Parallels vs. Fusion, etc. etc. Once we’d covered that, he offered to help me pick a wireless router. No, he didn’t fix my computer (yet), but he did walk me out to the car and give me a card of the other Geek Squad location where he works where they may have the technology to do it.

And I felt better, he actually cheered me up, which is amazing because he didn’t solve my problem! He was clearly so happy to be doing his job. I could just tell he really enjoyed working with customers, loved solving problems, truly wanted to understand what the real issue was so that he could come to an even more creative solution than just respond to my request.

I was so much more impressed with him than the people I’ve worked with at the Genius Bar at the Apple Store. I like the Apple store, the people know their stuff and they generally get the job done. But they’ve got a little too much attitude and too little flexibility on when they are willing to help you.

And then I started thinking about the reputation of many IT support departments. Of course there are exceptions, but they often have the reputation of being both difficult and clueless. I don’t know what kind of recruiting or training the Geek Squad does, but I think the internal help desk might be able to pick up a few tips from them. Imagine if the IT support people could go around and actually brighten someone’s day, on a day likely to be not going so well, instead of making it all worse. Mr. Geek Squad had the perfect combination of knowledge, creativity and happiness about his job to do just that.

How CIOs could investigate Twitter ... and other even more relevant technologies

This Information Week article called “Why CIOs Need the Transformative Power of Twitter” got me thinking about IT organizations and the time they (don’t) spend considering how new technologies can change their organization or industry. Bob Evans uses Twitter as an example of a technology most CIOs wanted to ignore, a technology that several organizations are now effectively using as a game changer. He asserts, “Ignoring it is hardly an option. More than ever before, CIOs are being expected and required to become active agents of change and drivers of revenue within their organizations.”

I totally agree that CIOs will only keep their jobs if they do more than just respond to what their business peers ask them to do. They have to bring thought leadership to their companies. But with everything else taking up time in their day, should they be the ones investigating all these technologies? They can’t; they do not have time to do it effectively. So if they don’t have the time, how do they get this information from their organization? Many IT organizations are too small or too lean to have a CTO, chief architect, or head of R&D who spends much of their time investigating new technologies. So IT organizations need to think creatively about how to use various people throughout their organizations to bring them this knowledge. And the great thing is that many employees, especially the ones who should be retained, would love to have a little side project to help investigate new technologies and the brief the CIO or the other business executives on ideas for how it could change their company. They might even do it in their spare time, for free. I think IT organizations should look into models for integrating this kind of research into their organization. Some coordination and process would be necessary to make it work effectively, but the direct benefits of the knowledge shared as well as the indirect benefits of getting employees more engaged and excited about the business they are in would make it well worth it.