December - 2010 issue > In My Opinion

By Upinder Zutshi

The key is to not reinvent the wheel but make a differentiated space for oneself. This would require a series of strategic decisions and a conscious effort to steer away from the trodden path. Opportunities not only need to be identified but also captured and executed in a novel and innovative way. Despite the challenges, the solutions should enable one to be distinguished from the pack and create building blocks for success.

"The key is to not reinvent the wheel but make a differentiated space for oneself."

A risk / reward sharing model is one such differentiated pricing model that encompasses all the essential elements of volume, usage, business processes, customer satisfaction, cost savings and revenue share, thereby creating a win-win situation for all the parties involved i.e. the client, the service provider or vendor as well as the end customer.

This model enables a vendor to take over those products of a client which have a limited shelf life, but continue to be essential to many customers due to their proven record of generating revenue. The client can then shift its resources and energies from these mature products and focus on their core initiatives.
The way it works is that the service provider obtains the license of the product, injects additional R&D funds to enhance it and eventually breathes new life into a mature product. This collaboration allows a client to continue to grow its strategic initiatives, without sacrificing mature lines.

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