New Insights for Negotiating Next-Generation ADM Deals

Sustainable cost reductions and efficiencies are key to optimal application development and maintenance procurement

Vienna, Va.May 9, 2014—Emphasizing the importance of getting application development and maintenance (ADM) deals right the first time, Steven Kirz, a principal at optimization and outsourcing advisory firm Pace Harmon, is advising companies to adopt a new model for establishing competitive, business-ready ADM deals.

“Chief information officers (CIOs) are beginning to look past rate arbitrage for positive business outcome-based pricing so that providers have the same incentives as buyers when delivering applications to their business,” said Kirz. “Implementing a true managed service model helps ensure a continuously competitive environment where multiple providers are delivering services to help the business gain competitive advantage.”

As part of a recent discussion at the International Association of Outsourcing Professionals® (IAOP®) Outsourcing World Summit, Kirz offered strategies for driving an effective end-state for next-generation ADM engagements. He advised CIOs to avoid traditional negotiation tactics associated with compromise in favor of standing firm on client requirements during the competitive process. He also encouraged organizations to pursue a managed services structure that supports both application development and application maintenance. These strategies yielded Pace Harmon’s clients improved provider resource quality and overall ADM performance while driving up to a 50 percent overall cost reduction.

“Approaching ADM procurement with the number one priority of meeting the business stakeholder’s and information technology (IT) team’s needs requires organizations to stand their ground on requirements, and request realistic pricing and visibility into the prospective providers’ plans, tools and resources,” added Kirz.

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