The traditional time and materials model, long a mainstay of our industry, is being challenged by a more results-focused approach: outcome-based agreements. As with any change, however, misconceptions abound. It’s time to set the record straight.

The myths surrounding outcome-based agreements range from concerns about cost and risk to misconceptions about flexibility and change management. Each one reflects a resistance to change, a clinging to the old ways of doing things. But in this piece, we’ll dismantle these myths, revealing how outcome-based agreements offer a clearer, more efficient path in IT consulting—a path that focuses on real results, not just hours spent.

Myth: “Outcome-Based Agreements Are More Expensive”

There is a common belief that outcome-based agreements are more expensive than time-and-materials agreements. Our experience at Intact over the past decade, however, suggests otherwise.

In fact, less than 1% of our revenue over the past decade has come from scope creep or project change requests. This figure stands in sharp contrast to the industry average, where over half of projects encounter uncontrolled scope changes. 

The industry’s standard time-and-materials contracts often seem like a bait-and-switch tactic. Clients are enticed with low estimates, only to discover that the costs keep increasing. Intact has a different approach that breaks this pattern with a simple idea: What we quote is what you pay. This model fosters a relationship built on trust and predictability, rather than uncertainty and last-minute adjustments. 

But what about the risk premium that often accompanies outcome-based contracts? Yes, there’s a small premium, usually 10 to 20%, to partially mitigate risk. But in the broader context—one in which traditional IT projects frequently overrun their budgets by as much as 45% and extend well beyond their deadlines—it seems worthwhile. The outcome-based model aligns our success with that of our clients. 

When you consider that 70% of all transformation projects fail and either get scrapped, restarted, or changed entirely, and then compare that to Intact’s 1.5% failure rate over the past decade, the value of an outcome based contract improves even more dramatically.

Initial cost is a misleading myth because, with T&M contracts, the initial cost rarely ends up being the final cost, which often clocks in much higher due to scope creep. Additionally, at the end of the day, cost is not the primary concern of Congress, your customers or your board if you are not successful. At Intact, we’ve turned this model into a win-win scenario by offering our clients a straightforward, transparent path to achieving their IT objectives without the usual surprise fees. 

Myth: “It’s Hard to Define Clear Outcomes for Complex Projects”

Defining these outcomes may be challenging (although it doesn’t have to be), but it is essential. Without clearly defined outcomes, a project is doomed from the start.

At Intact, we have to understand the ‘why’ behind every project. We start by sitting down with our clients and playing a little game of ’20 Questions’. Well, not quite 20, but you get the idea: “What do you want?”, “Why do you want it?”, “So what?”, “Who cares?”. We keep drilling down until we hit the core objective, that north star that guides the entire project. No why, no project. It’s that straightforward.

Now, you might ask, “But isn’t it really hard to define these outcomes?” Our perspective is that it’s not necessarily difficult; it’s more about asking the right questions of the right people. A typical RFP is often chock-full of requirements but fails to explicitly state the desired outcome of the project. What’s the ultimate goal behind all these requirements? 

There’s a cultural barrier at play. Somewhere along the line, we’ve been shamed out of asking ‘obvious’ questions. There’s this pressure in organizations to appear all-knowing. But at Intact, we abandon that notion entirely. We’re not afraid to ask, to probe, to really get to the heart of what our clients need and why they need it.

So, the myth that it’s hard to define clear outcomes for complex projects? Debunked. It’s all about asking the right questions, and that’s where we excel. Because ultimately, knowing the destination is the key to reaching it.

Myth: “Outcome-Based Models Limit Flexibility”

Another misconception is that once you opt for an outcome-based model in IT consulting, you’re locked in, with no room to maneuver. 

At first glance, it might seem like an outcome-based model is about rigidly sticking to the plan. But there’s a lot of nuance here: we’ve baked in a healthy dose of flexibility, equivalent to about 20% of the contract value and work. This ‘flex pool’ allows us to adapt and pivot as needed. While 80% of our focus is locked on securing the outcome, there’s still room to breathe and adjust.

