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Testing 3.0
Pricing for Value
Sridhar Throvagunta
Global Head – Test Advisory Services

1

© 2012 WIPRO LTD | WWW.WIPRO.CO...
Agenda
Testing 3.0 – Reimagining the Business
Analyst Speak
Pricing for Value: Context
Pricing Maturity Model: Prototype
W...
Testing 3.0 – Reimagining the Business
Testing 3.0
• Test Sourcing
• An integral part of the business and IT processes cre...
Testing 3.0 – Imperatives

1

Testing is about looking at Assurance function as driving more of outputs, outcomes and KPIs...
Analyst Speak
Customer-centric pricing strategies enabled by
technological advances
Shift towards Fixed Pricing/ Outcome B...
Pricing for Value: Context
•
•
•
•
•

Economy – Market – Technology Confluence
Marketing mix
Price sensitivity of demand/ ...
3

The Confluence

Economy

Market

Technology

7

© 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
3

Economy
The State of World Economy

Discretionary Spend is under Squeeze

Extreme Focus on Operational Efficiencies

Ex...
3

Market

Market

9

© 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
Technology

3

• Service Oriented Architecture: SaaS | TaaS | PaaS
• Enterprise Software over the Internet through Common
...
4

Pricing Model Matrix
Customer Overhead / Risk
High

Skill availability
Cost arbitrage
Efficiency

Incentive Based

M...
4

Pricing Models: Key Considerations
Pricing Model

Flexibility Transparency Predictability Innovation Client Risk Servic...
4

Pricing for Value: Client Perspective
Objective

Strategic
intent of
client

Target

 Cost reduction

Efficiency

IS
I...
4

The Mythical PMMi Prototype
Level
1

2

Stage
Initial
Managed

Focus

Cost plus
Very Low
Sales driven

Project
completi...
5

Pricing for Value
Client
relationship

Service
offering

Pricing

Sales
effectiveness

Strategy

Revenue
management
15
...
Q&A

16

© 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
Thank You
Sridhar Throvagunta
Global Head - Test Advisory Services

Sridhar.throvagunta@wipro.com

17

© 2012 WIPRO LTD | ...
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QAI STC 2012 Plenary Keynote: Testing 3.0 - Pricing for Value

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As Software Testing reimagines itself, the need for innovative commercial models is more pronounced than ever. There is no single model that will suit all the requirements. The keynote takes a comprehensive look at pricing and covers how it can have a business impact.

