An engagement model in the context of the software industry, is a framework that governs the way in which a vendor provides IT Services or Software Services to a client. It describes how the parties involved will engage with each other for the duration of the contract and forms the basis on which the responsibilities, obligations and commitments are defined for each of them.
There are many different kinds of engagement models and organizations must select the one that is most suitable to them, based on various techno-business requirements, financial and logistical considerations.
Let’s take a look at some popular Engagement Models that are in use and the scenarios they are suited for:
The Fixed-Price Model
The Fixed Price Model is associated with a pre-determined project cost. It is ideal to use when you have well-defined project requirements for the solution or application that you wish to develop. The project scope and costs are agreed upon at the time of signing the contract and the execution of the project is done in accordance with this. The project costs in this case are closely linked to well-defined project deliverables which are typically tied to various payment milestones during the course of the project. This arrangement also helps the client visibly monitor progress and minimize project risk.
It is possible that the scope could undergo a significant change during the course of the project. In such cases, a Change Management: process is invoked that allows for such change to be accommodated with approval from both sides including that related to cost and timeline implications, if any.
The Time and Material Model
Popularly abbreviated as the T&M model, this engagement arrangement is preferred when the scope of work associated with a project isn’t yet fully clear and is continuously evolving. The vendor agrees to provide resources for pre-determined skillsets and specifies a time-based billing rate for each resource type. This engagement model is ideal for continuous product evolution programming, complex large-scale projects, research and consulting assignments, solution design, support and maintenance contracts etc.
Many a time, a T&M model is well-suited to carry out a Requirements Analysis exercise in order to reach a defined scope and then move to a Fixed Price Model for development based on that. One of the biggest advantages of the T&M model is the flexibility it gives clients in terms of project specification evolution as per changing markets, technology trends or business priorities. T&M arrangements are typically accompanied by stringent project and time management, tracking and reporting practices so as to provide clients with good value for the time of the resources they invest in.
Offshore Development Center
This model involves teams that are an extension of the client’s team that is placed at a different location(s). An Offshore Development Center (ODC) can be maintained by an offshore development organization that has proven offshore delivery capabilities. There are multiple benefits of opting for this kind of a model including, but not limited to, cost-effectiveness of operations, teams that can scale up and down as needed, more coverage of workhours in a given calendar day (given that multiple time zones could come into play), and so on. A dedicated team provided by an ODC will offer a set of resources with relevant and pre-identified skill sets that the client has full access to and control over in terms of work allocation, status tracking and reporting and getting changes done at short notice.
Apart from these three often-used engagement models, there are other variants that exist some of which are combinations of the above. Let’s take a look at some of them as well:
The SLA/Milestone Based Model
In this model, the engagement aims to deliver specified milestones/SLAs in a project. It is key that for such an engagement to work well, the milestones are clearly defined with no ambiguity, and also that the roles and responsibilities that be clearly demarcated between the parties involved. The Milestone based model is typically well-suited for process-oriented organizational setups.
IT Staff Augmentation
This model allows clients to spruce up their in-house team with resources supplied by a vendor company. The model allows for flexibility in scaling up teams based on seasonal demand and also keeps helps cut costs associated with full-time hiring of employees. Staff augmentation is a good option to go with if your development or QA requirements are closely coupled with the work being done in-house and requires in-person rather than remote collaboration.
Hybrid (Onshore-offshore) Model
This model is a mix of the Onshore and Offshore ones and can prove to be an ideal fit if you have a requirement that will do well to have an onsite presence as well as remote support.
This is an engagement model in which the vendor manages the service for you in an end-to-end and holistic manner taking care of all requirements that arise within that area of work. This typically includes staffing the right people on the project, using the required tools and infrastructure, implementing process and best practices as suited to the project, maintaining documentation, producing project reports and ensuring that the deliverables are deployed in a timely manner. This model is well-suited for organizations who wish to focus on their core business; rather than investing in areas that are not really their expertise. In such cases, the organization can outsource the entire work of software development, maintenance or quality assurance to be managed end-to-end by a 3rd party.
High-Touch Onboarding and Low-Touch Onboarding
These models are typically suited to companies that have SaaS (Software as a Service) offerings, and specify how the vendor will help the client with implementation of the SaaS offering. In the high-touch onboarding engagement model, the client is typically introduced to the implementation team and they undergo training and are given assistance to configure the solution through a very involved and hands-on approach. The Low-Touch Onboarding approach generally applies to more simplistic software, tools or plugins. One that may require very little onboarding assistance or configuration to begin using. Many of these are available for direct purchase with an automated sales process.
High-touch onboarding processes typically have a dedicated Customer Manager or Account Manager that oversees and manages the client account and helps arrange for support as necessary. With Low Touch models, all customer queries or issues are typically handled with an online or automated customer helpdesk.
That was an overview of some of the different kinds of engagement models encountered in the software industry. A suitable engagement model must be chosen based on what works best for the unique requirements of the organization.
Given below are some considerations or questions to answer that will help with the decision-making process of zeroing in on the model that is right for your organization or project, and for picking a vendor who can aptly provide services with that model:
- What stage of ideation or implementation is your project currently at?
- Do you need niche skillsets or commonly encountered ones?
- Do you have a really short timeframe to be market-ready?
- Is there a very tightly-coupled dependency on in-house teams for getting additional development and QA work done by externally-supplied resources?
- Are you working off certain budget constraints or looking to significantly improve ROI margins for your business with this project?
- Do you need additional resources for a few months or weeks only, or is it more of a longer-term requirement?
- Do you have in-house project management and software delivery expertise?
- Does the vendor have proven industry experience for the kind of services you are looking for?
Choosing the right engagement model can be key to ensuring your project and organization are put on the path to sustained success. We hope you found this blog helpful towards that end.
Boston Technology offers a variety of Software Services with flexible engagement models tailored to your organization’s needs. Get in touch to know more and explore how your organization can benefit from them.