Want to build a mutually beneficial relationship with your clients? Of course you do. That is what every business strives to achieve – the ultimate goal for every market player. Ironically, what seems to be so easy is in fact the most challenging part of any business practice.
The need to build relationships refers to every industry across the board, and so do the general guidelines for actually creating the relations. In many industries there are collaboration models that regulate how a business interacts (i.e. collaborates) with its stakeholders. The way that is done is of paramount importance, as some models just may not be suitable for your goals. That’s a matter of strategy – and that’s why it matters so much.
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IT is a ‘booming’ industry. How does IT business collaborate with its clients? Here are the four basic models of doing so, employed by major international corporations and small software development outsourcing firms alike. Every service firm is employing these models in one way or another.
1. FIXED PRICE
This model suits when short-term issues come up with a project. Usually, the customer faces precise deadline, budget and project scope. Since the app development team is to handle all the risks, profound knowledge in IТ is required. The team readies project specification, calculates working hours, and proposes a fixed value for the customer.
In cases when the customer insists on fixed price, but the team cannot provide a precise evaluation of working hours (because of new technology, project scope exceeding 300 hours, etc.), the project is divided into a number of phases, which are given a min-max evaluation separately. Fixed price collaboration model assumes:
- Completely defined project scope
- Fixed timeframes
- Precisely defined budget
- Fixed project team
2. TIME & MATERIAL
This model is most suitable in cases when it’s impossible to define the requirements for product development since they may change a lot underway. Usually, Agile development methodology (SCRUM and KANBAN frameworks) is employed with the model.
Time & material collaboration model assumes:
- No defined project scope
- Features easily added/removed
- Personnel selection/project team size flexibility
3. OFFSHORE DEVELOPMENT CENTER (ODC)
The model assumes a dedicated team created for the project. A dedicated team is a team of developers (IT professionals) with experience and skillsets to complete a certain project. This model is perfect for companies that do not have their own development team, as it ensures higher quality at lower costs. The dedicated team is fully integrated into the customer’s business processes, allowing long-term strategic relations and unobstructed operation.
Offshore development team model of cooperation (ODC) assumes:
- Dedicated team
- Full control over hiring/team size
- T&M or Cost+ models
- Long-term collaboration
4. SERVICE-LEVEL AGREEMENT (SLA) MODEL
SLA-based model is commonly used in the support and maintenance-related projects or activities under the BPO agreements. The SLA implies providing services with precisely defined constraints and requirements. SLA for IT services usually includes:
- Incident management
- Problem management
- Change management
- Release management
Please bear in mind that the overwhelming complexity of some modern IT projects may be well beyond the basic collaboration frameworks, and require either an utterly different approach (less likely), or a combination of above mentioned models (more likely).
Still not sure which model to choose? Contact us and we'll be happy to assist!