Employers: IT services firms, software vendors, IT departments

The main employers in tech, what each one sells, and the ways of working: time and materials, fixed price, application maintenance outsourcing. Who pays, who directs and who invoices when an IT services employee is on assignment.

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  • IT services company: what is it?

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    A company that sells its IT staff's work to other organisations, on consulting, development or operations assignments.

    It does not sell a product: it sells time or a result. Its employees often work in the client's premises.

  • A services firm accepts a 40-day fixed-price project, then spends 60. Who bears the extra 20 days?

    • The services firm, whose margin shrinks
    • The client, who pays the days actually spent
    • Both, in equal shares, as custom has it
    • The employee, through unpaid hours
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    The services firm, whose margin shrinks

    Under a fixed price, price and result are set in advance: any overrun falls on the provider. It is the reverse of time and materials, where the client pays the time spent.

  • A vendor selling access to its software for a monthly payment follows a … model; one selling a right of use sells a ….

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    A vendor selling access to its software for a monthly payment follows a subscription model; one selling a right of use sells a licence.

    In both cases the customer does not own the code: it buys the right to use it.

  • Software vendor: what is it?

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    A company that designs a piece of software and sells it to many customers, through a licence or a subscription.

    The same code serves every customer: producing one more copy costs almost nothing, which sets the vendor apart from a services firm.

  • A client wants to hand a provider the fixing and evolution of its applications, with a maximum incident response time. Which way of working does it choose?

    • Time and materials
    • Application maintenance outsourcing
    • A fixed-price development
    • A software licence
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    Application maintenance outsourcing

    A continuing service committed to service levels is application maintenance outsourcing. Time and materials sells time, a fixed price sells a finished project, a licence sells a right of use.