Balance cost and quality for agile apps market success

Over the past three months, we’ve conducted plenty of client reference calls to understand how the agile software services market is evolving and what “good” looks like from a client’s perspective. While vendors spend billions investing in new tools, technologies, and approaches, it seems most clients hold a simpler vision for the ideal outcome—a careful balancing act between cost and quality. To succeed in this market, then, providers must ensure that innovative cost models and commercial flexibility are at the very core of their offerings as they develop their agile development practices, alongside a crystal-clear narrative about how their tools and talent are uniquely positioned to bring better business outcomes.

Let’s start by busting some myths: Bringing the best tools and talent to engagements is a good best strategy, but it must be combined with a crystal-clear narrative

First, we hate to break it to you, but a fancy toolkit alone doesn’t guarantee success. A well-outfitted toolkit is sufficient for provider success in some markets, but hyper-cynical agile project managers and IT experts on the buy side shine a punishingly bright spotlight on provider marketing collateral. One of our clients relayed that their experience includes working with multiple providers, and, to paraphrase their observation, all services firms have nearly identical arsenals of IP, tools, and accelerators. Entering engagements talking about having the best automated testing platform or DevOps approach simply doesn’t work. Instead, it’s more compelling and effective to articulate how combining your tools, approach, and talent will deliver better outcomes.

“Everyone has the same solutions and tools—and the very nature of the market means approaches and frameworks are similar. So, we have to pick a partner that’s really clear about how they can deliver something better than their competitors.”

—Anonymized client reference

The second myth we need to bust is that thought leadership is enough evidence to convince buyers of your expertise. Of course, buyers like to hear new, innovative ideas from vendors. But they expect you to back those stories with real-life delivery examples. Buyers want to hear from existing clients, analysts, and observers that your bright ideas extend beyond marketing collateral. In a hyper-competitive market with a cynical buy side, the impartial third-party is king.

“We picked our partner because, from the RFP process onwards, they brought something real to show us. No PowerPoint—just real, pragmatic solutions.”

—Anonymized client reference

Indeed, as the agile services market has evolved, the buy side’s justifiable cynicism has evolved with it. For some providers, catering to this demand for proven solutions instead of smooth sales pitches presents a considerable opportunity. In particular, mid-tier firms seem to have developed a knack for winning over PowerPoint-weary selection committees with their pragmatic approaches, which often involve an abundance of proof-of-delivery and clear solution examples. One client remarked that the provider they picked did an appalling job of presenting glitzy marketing collateral, but that was part of their charm. Instead of a meeting room packed with sales professionals and consultants, the team pitching the provider’s wares included the technical architects that would be running the show once the dotted line was signed.

All of these factors combined boil down to one core trend in the evolving buyer market: cost sensitivity. Across our IT services coverage, the agile software market emerged as one of the most cost-focused buyer groups. Many clients described ambitious roadmaps and an appetite for innovation, only to summarize that the reason they selected their provider is that they were the cheapest. Cost sensitivity, however, is a broad church. Absolute pricing takes up the bulk of mindshare, but flexibility also has a role to play. Several clients advised that while the ticket price of the solution they selected wasn’t the cheapest, innovative commercial models and examples of structural flexibility won their partner the deal. The smart providers, then, strike the right balance across their commercial approaches in the agile services market—pricing is important, but so are the commercial model and evidence that ensure it incentivizes the right quality and business outcomes.

The Bottom Line: The smart providers will cater to the increasing cynicism of the agile services market with innovative pricing models that drive down cost while incentivizing improved quality and business outcomes. Customers expect you to justify your price.

Agile development is leveling the playing field for service providers; smaller, mid-tier firms can compete effectively with the global players. Delivering scale to agile projects won’t necessarily improve service delivery; the quality depends on the team’s talent and how well it is managed within the agile framework. Customers are asking themselves why they are paying 20% more to a global major when a mid-tier firm can deliver the same thing or better? What’s the ultimate proof point for tools, methodology, and IP? Better ROI.

The agile software development services buyer community’s healthy skepticism is the natural result of a marketplace populated with grandiose claims for innovation business outcomes and failed ROI, combined with the need for service leaders to drive more cost out of IT projects. The smart providers rise to meet new client expectations with an effective and provable story about how their unique assets, talent, and approach can bring compelling pricing, better ROI, and proof of delivery to engagements.