For example, say we’re implementing an out-of-the-box (OOTB) workflow for a client. The core of this workflow remains standard—that’s our 80%, the foundation. But what about the unique considerations of a client’s specific needs, like compliance requirements, or regional nuances? That’s where our 20% flex pool comes into play. We can customize the OOTB workflow and incorporate client-specific elements without deviating from our primary goal.

The idea that outcome-based models are a contractual straightjacket couldn’t be further from the truth. At Intact, we believe in striking the perfect balance between meeting the outcome and ensuring that our clients are more than just satisfied—they’re delighted and able to adjust over the long haul. And that’s where true flexibility lies.

Myth: “Change Management is a ‘Nice to Have’”

Technology, no matter how advanced, only creates business outcomes when it’s used properly. And who’s using it? People. Without their engagement, the most cutting-edge systems become paperweights. For example, think about a self-service portal we deploy in a client’s environment. It’s designed to improve the productivity of their service desk, cutting down on call volume. But if only 25% of people are using it, then you’re only seeing 25% of the potential value. Bump that usage up to 75%, and suddenly, you’re seeing 75% of the potential value. See the pattern here? We need people to see the value of these investments.

Our competitors often put all their eggs in the tech basket. Why? Because it’s straightforward. There’s no pushback from a machine. But to truly realize an outcome, you can’t sidestep the human factor—the fears, the resistance, the need to adapt. That’s where change management shines. It bridges the gap between new technology and its users, ensuring that the tools we implement are embraced and effectively used.

To say that change management is just ‘nice to have’ is to misunderstand the essence of outcome-based agreements. Without it, you’re only skimming the surface of what’s possible. At Intact, we dive deeper, addressing the human side of the equation head-on. That’s how we unlock the full potential of our technological solution and reach our defined outcomes—by ensuring that they’re not just installed, but integrated, understood, and welcomed.

Myth: “Outcome-Based Agreements Are Too Risky”

It’s a common refrain that outcome-based agreements are a risky proposition, but at Intact, we try to make clear that, far from being a gamble, these agreements are actually the safest bet for our clients.

Think about Netflix. They take on the risk whether you binge-watch their entire catalog or don’t watch a single episode. Similarly, in an outcome-based agreement, the risk shifts from the customer to the vendor. The right contract, structured with financial penalties and clear deliverables, means that it’s us, the service provider, who’s on the hook. Not the client.

Why adopt this mode? Because ultimately we at Intact are in a much better position to mitigate these risks. Unlike a sprawling organization, where managing risk depends on various human factors, our incentives are aligned directly with successful outcomes. It contractually aligns us to our customers’ success. We have skin in the game and only succeed when our customers succeed.

There’s a perception that what’s risky for the customer is also risky for the vendor, but this isn’t necessarily true. If you’re changing a faucet at home, for example, you better have your insurance details handy for a potential flood. But when you call in a professional plumber, someone who’s done this hundreds of times, the risk is negligible. They know the ropes, they have the expertise, and they’ve got it covered. If you hired a plumber and they came and asked you how you would like them to go about changing the faucet, what would be the odds that the faucet would be installed according to best practices and in a manner where you weren’t left with a host of issues to deal with when they left?

At Intact, we’re like that plumber but in the IT consulting world. We’ve navigated these waters time and time again. We know what works, what doesn’t, and how to steer clear of pitfalls. While it might seem risky from the outside, for us, managing these risks is just part of our daily work.

In truth, outcome-based agreements offer significant advantages over traditional models. Rather than proving more expensive or limiting flexibility, they promote transparency and agility. Outcomes crystallize vision while change management and flexibility provisions enable fluid implementation. And by shifting risk to those most able to mitigate it, these agreements provide both parties the security to focus purely on shared success. When examined objectively, outcome-based approaches unlock efficiency, clarity, and results unavailable through outdated alternatives clinging to hourly billing and unchecked scope creep. The way forward is clear for those bold enough to debunk the myths.

