How global uncertainty drives business, commercial and pricing models?

Written by Rajesh R N

With rising global uncertainties which have emerged over time, fueled by the recession of 2008 came new operating and business models including cloud computing. Business Processing Outsourcing (BPO) came in much earlier to that, perhaps due to the previous recession and evolution of technology.

The traditional model of customers having to bear huge upfront cost for implementing large scale transformation programs and subsequent operating costs over time became the not so preferred model. The need for elasticity and opex based models gained further momentum. Conversion of capex based pricing into opex based, where upfront costs are recovered over time on a certain basis such as a per Virtual Machine or per transaction with cost of capital built into could be one theme for large service providers who have the financial ability to do this, withstand, successfully deliver and reap the benefits of being a true transformation partner. Taking this further, a catalog based pricing with options to mix and match offerings is another within this. On top of this simulating across different volumes of transactions or other unit of measurement such as Virtual Machines meant a nightmare for the pricing modelers as well as procurement departments of the customers who need to look into the future and guesstimate the demand to support the service providers in building a model and quote. All this has given rise to something very interesting for the customer. Equally on the other side, customers need to provide some ramp up assurances over time to the service providers with a tight governance model on both sides, in order for the service provider to be able to meet commercial goals while unleashing the transformation. Continue reading