Testing 3.0 - Pricing for Value

Presentation by Sridhar Throvagunta, Plenary Keynote Speaker @STC 2012.

Presentation Abstract

The value that is dwelled by Testing 3.0 is huge. Sridhar T will be speaking on if the strategies for pricing matches the value created or not.

About Sridhar

Sridhar Throvagunta heading Wipro's Test Advisory Services function with a focus on evangelizing a transformational shift from software testing to business assurance. More recently, he led the Non Linear Initiative and Practice Development functions. His efforts contributed significantly in getting Wipro Testing Services recognized as one of the largest third party offshore testing service provider globally by 3 different analyst firms (2010-11). Prior to Wipro, Sridhar's experience spans defining business strategies, nurturing global accounts and mentoring geographically spread teams.

To his credit, Sridhar is an IIM alumnus and Computer Science Engineer. He is deeply spiritual and passionate about Homeopathy, Anthropology and other holistic practices. His fine sense of humor, refinement and cultural relativism keeps him in good stead with people from all walks of life.

Transcript

1. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 1 Testing 3.0 Pricing for Value Sridhar Throvagunta Global Head – Test Advisory Services
2. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 2 Agenda Testing 3.0 – Reimagining the Business Analyst Speak Pricing for Value: Context Pricing Maturity Model: Prototype Wrap up | Q&A
3. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 3 • Test Sourcing • An integral part of the business and IT processes creating business value • Shared Services, Defect Prevention, Outcome Based Pricing • Business assurance Testing 3.0 Testing 3.0 – Reimagining the Business • 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 2.0 • 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 Testing 1.0 1
4. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 4 Testing 3.0 – Imperatives 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 Outcome & Budget Goal Methodology Measure of Success 1
5. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 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. 2
6. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 6 • Premium • Penetration • Economy • Skimming • Psychological • Bundling • Promotional • Geography… Price Strategies • Input based • Output based • Outcome based • Pricing for Value Price Models Pricing for Value: Context • Economy – Market – Technology Confluence • Marketing mix • Price sensitivity of demand/ operating profit • Pricing Power Shift • Cost – Market – Business Benefit Triangulation 3
7. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 7 Technology Market Economy The Confluence 3
8. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 8 Economy The State of World Economy Discretionary Spend is under Squeeze Extreme Focus on Operational Efficiencies Expectation of High RoI Business – IT Synergy Economy 3
9. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 9 Market Market 3
10. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 10 Technology • 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 3
11. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 11 Pricing Model Matrix • Shared risks • Partnership basis • Program Mgmt • Biz objective alignment • Domain knowledge • Transformational  Global Delivery  Proven processes  Tech expertise  Effectiveness Skill availability Cost arbitrage Efficiency Customer Overhead / Risk Low Medium High Service Provider Responsibility / Risks  Low Medium High Service Provider Value Add  Low Medium High Control vs. Governance  T&M Onsite T&M Offshore Managed Capacity Fixed Price Unit / Element Based Shared Risk/Reward Biz Results Based Incentive Based 4
12. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 12 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 GainSharing / BusinessBenefits-Based Low Low Low Very High Low High Pricing Models: Key Considerations 4
13. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 13 Pricing for Value: Client Perspective Objective Strategic intent of client Target Performance Measures Engagement Model Preferred Pricing Model Efficiency IS Improveme nt  Cost reduction  Service quality improvement  Acquisition of new technical skills and management competencies.  IS Costs  IS Quality  IS Productivity  IS User Satisfaction  Traditional Outsourcing Contract  Staff Augmentation  Fixed Price  T&M  Element based  Utility based Effectiveness Business Impact  Improve critical aspects of business performance like increased revenue, improvement in client customer relationship, etc.,  Business Cost  Business Quality  Business Productivity  Business Customer Satisfaction  Captive  BOT  Co-sourcing  T&M  Incentive based pricing  Risk-Reward Model  Element Transformation Business Shift  Improve the ROI by generating new revenue or profit or Come out with Innovative technology and gain market share or by offsetting the cost.  ROI, ROA  Revenue  Profit  Market Share  Joint Venture  Risk-Reward Model 4
14. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 14 The Mythical PMMi Prototype Level Stage Focus Model Strategy Innovation 1 Initial Technology Operations Staff Aug T&M Cost plus Sales driven Very Low 2 Managed Project completion Managed Capacity FP Finance driven Low 3 Defined Cost Time Quality Unit/ Element Market driven Medium 4 Quantitatively Managed Growth SLA driven Risk/ Reward Outcome Based Pricing High 5 Optimizing Business Assurance Utility Business Value Pricing for Value Very High 4
15. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 15 Pricing for Value Client relationship Sales effectiveness Risk management Revenue management Service offering 5 Pricing Strategy
16. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 16 Q&A
17. © 2012 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 17 Sridhar Throvagunta Sridhar.throvagunta@wipro.com Thank You Global Head - Test Advisory Services