When ordering food from a restaurant, you don’t pay your bill based on how many steps the chef took to cook your food or how many minutes the waiter spent serving you. You pay for the meal itself—its taste, presentation, and your overall experience at the restaurant. This outcome-focused model incentivizes the restaurant staff to provide quick, attentive, and high-quality service. After all, better service means happier customers who tip more generously.

Something different happens in the enterprise world, though. When contracting technology partners, many businesses and federal agencies still cling to an outdated inputs-based approach, where vendors get paid for the amount of time or resources spent rather than the value created for a client.

Increasingly, however, forward-looking service providers are challenging the status quo through a new paradigm: outcome-based agreements.

What exactly constitutes an ‘outcome’ in this context? It’s more than a technical achievement—it’s about meeting the core expectations of those footing the bill—be it a board, a capital committee, or Congress. Outcomes are tangible results like enhanced productivity, improved customer experience, or elevated profit margins. They are the true north stars guiding every decision and investment.

But despite how important they are, the focus on outcomes often gets lost in the traditional inputs-based model. McKinsey reports that about 70% of digital transformations falter when the end goal isn’t clear. At Intact, we understand this pitfall all too well. That’s why we insist on a clear definition of outcomes before embarking on any project. If the destination isn’t clear, we don’t start the journey.

The Burden of Today’s Inputs-Based Model

The dominant contracting models in IT essentially boil down to variations on an inputs-based theme. Whether labeled as time-and-materials (T&M) or fee-for-service (FFS), most arrangements involve paying vendors based on allocated resources, staff hours, or completing prescribed activities.

For example, under a standard T&M structure, clients pay an agreed hourly rate for labor and reimburse their vendors for any expenses they incur. The more hours logged or additional supplies the vendor uses, the more the client owes―regardless of whether those hours or supplies actually contributed to achieving the desired outcome. Assuming a desired outcome was even defined.

Similarly, FFS agreements specify set fees for particular services rendered, such as $X for completing Y task. The focus rests on delivering prescribed assignments rather than achieving real-world impacts.

This inputs fixation has become the default option, with both buyers and sellers accustoming themselves to the model. And because sector leaders continue operating this way, innovation stagnates as new players conform to compete. Without external pressure or crisis forcing reassessment, questioning the status quo rarely occurs to either party.

And What’s Wrong With That?

To understand the downsides of input-focused IT contracts, think of a taxi ride. In a standard metered cab, the fare is determined by time spent in transit and distance traveled. So essentially, the passenger pays the driver to perform an activity—to operate the vehicle.

This payment model contains no inherent incentive for the cab driver to take the most optimal route to the destination. Whether due to traffic, construction detours, or intentionally dragging your ride along a longer path, the meter ticks steadily regardless. And the longer the ride, the more the driver earns—achieving the actual outcome of arriving efficiently is secondary.

The IT equivalent are T&M agreements. Under T&M, service providers get compensated according to hours logged rather than results achieved. Just as the taxi driver earns more from a longer ride independent of progress to the destination, T&M actually incentivizes vendor inefficiency. The more hours dedicated, the greater the fees accumulated. Quick completion risks revenue loss even if the project satisfies objectives.

FFS contracts seem on their face to address this by tying pay to predefined assignments. But once a vendor checks the to-do list, they get paid regardless of whether adoption, user satisfaction or other tangible benefits actually materialized. 

In essence, charging for activity over outcomes undercuts the potential for larger shared success for short-sighted financial gain. Sellers focus on maximizing billable deliverables instead of optimizing end solutions. Limited accountability lets organizations continue operating inefficiently while still profiting. Ultimately everyone loses—buyers waste funds for minimal mission progress and vendors erode their trust by allocating resources in a self-serving way. Just as a taxi passenger stranded miles from their destination fumes at their driver’s nonchalance, clients stew (if they are aware it’s happening) as vendors milk contracts without advancing real needs.

