PointCross

Why We Use a Fixed Price Model

It’s amazing to us that while all other forms of technology – hardware, consumer software, iPhones, etc. – get cheaper and easier to use every year, enterprise software just gets more and more expensive and difficult to implement successfully every year.

That’s why, unlike most technology and SI firms who provide services on a time-and-materials basis, we fix-price our offerings.

There’s a reason this is so unusual in the enterprise technology market:  there is way too much (perceived) risk, making it a really bad idea for vendors who have co-opted IT buyers.  IT staff often have little direct experience in developing applications, and rely on vendors’ estimates and perceptions of risk.   Scope creep is another reason – both sides tie themselves down to firm specifications instead of working to meet intent and managing change at the lowest cost. All these risks and more can easily increase, if not double the initial estimated cost – often in the millions of dollars in a typical enterprise technology implementation.

And yet, we do fixed pricing anyway.  We do it because we feel that our customers should not have to shoulder risks that we as the solution provider are in the best position to mitigate. It is a matter of professional etiquette that we size the risk, the range of uncertainties, and work to achieve satisfaction with as many iterations as it might take.  We are driven by the beliefs that “customers are not always right, they always have rights” and “users may not always know what they want, but they always know what they don’t want.”

We are also more assured than most in taking on the risk ourselves because:

1. Orchestra™ is built on an ontology engine, which makes it a fundamentally agile platform.  All of our solutions built on top of Orchestra™ are equally flexible, which means that we can adapt to changing business requirements quickly; and
2. Orchestra™ is compatible with most other software systems because it sits on top of a company’s current infrastructure, provisioning knowledge resources as needed.  We don’t disrupt a thing, which makes implementation far easier and less risky.

We also do fixed pricing because it makes our covenant with our customers simple: we are incented to finish delivery quickly and to their satisfaction; in fact the earlier we finish it is more profitable for us, and better ROI for them. Our customers meanwhile do not have to stress about budget and late projects, or worry about making compromises on the specifications or changing their mind on requirements.  By aligning our goals with our customers’ goals, we’re able to serve both of us best.

So we think we’ve found one possible solution to the skyrocketing cost and high failure rate of enterprise software; now we think that companies should start demanding it from all their IT and SI vendors.

What do you think?  Leave us a comment below if you agree…