Paying for NetSuite Professional Services? Here’s What to Expect
This is a bit of a vulnerable share. It is hard for a business to talk about their pricing model without generating some judgement from the reader. However, based upon the conversations we have had with clients, their experience of us and of other NetSuite service providers in the marketplace, I believe this information is desperately needed. Paying for NetSuite professional services? Here’s what to expect…… deep breath…….
What are you buying?
If you have just bought NetSuite, you might be buying an implementation service. This service needs to be provided by NetSuite experts and will likely follow a “design, build, test, go-live” type model. The design process will include workshopping to define your project scope and the creation of a business requirement document (BRD) to be the blueprint for your system. Following BRD sign off your NetSuite services provider will likely squirrel themselves away in a dark room to build the system you need – with a few touch points with you (project management or otherwise). Following that you’ll move into a user testing phase where you’ll basically try to break the system. If the system passes user testing the service provider will help you cut over from your old system to your NetSuite system and help you go live. Finally, you’ll pay for some “snagging” or even “finessing” of the system post go-live.
This is basically project work – where there is a clear beginning, middle and end of a single piece of work.
You may also be engaging a NetSuite expert (service provider) to help you support you existing system. If you are working with CloudTamers, this can include customisations, integrations or other development work (such as scripting), maintenance of your existing system, implementation of new modules or training.
This kind of support is not so much project based and is typically scoped and managed against a single PO with an estimate of time based upon the specific requirement of the day.
Fixed Price vs Time and Material
There are two ways (typically) of paying for NetSuite services. The first is fixed price and the second is time and material. There’s risk, both for you, and for your partner, in each of these models.
Fixed price contracts can include project work – such as the NetSuite implementation described above – or it can be a retainer for support, where your monthly fee is fixed regardless of the time expended. Fixed price might seem less risky for you, and it is true that the NetSuite service provider is carrying the main burden of risk with a fixed price contract. That said, it isn’t without risk for the paying customer. No business is in a position to make a loss supporting customers. If the balance tips too much in your favour (usually when you are using more resource than you have agreed to pay for) you will find the standard of service will go downhill quite quickly. The relationship may even break completely. It’s because of this that companies who offer fixed price contracts tend to upweight either their typical hourly rate or the number of estimated hours, to build in a buffer and mitigate the risk.
Time and material is where you agree an hourly rate with your service provider, who gives an estimated time for the service you require and you “pay as you go” – usually monthly, in arrears – for time and expenses expended. Not without risk (we have all heard of costly implementations which have gone way over time and budget), it is less risky for both parties as the partner gets payment for their services as delivered, and you don’t pay for services you have not received. If managed carefully, and in a controlled way (including a robust change order management process) there shouldn’t be any nasty surprises.
Competitive Pricing vs Value for Money
The hourly rate will vary depending upon a multitude of factors from the country you are procuring services from to the size of your NetSuite partner.
Defining an hourly rate is never an easy task for a service provider. Pricing needs to be competitive but also needs to convey the value for money that is being offered and balance all the needs of the business with your company objectives.
Competitive pricing is NOT the same thing as value for money. The former is cheap, whereas the latter is worth.
Using a less experienced partner who is charging 1/3 less but who will take twice as long to get to the same conclusion as their more experienced counterpart, is not conducive to value.
It is also tempting to try and resolve your issues yourself, and whilst your solution provider is likely to endorse upskilling, you can disappear down many dark alleys when using a system as complex as NetSuite. Sometimes it is better just to pay for the expertise. Remember, your own time is money too.
The Experience Tax
This brings me nicely onto my next point – the “experience tax”. Not all NetSuite consultants are the same. Some are generalists. Others are specialists. Many have a few years’ experience. Not so many have over a decade of experience. It might hurt to have to pay more (sometimes much more) for a specific resource, but when you start to get into really granular functionality or something which is incredibly complex, there’s fewer people in the marketplace who can actually achieve this for you so you may need to pay more. Similarly, that person might be more in demand so their time is at a premium.
Chargeable vs Non-Chargeable
Here’s the trickiest part, discussing chargeable work versus non-chargeable work.
Software is complex.
Your business is complex.
Any pre-sales effort that is expended, including understanding your business at a high level, tying up the software to your business requirements, attempting to identify gaps and customisations: all usually free of charge. This pre-sales effort is intended to match the suitability of the software to your needs and, is not the same thing as your project initiation, workshopping and BRD. Those parts will be chargeable.
Because the workshopping might identify further requirements which, despite best pre-sales effort, may not have been initially identified, you might find the scope of your project creeps a bit. Hopefully nothing major at this point. This is quite normal. In much the same way as your car mechanic can give you an idea of whether your car will pass its MOT, they will need to pop the bonnet and do the work to find out. Work that did not make it into the original BRD may or may not be chargeable.
If you have a support contract with a NetSuite partner, you can reasonably expect to pay for all activities that pertain to your support enquiry and not just the set up itself. The fix might include a bit of scripting or a bug fixing, but there may be some investigation required in the first instance to ascertain the issue and determine if it is a defect in the product as supplied, or as implemented. There may also be a requirement to consider the system architecture or your specific instance to ensure any fix doesn’t impact on other areas of your system. This consideration might take the form of discussions between consultants, or a play in your sandbox environment. In any case, these are still paid for activities. This is all to say that if you see “internal discussion” or “consideration about” or “scoping exercise” on your bill, it’s all working towards fixing your issue and should therefore be paid for.
If you have a time and material contract, you can expect to also pay for travel and subsistence if we come to you for an onsite visit. The time may also take into consideration travel time, especially if travel is substantial and takes the solution consultant “out the game” for other project work. If you visit your NetSuite partner, they will likely be delighted to see you, and may even buy your lunch…. But while you are there, any work done with you will also be chargeable.
Written by Emma Stewart – who has 7 years experience demonstrating NetSuite, but who cannot code even one bit (also Sales & Marketing Director at CloudTamers Ltd)
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