Published in: Education, Business

QAI STC 2012 Plenary Keynote: Testing 3.0 - Pricing for Value

  1. 1. Testing 3.0 Pricing for Value Sridhar Throvagunta Global Head – Test Advisory Services 1 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
  2. 2. Agenda Testing 3.0 – Reimagining the Business Analyst Speak Pricing for Value: Context Pricing Maturity Model: Prototype Wrap up | Q&A 2 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
  3. 3. Testing 3.0 – Reimagining the Business Testing 3.0 • Test Sourcing • An integral part of the business and IT processes creating business value • Shared Services, Defect Prevention, Outcome Based Pricing • Business assurance Testing 2.0 • Outsourcing • An investigation conducted to provide stakeholders with information about the quality of the product or service under test • Part of SDLC/ PDLC • Standardized techniques and procedures • Better quality, improved time to market and reduced cost overruns Testing 1.0 • Insourcing • Software Testing is the process of executing a program or system with the intent of finding errors. [Myers79] • Part of debugging process and is dynamic • Adhoc testing, uncontrolled, reactive and undocumented • Cost overruns 3 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 1
  4. 4. Testing 3.0 – Imperatives 1 Testing is about looking at Assurance function as driving more of outputs, outcomes and KPIs rather than just performing certain activities. CHARACTERISTIC TODAY TOMORROW Testing as an Activity Assurance as an Outcome Find Software defects Find business process failures SDLC aligned Industry aligned Test Completion Purpose Readiness Productivity Efficiency Software Quality Acceptable Risk Reporting Advisory Based on Development Effort Based on risk and time to market Goal Methodology Measure of Success Outcome & Budget 4 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
  5. 5. Analyst Speak Customer-centric pricing strategies enabled by technological advances Shift towards Fixed Pricing/ Outcome Based enabling client’s ability to innovate and cut time to market Adoption of outcome based pricing in offshore contracts is picking up Moving from cost burden to value generation CFOs are still concerned about achieving business benefits from IT. 5 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 2
  6. 6. Pricing for Value: Context • • • • • Economy – Market – Technology Confluence Marketing mix Price sensitivity of demand/ operating profit Pricing Power Shift Cost – Market – Business Benefit Triangulation Price Strategies • • • • • • • • 6 Price Models • • • • Premium Penetration Economy Skimming Psychological Bundling Promotional Geography… Input based Output based Outcome based Pricing for Value © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 3
  7. 7. 3 The Confluence Economy Market Technology 7 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
  8. 8. 3 Economy The State of World Economy Discretionary Spend is under Squeeze Extreme Focus on Operational Efficiencies Expectation of High RoI Business – IT Synergy 8 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL Economy
  9. 9. 3 Market Market 9 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
  10. 10. Technology 3 • Service Oriented Architecture: SaaS | TaaS | PaaS • Enterprise Software over the Internet through Common Application Platform • Emergence of smart gadgets: Mobiles, Tablets & Beyond… • Open Source Software • Component Software • SoCoMo • Crowd Technology 10 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
  11. 11. 4 Pricing Model Matrix Customer Overhead / Risk High Skill availability Cost arbitrage Efficiency Incentive Based Medium Fixed Price Unit / Element Based Managed Capacity T&M Offshore T&M Onsite Low Medium High Service Provider Responsibility / Risks  11 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL Control vs. Governance  High Shared Risk/Reward Low  Global Delivery  Proven processes  Tech expertise  Effectiveness Low Biz Results Based Service Provider Value Add  • Shared risks • Partnership basis • Program Mgmt • Biz objective alignment • Domain knowledge • Transformational Medium
  12. 12. 4 Pricing Models: Key Considerations Pricing Model Flexibility Transparency Predictability Innovation Client Risk Service Provider Risk T&M High High Low Very Low High Low Managed Capacity Medium High Low Low High Low Open Book High High Low Low High Low Unit-Based/Use-Based High* Medium High Medium Low Medium to High Incentive-Based Low Medium Medium High Low High Shared Risk/Shared Reward Medium High Low High High High Low Low Very High Low High GainSharing / Low BusinessBenefits-Based 12 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
  13. 13. 4 Pricing for Value: Client Perspective Objective Strategic intent of client Target  Cost reduction Efficiency IS Improveme nt  Service quality improvement  Acquisition of new technical skills and management competencies. Performance Measures  IS Costs Engagement Model  IS Productivity  Traditional Outsourcing Contract  IS User Satisfaction  Staff Augmentation  IS Quality  Business Cost Effectiveness Transformation 13 Business Impact Business Shift  Improve critical aspects of  Business Quality  Captive business performance like  Business increased revenue,  BOT Productivity improvement in client  Co-sourcing  Business customer relationship, etc., Customer Satisfaction  Improve the ROI by generating new revenue or profit or Come out with Innovative technology and gain market share or by offsetting the cost. Preferred Pricing Model  Fixed Price  T&M  Element based  Utility based  T&M  Incentive based pricing  Risk-Reward Model  Element  ROI, ROA  Revenue  Profit  Market Share © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL  Joint Venture  Risk-Reward Model
  14. 14. 4 The Mythical PMMi Prototype Level 1 2 Stage Initial Managed Focus Cost plus Very Low Sales driven Project completion Managed Capacity FP Finance driven Low Cost Time Quality Unit/ Element Market driven Medium 4 14 Innovation Staff Aug T&M Defined Quantitatively Growth Managed Optimizing Strategy Technology Operations 3 5 Model Business Assurance Outcome SLA driven Based Risk/ Reward Pricing High Utility Business Value Very High © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL Pricing for Value
  15. 15. 5 Pricing for Value Client relationship Service offering Pricing Sales effectiveness Strategy Revenue management 15 Risk management © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
  16. 16. Q&A 16 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
  17. 17. Thank You Sridhar Throvagunta Global Head - Test Advisory Services Sridhar.throvagunta@wipro.com 17 © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

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