As high rates of IT project failure continue unabated, CIOs should examine alternative approaches toÂ pure time and materials implementation contracts. While traditional contracts offer maximum flexibility, which isÂ appropriate for some situations, open-ended services on large projectsÂ place substantialÂ risk on enterprise buyers.
Since 2006, I have advocated packaged (also called productized) services and software solutions to combat the risks inherent in traditional implementation arrangements. Today,Â many enterprise software and services vendors offer packaged solutions, to help theirÂ enterprise customers reduce implementation cost and risk.
To explain key concepts behind packaged solutions, I recorded a shortÂ video,Â presented belowÂ [disclosure: I received compensation from SAP]. The video covers several key points:
What are fixed-price solutions? Fixed price projectsÂ achieve predictable outcomes by combining specific scope of work with aÂ clear implementation process. Packaged solutions work their magic by standardizing the process aroundÂ pre-defined components such as accelerators, roadmaps, and training materials.
WhenÂ are packaged solutions a good fit? Consider these solutions to automate core processes that are substantially similarÂ to thoseÂ used byÂ other companies in your industry.Â Custom implementationsÂ are better for better suitedÂ forÂ unusual,Â highly differentiated processes that embody an organization’s “special sauce”Â of intellectual propertyÂ and methods.
How does a modular approach reduce risk? Packaged solutions “chunk” an implementation into groups of smaller, modularÂ projects. ByÂ aggregating these smaller project modules into a broader portfolio, the approach increases control andÂ transparencyÂ into the implementation process. Perhaps an obvious point, butÂ greater control andÂ visibilityÂ areÂ highlyÂ beneficial on complex projects.
To see a longer, more detailedÂ version of this video, click here (registration required).