Author: Yogi Schulz
Keeping customers happy is always a challenge. Likewise, keeping revenue flowing from customers is never easy for software vendors.. Occasionally, well-intentioned vendors (not always an oxymoron) set themselves up for failure by allowing customers to ratchet expectations up into the stratosphere.
On every project, the customer will come up with an added scope proposal (well after the design has been signed-off) that absolutely has to be included in the current release.
The project team will want the customer to sign a change order. The customer will plead poverty and lobby the vendor’s marketing staff to jam it into the current release with a misleading minimization like “It’s such a small item”. At the same time, the customer will dangle the alluring bauble of future work, with comments like “In next year’s budget we want to spend a lot of money with you”, in front of the always eager marketer.
This scope demand pushes the vendor into an awkward corner. Agreeing to the added scope gambit will encourage the customer to use the gambit more often, ratcheting expectations ever closer to the stratosphere; thus ensuring failure. Declining the customer’s demand will leave a sour taste in the growing relationship that will come back to haunt the vendor.
Caving In Doesn’t Work
Well-intentioned vendors will cave in with little or no attempted negotiation in the starry-eyed, but mistaken, belief that the customer will appreciate and remember the concession. Well-intentioned vendors will convince themselves that the customer will reciprocate with understanding when the next crisis pops up and will treat the vendor preferentially when the next project is awarded.
These rose-colored outcomes are totally devoid of reality. We all have incredibly short memories. The customer will become upset when the next crisis arises and will have forgotten the previous concession even when reminded. When the next project is awarded the customer’s loyalty to the vendor will evaporate at the sight of what appears to be a good deal from someone else.
There are workable alternatives for wiggling out of this awkward corner. Sometimes the vendor only has to point out that even if the cost of the added scope proposal is free, the schedule impact is at least a month. Because no one wants to delay implementation, the proposal fades quietly into the next release.
The vendor can produce two change orders. One will contain the portion of the scope proposal that the vendor is willing to choke down as a freebie in the current release. The value of creating the freebie change order is to tangibly remind the customer of the concession. The second change order contains the estimate for the remaining work that the customer must commit to spend in the next budget year in order to secure the freebie.
A third alternative calls for the vendor to produce one change order for the current release and show a sizable discount in recognition of the importance of the customer.
These alternatives firmly and professionally reinforce the point that added scope costs extra money and extra schedule. Negotiation always produces a better result than a simple cave-in that risks project failure through stratospheric expectations.