Once you have decided to engage a vendor for your software development, you will have to decide on an engagement model that works for you. Each model has its Pros and Cons.
Engagement model is a framework within which you operate with your software development vendor. This serves as the foundation for the relationship between you and the software company, will help you build the future collaboration and ensures the success of the project.
How to pick the engagement model
Before you go any further, ask yourself a few questions
- Is your project a simple MVP (Minimum viable product) or a complex project?
- Do you have a fixed budget for your project? Is it important for you to know how much your project will cost in advance?
- Do you know well how your project will look and work like when finished? Or do you want your project to be flexible and add requirements as and when the project progresses?
- Do you have enough time to take the project to market Or is it important that the project reaches its end-user as quickly as possible?
- What is the timeline of the project? Can the timeline change or is it fixed?
- How competent are you to manage the project during its development phase?
Different Types of Engagement models
Fixed Price Model
In this model, the company should be very clear about the project requirements, the deadlines, defined goals and specifications of the project. The company should spend their initial time planning the entire project.
More Planning = Better Outcome.
Slightest change in the requirements can be difficult for both the companies and this will harm the project release and will cost you widely. One of the benefits of this model is that you have a fixed budget and you will be well aware of the cost for the project.
When can you use the Fixed Price model?
- Requirements are clear and well defined.
- Short-term Projects.
- MVP Projects.
- Small to medium projects.
Pros of Fixed Price Model
- The project cost will not exceed the agreed budget.
- Predictability of the project helps you prepare expenses before the project starts.
- Requirements and specifications are well defined to give an idea of the final project.
- The workflow of the project is simple and easy to monitor.
Cons of Fixed Price Model
- Communicating the right requirements and specifications is crucial, if not done right at the beginning the project will be harmed.
- The project is not flexible.
- A detailed meeting about the project is necessary before the project starts.
Dedicated Team Model
The project will have a dedicated team to work only on your project. This is the best engagement model if you are looking for a long-term relationship with your service providing company for a complex project. You rent an entire team with the different skill set required for the project and pay them a monthly fee and additional service fee to the company providing the team. The team will report to you and follow all the policies of your company according to the initial agreement decided between the company and service provider.
The company will have to spend a good amount of time with the team to keep the project going and check the process.
When can you use the Dedicated Team model?
- When your in-house development team needs more personnel to support them in an ongoing project.
- Short-term Projects.
- For long-term projects with original and flexible changes during the development process.
- You can use this when you want different minds and cross-border knowledge in your ongoing project.
Pros of Dedicated Team Model
- This model is a good choice for flexible projects and you can change the requirements at any time during the project.
- You can have different minds working and sharing their knowledge and tips across different borders.
- You will have full control over the team and project and can check the progress of the project anytime.
Cons of Dedicated Team Model
- The teams’ workflow and responsibilities will be pre-decided by your company.
- There might be a conflict between the in-house team and dedicated team members, due to difference of opinion and ideas.
- You will be spending more time with the team at every stage of the project.
Time & Material Model
Time and Material engagement model is gaining popularity rapidly in today’s world. In this engagement model, the cost spent is equal to the time spent by the software development company on the project.
Cost Spent = Work Delivered.
At every stage of the development, the software development company will deliver the project based on the requirements or features mutually agreed on. On the basis of this, the changes can be conveyed to the development team or proceed to the next set of requirements or features. One of the advantages of this model is that you can prioritize your features or requirements beforehand.
In this model, defined requirements and specifications will fasten the project delivery deadline. If the requirements are not defined, then the project will require more time, resources and will cost you more. There is no budget prediction in this model.
When can you use the Time & Material Model model?
- A complex project with multiple iterations.
- Evolving and unclear requirement in a long-team project.
- You expect transparency in the relationship between your company and software development company.
Pros of Time & Material Model
- You can make changes to improve and evolve in the project anytime during the process.
- This model is low risk, you can prioritize the requirements and ask for changes in the resources required at different stages of the project.
Cons of Time & Material Model
- The overall budget can exceed the expected budget if requirements and features change in the project development stage.
- If the requirements or changes are increased during the project development the delivery date of the final project will be delayed.
To conclude, the choice is to pick a model that works for your current needs.