The Right way to price....
In the recent past we had multiple interactions with prospects and existing customers on the pricing model for Platform based solutions for "Source to Pay" (managed services).Various stakeholders have expressed opinions which rightly address their concerns but it’s hard to conclude to a single model.
Let me start out with a fundamental argument. What is the objective of an outsourcing engagement? Is it to impact business process from a business requirement standpoint or to impact at transactional level?
In my view a transactional view does not enable a service provider to create any transformational value for clients. Service providers will perform the transactional work as per agreed SLA but will not be in a position to appreciate or contribute larger business goals that client organizations strive for. The transactional view probably provides benefits which are tangible, but are far from business benefits that is the need of the hour.
A pricing model should also reflect the basic premise (transformational v/s transactional) and should use the right metrics accordingly. In the next post I would like to discuss with the audience various pricing models that can be proposed. Till then please feel free to share your views on pricing.
