Business outcome-based pricing models for IT services

Abstract

This paper identifies two trends that are occurring in the IT services industry. First the value proposition of services is shifting towards delivering business outcomes. Second, the shift is causing a serious threat of commoditization to traditional models of IT-focused outsourcing and pure IT cost plays. The authors developed a business outcome-based pricing models for IT services by understanding the causal relationships between business outcomes and IT capabilities. The model aims to balance the IT service providers and clients, exactly minimizing the providers' risk and maximizing the consumers' satisfactory as well. Last, examples of how business outcome-based pricing has been used in different industries. © 2012 IEEE.