There must be a better way—one that aligns interests around achieving results rather than rewarding mere activity.

What is an Outcome-Based Agreement?

An outcome-based agreement ties partner compensation directly to achieving specific, measurable results rather than just delivering a service. It fosters alignment by basing payment on success, not effort alone.

For example, a traditional software implementation company traditionally hired to build an app may charge an hourly rate for development work, paid incrementally regardless of whether the final product met the client’s expectations. But under an outcome-based agreement, the partner only receives full payment if the completed app hits mutually agreed performance metrics—like a certain number of downloads, user retention rate, or revenue target.

This approach marks a pivotal shift from paying for activity inputs to paying for impacts and effectiveness. Outcome-based agreements transform vendor relationships from mere service transactions to shared success partnerships.

Outcome-based agreements represent a significant departure from tradition, so overhauling entrenched norms won’t happen overnight. But the status quo is no match for the increasing wave of innovation. Savvy leaders in various sectors are aware of the inevitable change—one not solely focused on effort and activity, but on achieving tangible impacts that drive organizations forward. The future of partnerships is outcome-based.

The IT industry desperately needs skilled talent. Over the next decade, technology occupations are projected to grow nearly twice as fast as the overall labor market. However, 64% of IT executives already report trouble finding qualified candidates today. 

By 2030, an estimated 85 million IT jobs globally may go unfilled, representing $8.5 trillion in lost annual revenue. Traditionally, employers have sought candidates with computer science degrees from four-year colleges to fill these roles. But while struggling to meet demand, they have overlooked millions of capable workers based solely on lacking a bachelor’s degree.

After having a daughter and needing more stability, Sandra worked her way up to managing a Sweetgreen location. The work was steady but it didn’t quell the nagging thoughts she had about her limited advancement options. “I was questioning myself—at 30 years old, do I see myself retiring from this?” The long hours and high stress of the food industry drained her time with family. But unsure how to pivot fields without taking on expensive education costs, her career ambitions remained on the back burner for years.

Discovering an alternate path

When Sandra came across an article about Virginia’s investments to meet IT workforce demands, she saw IT as more accessible than her past interests. She started teaching herself basic coding but was unsure about taking on expensive training costs. That’s when she found Merit America’s free technology training program.

Merit America’s model stood out by covering the cost of technology training through donors and employer partnerships. By removing financial barriers that commonly prevent career transitions, the non-profit opens overlooked talent pools to in-demand roles. Rigorous prep courses are combined with career coaching, virtual work simulations, and interview support for traditionally left-behind groups to launch them into living-wage IT professions.

Leveraging transferable skills from past careers

Despite lacking technical experience, Sandra’s training with Merit America quickly led to a job placement at Intact Technology. After undergoing our intensive 12-week onboarding program, Sandra moved into her new role full-time, brought ingenuity from past work to creatively solve clients’ problems, empathize with frustrated users, and maintain patience handling complex business needs—talents beyond the scope of what bootcamps teach.

“In the restaurant business…when people get hungry, they get ugly,” Sandra explains. “They come in already mad.” Drawing from years of navigating similar stress working with hangry Sweetgreen customers, she handles clients’ IT headaches with similar finesse.

Three years later, Sandra now manages technical teams supporting multiple accounts as a Customer Success Manager, guiding Intact’s delivery to meet clients’ business objectives. 

“I always tell folks who want to get into IT—you can do it. Give yourself credit that it’s easier than it looks,” she urges.

The persistence of the paper ceiling

Sandra’s colleague Toya, who also graduated from Intact’s training program, also escaped confined advancement prospects by crossing to tech in mid-career. Toya had over 15 years’ expertise supporting complex banking operations. However, lacking a bachelor’s degree repeatedly blocked her from management roles, even over candidates with less experience.

