Best Practice Report

Choosing The Right Pricing Model For Your Applications Maintenance Engagement

July 20th, 2010
Bill Martorelli, Principal Analyst
Bill Martorelli Principal Analyst
With contributors:
Christine Ferrusi Ross , Mark Grannan

Summary

Applications maintenance pricing models are in flux. While many clients want to move beyond staff augmentation relationships, finding the right type of pricing to employ in the managed context can be a challenge. Maintenance engagements lend themselves well to outcome-based models, but there are several potential alternatives to consider — each with its own tradeoffs. Sourcing and vendor management (SVM) professionals should exercise caution in recommending outcome-based maintenance structures until they have addressed the potential for unintended consequences.

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