RE: Re: Responsibility

There was a great article in HBR a couple of months ago about the
effects of payment frequency on usage. Turns out that for any kind of
subscription, folks use the service most right after they have paid. So,
for example, and country club could reduce peak demand for tee times by
charging annual fees and staggering the fees throughout the year.

In the context of the below, if I wanted more customer involvement, I
would charge more often than quarterly. I've seen monthly and even
bi-weekly billing work well.

Kent

> -----Original Message-----
> From: 
> sentto-8233308-1196-1039799186-kent=threeriversinstitute.org@r
> eturns.groups.yahoo.com 
> [mailto:sentto-8233308-1196-1039799186-kent=threeriversinstitu
> [email protected]] On Behalf Of Arien Malec
> Sent: Friday, December 13, 2002 9:06 AM
> To: [email protected]
> Subject: Re: [XC] Re: Responsibility
> 
> 
>  
> 
> --- Andrey Khavryuchenko <[email protected]> wrote:
> > Arien,
> > 
> > "AM" == Arien Malec wrote:
> > 
> >  AM> There are business relationships, with contractual 
> support, that 
> > help  AM> here: we've worked out partnership agreements that are a 
> > cross between  AM> a standard SLA and contracted development.
> > 
> > May you share a typical outline of such a contract?
> 
> Sure: pretty simple. Customer X wishes to purchase the future 
> software product (or better, customers X, Y & Z: 3-4 is 
> best). There is a tension between the risk the customer 
> incurs in paying for future software, and the value such 
> software produces. The customer would like to pay explicitly 
> for value creation.
> 
> We lay out a 1 or 2 year partnership agreement. The agreement 
> gives the
> company(s) licenses/subscriptions for the software product 
> over a certain timeframe, generally at a discount from list 
> price. Payments are quarterly, are tied to product delivery 
> milestones, and are somewhat backloaded. Customers agree to 
> meet monthly at the beginning, review product increments, 
> participate in release planning, help us develop acceptance 
> testing, etc. (Play the Customer role in XP terms).
> 
> For multiple companies, we develop a charter that encourages 
> unanimity, but gives the software company veto rights in 
> extraordinary circumstances (using that veto right is 
> generally destructive to the partnership).
> 
> Partners have the right to drop out at any point. That keeps 
> the software development company on the hook to continually 
> deliver value.
> 
> It should be obvious that this would work best with XP or 
> something similar, as the ability to deliver software 
> releases at each of the milestones, and deliver working 
> software to play with monthly (or bi-weekly off-line), makes 
> this all work most smoothly, but I've done this in 
> traditional software development organizations.
> 
> Arien
> 
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