Gain Sharing

Describes a contract that defines the vendor’s contribution to the customer in terms of specific benefits to the customer’s business. Such a contract also defines the payment the customer will make according to the vendor’s performance in delivering those business benefits. Gain-sharing contracts require the development of a delivery paradigm that links a customer’s business metrics to a vendor’s IT solution. The key elements of this paradigm, in order, are:
1. Business metric definition and selection
2. Client metric benchmarking
3. Development of key performance indicators
4. Investment options evaluation
5. Gain-sharing contract development
6. Financial engineering
7. Delivery of services
8. Re-evaluation and adjustment of metrics