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Pick the Best Engagement Model for Software Startup development

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Pick the Best Engagement Model for Software Startup development

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Software Development for Startups - engagement models - software pricing - project development - advantages and disadvantages of engagement models - fixed price - Time and Materials - FFF — Fixed time, Fix budget, Flex-scope - Dedicated Team - Milestone based model

Software Development for Startups - engagement models - software pricing - project development - advantages and disadvantages of engagement models - fixed price - Time and Materials - FFF — Fixed time, Fix budget, Flex-scope - Dedicated Team - Milestone based model

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Pick the Best Engagement Model for Software Startup development

  1. 1. Software Development for Startups: How to Choose the Right Engagement Model Alex Volik CCO | We help start-ups and innovation
  2. 2. What is an engagement model? Software development for startups is a cooperation between the startup founders or managers and an IT company. The engagement model is a clear plan of action, a structure that shapes the relationship between the customer of the software solution and the supplier, whom the customer chooses for the duration of his project.
  3. 3. What impacts the choice of interaction model? Choosing an engagement model, the parties are guided primarily by the goals, timing and scope of the technological project, its features, as well as financial capabilities. Engagement model allows you to identify the framework and mechanism of cooperation, coordinate goals around the overall result, provide a level of control, responsibility, flexibility, and determine the pricing model.
  4. 4. The most popular engagement models in software development for startups: ● Fixed price ● Time and materials ● FFF: Fixed time, Fix budget, Flex-scope ● Dedicated team ● Milestone based model
  5. 5. Engagement Model - Fixed Price Perfect for small to medium sized project. You don’t pay more for a software solution than was agreed before its development. In order to achieve this, careful planning is necessary. Before project creation be sure to tell the software company in detail about all the requirements, specifications, resources and deadlines, as well as planned technical documentation.
  6. 6. Engagement Model - Fixed Price Advantages ● The cost of startup project development remains fixed for the customer ● Software product release dates will not change ● The project is easy to manage, as it does not need client control ● Price remains unchanged if requirements stay the same ● Clearly defined specifications and simple workflow ● The future result is predictable
  7. 7. Engagement Model - Fixed Price Disadvantages ● Long preparation time ● Requires detailed documentation before the start of work ● Cannot be applied to large and complex projects ● When it's necessary to make changes, all parties agree on them and draw up an additional agreement to the contract
  8. 8. Engagement Model - Fixed Price Disadvantages ● Long preparation time ● Requires detailed documentation before the start of work ● Cannot be applied to large and complex projects ● When it's necessary to make changes, all parties agree on them and draw up an additional agreement to the contract
  9. 9. Engagement Model - Time and Materials It has more flexible deadlines and a budget, and used for complex long-term projects. The client constantly participates in the project, making decisions based on the priority and order of developing product functions. The customer can easily make changes to the requirements at any stage of the project. Client pays for actual hours spent on development and the amount of work performed, having previously agreed on hourly rate.
  10. 10. Engagement Model - Time and Materials Advantages ● Customers are free to make changes at any stage of development ● Possibility of simple and quick start - no long preparation and detailed documentation are required immediately for the entire project ● Constant cooperation with customer at all stages of the project ● Customer pays for completed tasks ● Focuses on Agile development methodologies
  11. 11. Engagement Model - Time and Materials Disadvantages ● It’s impossible to estimate exactly how much the project will cost ● It’s impossible to evaluate exact project deadlines ● Constant monitoring by the client ● Great amount of time spent on coordination through phoning and messaging in chat
  12. 12. Engagement Model - FFF: Fixed time, Fix budget, Flex-scope A feature of this model is in two commandments, which under no circumstances must be violated - budget and timelines. When client wants to make some kind of innovation, executing company monitors what change it will make to their budget. If the budget is exceeded, the team transfers the amount of work to the second release or discards that idea in order not to exceed the costs and development time.
  13. 13. Advantages ● Effective when you need to develop a quality product for a limited budget ● The price and quality of project development does not change when adjusting the scope of work ● Clear deadlines and focused on results ● Monitoring the work process both on the part of the client and by the contractor Engagement Model - FFF: Fixed time, Fix budget, Flex-scope
  14. 14. Disadvantages ● The software company needs to plan workflow carefully and stay flexible ● Close customer collaboration required Engagement Model - FFF: Fixed time, Fix budget, Flex-scope
  15. 15. Engagement Model - Dedicated team Сustomer and service vendor agree on product requirements, workload, and time needed for completion. Meanwhile, an outsourcing company provides a Dedicated Team of IT-specialists who meet their client's demands. The Dedicated Team may include developers, designers, and project managers. This separate team “dives head first” into the current project and works exclusively on it.
  16. 16. Engagement Model - Dedicated team Advantages ● Good for large complex projects ● The most reliable engagement model for customers ● High work efficiency, as the team is well- acquainted with the project ● A personal, quality-oriented team that works on a long-term basis ● The client fully controls and manages the project ● Customer saves on infrastructure
  17. 17. Engagement Model - Dedicated team Disadvantages ● The client invests a significant amount of time and money in team management ● Possible contentious issues and misunderstandings during the process ● The most expensive existing engagement model
  18. 18. Engagement Model - Milestone based model This type of contract is suitable for long-term projects where the scope of work and technical requirements are defined. The project is divided into several parts, so-called milestones, which, according to priority, are performed by the software supplier company. Client gradually pays for each successfully completed part of the work, and their team, meanwhile, is taken for the next.
  19. 19. Advantages ● No need to pay immediately for the entire project ● Quick start option ● Transparency and predictability of results ● Customer pays for completed individual parts of the project ● A high quality work of team ● Measurable and achievable result ● Minimal risks due to visible monitoring of task performance Engagement Model - Milestone based model
  20. 20. Disadvantages ● Approximate budget ● Since planning and execution of the project is approximate ● There is no fixed price. All milestones have different costs ● Possible lengthy disputes between the development team and the customer in the event that something Engagement Model - Milestone based model
  21. 21. We hope that this review has helped you get a better idea of the popular engagement models in software solution development. Finally, you can make an informed decision on which model is tailor-made to create precisely your business project. Learn more about software engagement models in our article on LinkedIn

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