Services-as-Software

Time and material (T&M) contracts have been the backbone of the services industry for decades. The premise seems straightforward: clients pay for actual time spent and materials used, providing transparency and flexibility for both parties.

The model appeared to offer controlled risk. Customer slow at providing access? The clock keeps ticking. Customer unhappy with the service provider? The clock stops. Simple, fair, and seemingly foolproof.

This model spawned an entire hidden world of timesheet memes (seriously google it, it's funny). If you've never worked in consulting, you might not know that every Friday, consulting leaders (like I was in my past life) have to chase down staff to submit their timesheets.

Worked 60 hours this week, too bad. Bill your standard 8 hours a day. Worked only a few hours but were allocated to a project? Still bill your 8 hours a day.

No timesheets mean no data, no forecasting visibility, no invoices for country leaders, and no utilization metrics. Everyone knows in consulting: No timesheet = no bonus.

While this model appears logical on paper, it creates a toxic incentive structure: consultants are rewarded for being slow.

I'm based in Spain, where public tenders consistently publish selection criteria that prioritize two things: the cheapest possible rates and the maximum number of billable hours. The math becomes brutally simple:

1. Win the project with low rates

2. Inflate effort estimations

3. Staff consultants full-time

4. Double-book when possible

Before you blame the consultants, consider this: procurement departments are often the root cause. They obsess over price while ignoring business value entirely. But that's a discussion for another time.

This is precisely the model that AI threatens to destroy.

AI offers a fundamentally different system for delivering services. Instead of selling time, you productize services, staff them with AI labor (call it agentic or whatever you want), and sell outcomes—delivered in minutes, not weeks.

The value proposition flips entirely: customer doesn't like the outcome? Customer doesn't pay. No artificial complexity, no perverse incentives. Intelligence on demand.

This transformation is happening right in front of us.