Deciphering Software Development Engagement Models

The competition continues to bolster the demand for brilliant software development. With more brands coming up, it is crucial to streamline the specifications to meet the business requirements.

The engagement model is one of those critical areas in any software development company that requires attention. Brands must be extra cautious and handle the model with proper understanding. Today, engagement models are either outsourced or even freelanced. It has transcended from the in-house talents to an offsite custom software development company.

A recent survey shows that the global IT outsourcing market will grow by USD 98 billion during 2020–2024. Outsourced development will be the best option post-2020, paving the way for software outsourcing company models at a baffling rate. The comprehensive benefits range from ease of access to a wide range of talents to better control expenditure and lesser marketing time.

However, as software development is unique to projects, there cannot be a particular engagement model for software development that fits all. Every software development engagement model has some pros and cons, making it apt to specific development projects.

What is Software Development Engagement Model?

Customer success begins with an appropriate engagement model. The choice depends on different scenarios, such as the project’s size, duration, strategy, concept, etc. Based on that, the client may agree to particular engagement models in IT industry.

An engagement model is nothing short of a plan, or a strategy, describing a partnership between customers and vendors during project development.

Engagement models for software companies specify how specialists and professionals are engaged in software development, their responsibilities, terms of payment, management issues, timelines, etc.

However, no singular software development engagement model suits all types of projects and satisfies customers’ demands.

Types of Software Development Engagement Models

Finding the right engagement models for software company is easier said than done. Though there are a few standard engagement models followed in the industry. There are quite a few unique ones that have emerged with changing demand in the market. Given here is a list of the most commonly used and latest models:

#1: Fixed Price Model

It is the most appropriate model for small and medium-sized software projects.

If you choose this model, you should have a fair idea about the project requirements, scope, and deadline.

To ensure this engagement model works, have your initial plan ready along with cost estimation.

Client involvement is not a criterion of this model. However, it is necessary to have a technology vendor’s opinion. Only a professional technology vendor can analyze the price of custom software development to clarify the risks.

Remember, the early phase of a project is the most crucial for successful engagement.

Pros

• There is a minimal scope of error considering that the project is well defined
• This model does not exceed budget
• At an initial stage, the team gets clarity of software, and there is more room for changes
• No client supervision required
• When all parameters are set, this model could give 100% accuracy

Cons

• Requirements should be stated clearly to ensure zero error. No last-minute changes
• This is not a flexible model. It is not possible to add anything later
• A lot of discussions and meetings are required before embarking on the project

#2: Time and Material Model

It is the perfect model for a healthy relationship between client and vendor through continuous communication. It is a flexible model that allows changes to project specifications at any given time.

If the project’s scope and features are not clear to you, this is the right model.

Both client and service provider mutually agree upon the time for allocated resources.

This model would be perfect for projects related to game development, IoT, and AI software in which the end requirements are often volatile.

Pros

• Extremely flexible and dynamic
• Granular monitoring makes it feasible, especially for agile methods
• Apt for research-based software solutions
• The project is totally under your control
• The client has an opportunity to validating the project before it hits the market

Cons

• The client is fully involved
• The cost of software development exceeds the budget
• High-risk factors
• Innumerable last-minute changes can delay the project

#3: Dedicated Developer Model

This model removes all the disadvantages of the last two models. You can tweak some new features of the software or even shuffle resources, or you can make as many modifications as you want. Moreover, you can dictate the cost too.

It is one of the most compatible pricing models for a long-term software development company project that involves constant changes and evolving requirements.

The client pays every month to the team and ensures there are other essential resources available. The customer has complete control over the software development process as well as the plan of action.

The client monitors the team. As a result, you can save recruitment costs.

Pros

• The client has a team of experienced and skilled resources
• Real-time progress tracker
• Despite workload changes and updates, the budget is stable
• Considerable savings — human resources and infrastructure
• Client controls resource allocation, deadlines, etc.

Cons

• The client should have considerable planning for the process with task allocation for team members
• The client must have clarity and vision to get the maximum output from his team
• The difference of opinions may arise in the event of having both in-house and dedicated developers.

Apart from these standard engagement models for software development, a few hybrid engagement models bring out the best way to meet a unique development project demand. Following are two examples of hybrid models.

#4 Combination of Fixed Cost, Time and Material Model

• Ideal for projects with initial ambiguity stage
• The requirement gathering stage is conducted on an hourly basis to define the project requirement. After that, it commences on the Fixed Cost model.
• Proper documentation is in place, and well-defined project deadlines
• Cost-effective and a time saver

#5 Combination of Fixed Cost and Dedicated Resource

• Ideal for product development projects with no documentation and to test a pilot-scale project for commercial viability
• Initial stage level requirements and select modules are based on the Dedicated Resource model to prepare a course basic framework for the solution
• The subsequent stages of development are based on the Fixed Cost model
• Helps in product/solution launch planning

Questions to Ask Before You Choose

Before choosing the right software development engagement models, understand that there would be few trade-offs. Noted below are some of the vital factors to consider before contemplating a specific model:

• Project Type: What type of work is it? Is it a simple MVP project or a multi-faceted and complex solution?
• Budget: Is it essential for you to have the budget to understand how much you are supposed to pay for the project?
• Flexibility: Do you know the final product details you should work on? Do you prefer to consider last-minute changes or additional requirements after you begin the project?
• Market Time: Is it essential that the product should reach its users in time and as quickly as humanly possible? If yes, how important would that be?
• Timelines: Do you have immovable project completion deadlines?
• Management: Are you competent enough to manage the project development?

Answer these questions before you take a step towards choosing an appropriate engagement model best suited for the project.

Remember, if you choose an inappropriate engagement model for software development, it could have undesirable outcomes. Your end-users may be dissatisfied with your product or friction between the supplier and you. As a result, you may lose revenue.

For instance, handling a big and complicated project with a relatively small and straightforward engagement model could lead to a disastrous outcome if the market situation suddenly changes, and your product has to be modified. There is nothing to do to salvage the situation. Likewise, if you choose a considerable engagement model for a small development project with a relatively smaller workload, it is not worth the money.

Making the right choice means that you would get the best value for money with an increased chance of return and smoother collaboration with vendors. It could be an advantageous situation for everybody involved in the project.