“I always saw people being promoted ahead of me simply because they had that degree,” Toya explains. “That four-year degree seemed to mean more than my 15 years of experience.”

Exhausted from fighting credential bias, Toya quit after her father’s death provoked minimal compassion from employers. She reflected on her shelved aspirations from long ago and decided to study computer science. Not expecting coding alone to satisfy her, Toya searched online for open-minded IT pathways. Merit America again immediately stood out.

Within months, Toya gained Google IT certification through their flexible program while honing interview and resume skills. She highlights the “problem solving” abilities gained from financial analytical work that transfers better than technical tactical knowledge. At Intact interviews, Toya leaned into discussing her process navigating uncertainties, building stakeholder alignment, and other people-focused strengths.

More than just gaining new career opportunities, Toya has also rediscovered her voice after spending years in rigid corporate cultures. At Intact, she feels comfortable approaching even the CEO directly with questions or just to say hello.

“I even get a hug from Jesse,” Toya said, referring to Intact’s CEO. “I don’t have to change or hide parts of myself here.”

Expanding equity and opportunity to millions

Stories like Sandra and Toya’s demonstrate vast untapped potential when employers move beyond academic proxies that disproportionately filter out women, minorities, lower-income groups, and other talent. Pure technical skills can be gained through shorter-term training programs tailored to jobs. But the softer stuff—empathy, creativity, tenacity, and other social strengths that high performers carry—remain harder to instill.

Workforce development programs like Merit America and the Intact University are expanding nationally due to demonstrated Triple Bottom Line returns benefitting trainees, employers, and communities simultaneously. Early pilots reveal such models prepare competent applicants for living-wage careers in months instead of years, helping companies struggling to fill over 1 million IT job openings while steering economic mobility to more individuals. 

Sandra sums up the demand for this kind of disruption well: “It needs the compassion, it needs the empathy.” 

As more organizations wake up to realities that talent comes from everywhere, ladders of opportunity expand for millions who’ve previously been left out of tech’s prosperity. The business case shows existing assumptions only hold us all back, while creative solutions allow anyone willing to learn a chance to meaningfully contribute.

Nearly 40% of federal employees will be eligible for retirement in the next five years, and the impending ‘knowledge cliff’ has long been a well-reported concern. This uncertainty presents a dual challenge for the public sector: preparing for a potential mass exodus of experienced employees and attracting a new generation of digitally adept job seekers eager to make a difference—but disillusioned by outdated systems and convoluted workflows.

Just trying to get basic work tools can be a frustrating slog. “Getting a computer or your security clearance done is hard. And that’s your first experience with the federal government walking in the door,” she says.

When digital native applicants encounter bureaucratic hurdles like filling out a PDF form just to receive a work laptop, they quickly lose interest in pursuing a potentially rewarding career in the public sector. Instead, they take their talents to more agile industries, often in the private sector. In order to attract and retain the upcoming generation of public servants, the government must find a way to overcome this generational divide.

Modernizing systems to empower employees

Outdated legacy systems hinder both current employees and potential hires. These systems turn simple tasks into time-sucking rabbit holes.

“HR can sometimes feel like a black hole,” Niakan points out. “You send a request in, and you don’t know where it went. You don’t know how long it’s going to sit there. And when you get a response, you feel lucky. What you don’t see is how incredibly hard the HR team is working to get all of their customer needs accomplished. You don’t know it because there is no visibility into HR.”

By implementing ServiceNow, Intact streamlines workflows and provides real-time visibility. “We’re able to give our employees and leaders access to information that they didn’t have before,” Niakan explains.

For example, during her tenure at the Department of Health and Human Services, Niakan’s team used ServiceNow to create a platform called HR Exchange. This system allowed different HR centers to share candidate certificates between them—a process that was previously manual and siloed. With the old method, hiring managers would receive hundreds of eligible candidates on a list, pick one to hire, and discard the other qualified resumes.

But by making all the resumes keyword searchable, hiring managers from other departments can easily comb through thousands of resumes for other candidates that matched their required qualifications.

“At one point, we had 100,000 resumes available in the database,” Niakan recalls. “I could put in the word ‘epidemiology,’ for example, and it would narrow down to 417 resumes. Then I could add ‘basketball’ and it would narrow down to 26 people.” This new level of visibility allowed managers to efficiently identify qualified candidates across silos, improving hiring outcomes.

Staff can work more efficiently and focus on high-value activities by having critical data readily available. They can automate repetitive tasks using ServiceNow, allowing experienced personnel to dedicate their time to more strategic initiatives. It’s an approach that not only helps retain valuable institutional knowledge but also accommodates the retirement of long-time employees.

The importance of transferring critical institutional knowledge to the next generation has caught the attention of oversight bodies. According to the Office of Personnel Management, failure to transfer this knowledge could compromise a federal agency’s ability to fulfill its mission.

“Agencies must modernize human resources IT infrastructure by upgrading and integrating enterprise IT systems supporting the workforce and increasing the data available to inform management decision-making,” according to the OPM’s 2022 Federal Workforce Priorities Report.

The fear of failure holding us back

Modernizing any system comes with its own set of risks. But when it comes to federal agencies that are accountable for providing essential benefits and services, any failure can have a significantly adverse impact on vulnerable populations.

“These are major systems we are talking about, like the ones that run the food stamp program I worked on at USDA. That’s a system that has to work every day,” says Jonathan Alboum, the Federal CTO at ServiceNow, who previously served as CIO for the U.S. Department of Agriculture. “These systems always have to work, so you don’t have a lot of opportunity to introduce something new that’s going to fail—or that might fail.”

With so much at stake, fear of destabilization breeds deep risk aversion. Yet refusing to evolve also poses dangers. Outdated tools frustrate users and impose limitations. The key is finding a middle path.

“ServiceNow gives you a lot of ability to innovate quickly and rapidly, and, in many cases, ServiceNow is already a key technology in an agency,” Alboum says. “So you can build off of that to implement other aspects of ServiceNow, like low-code applications, very quickly to transport processes.”

By leveraging familiar systems like ServiceNow, change can unfold steadily using the right iterative approach. The process begins with small upgrades that help build trust and confidence, paving the way for more expansive modernization in the future. While transforming massive bureaucracies may require patience, the iterative progress empowers current staff and makes public service more appealing to potential hires.ServiceNow’s connected platform enables the free flow of information across silos. For example, during the COVID-19 pandemic, Niakan was able to provide real-time policy and safety updates to the entire HHS workforce and widespread access to Federal Employee Viewpoint Survey results.

“Managers were able to look at not just their own survey results within their organization down to the work unit level, but they could also make comparisons with other organizations to see what organizations might be doing better in a certain area,” she said.

You need to help people transition through change first

One reason why the pace of modernization is usually slow is that leaders recognize that effective modernization goes beyond technology. Implementing change across massive bureaucratic systems also demands the ability to competently and compassionately address their employees’ fears and resistance.

“Change is scary for a lot of people,” Niakan says. “It’s not just about putting a new system in front of them. When you say to a person, ‘You need to change the way you’re thinking,’ there’s no system in front of them to learn, with buttons to press. It’s more complex than that.”

With a thoughtful, people-focused approach, leaders can overcome resistance by building trust and helping staff understand the “why” behind digital transformations. Though progress takes patience, this mindset shift brings government into the 21st century—where public service is more streamlined, responsive, and fulfilling for users both inside and out.

“I tell employees the stories of changes I’ve gone through, how difficult it is even for me as a change agent,” she says. “When we get through this process and get to the other side, your lives are going to be better, your work is going to be easier, and your customers are going to be happier.”