Is a Fixed Fee Deal for Zoho Implementation Services the Best Option?
Updated: Aug 19, 2022
When it comes to Zoho implementation services, companies are often tempted by the idea of a fixed fee deal. This seems like a low risk way of running a software project so can be very appealing to businesses who want to avoid unexpected costs. However, this may not be the most budget friendly and therefore best option for your company.
It is common for vendors offering fixed fee proposals to factor in a buffer on top of their estimated hours to deliver the proposed work. This is because they understand that scope creep is inevitable so manage their own risk by buffering the estimated fee.
If a software implementation partner agrees to fix a project fee, they will need to be VERY strict about what requirements are included in the scope of work and what requirements fall outside of it.
They will then charge for any change requests or new requirements that are considered out of scope. It is to be expected that the requirements of the project will change over time, typically when you get a better understanding of how the system works and what is possible. The requirements of your business will be constantly evolving and as such your support software must evolve with the business.
At the point of signing an agreement, you have no way of foreseeing or budgeting for the additional costs associated with the inevitable variances and change requests. In reality this means the project fee isn't fixed at all, only the fee for the initial scope of work (which typically hasn't been documented in finite detail) is covered.
Another point to consider is that you could potentially be losing money if the project takes less time to deliver than expected. Let’s say the vendor estimated it would take 100 hours to deliver the project (which could include a buffer of 20%). In the end it only takes 80 hours to deliver (the original estimate minus the buffer), you won’t get the money back which covered the buffer as the fee has been fixed. You also won’t receive any reports on how much time has been logged against the project and therefore how the budget was utilised and as its not within the vendors interest to be that transparent.
A better option would be to agree on a fixed hourly rate with your Zoho services provider. This way, you can avoid unexpected costs by having a more flexible and transparent agreement. Make sure to discuss the details of the project with your provider so that you can come to an agreement that works best for both parties.
Why do Zoho specialists offer fixed fee over hourly rate?
The scope of work is documented and agreed upon by both parties.
There's a clear understanding of what's included in the scope of work and what's not.
Any change requests or new requirements that fall outside of the scope will be classed as additional charges.
You have no way of foreseeing or budgeting for these additional costs.
In reality, the project fee isn't fixed, only the fee for the starting scope of work.
A better option would be to agree on a fixed hourly rate with your chosen Zoho partner.
What to look out for when hiring a Zoho implementation specialist:
Make sure they are experienced in working with the full range of Zoho products you require
Ask about their teams experience and the resource availability they have to work on the project
Understand their billing structure upfront and how they will present updates on the budget utilisation
Get a sense for their project management style and the tools they will use to deliver the project
Ask for case studies and referrals from current clients
If you're considering hiring a Zoho implementation specialist, there are a few things you should keep in mind. Firstly, make sure that they're experienced in working with the Zoho suite of products. This is important so that you can be confident that they'll be able to handle the requirements of your project.
Secondly, get a sense for their project management style. This will help you understand how they operate and whether or not they're a good fit for your company.
Thirdly, ask for referrals from past clients. This will give you a better idea of what it's like to work with them. Finally, understand their billing structure upfront. This way, you can avoid any surprises down the road.
Company case study with PAEMAC
Fleur Hole From PAEMAC writes...
PAEMAC recently had the opportunity to work with FWRD to develop a web based process for a new Client. The process comprises an online application form incorporating an approval process based on review and assessment against a set of standard criteria.
IT projects are often difficult to budget due to Clients specific and unique applications in which scope definition is difficult to place boundaries around, and, once the project starts to take form new ideas ultimately arise leading to out-of-scope work and variations.
Rather than opt for a fixed priced budget, we decided to work with FWRD to utilise a cost model in which a base fee for service was agreed with any additional hours above the base budget, for either in scope or out of scope work, needing to be costed, at the same budget base rate, and approved prior to progression of the additional hours.
With this costing model we were comfortable that all variation and customisation work would be costed fairly and that a premium hadn’t been added to cater for a fixed price budget that needed to build in risk for scope creep and variation work.
FWRD have been completely transparent with detailed weekly reports being provided and all out-of-scope work being identified and costed prior to the work progressing.
The end result has been a fit for purpose solution that has met budget expectations. We have been really impressed with how FWRD operate and enjoyed working with their team.
In conclusion, it is important to remember that when considering whether a fixed fee proposal for Zoho implementation services is the right option for you, remember that this doesn’t mean the entire project fee is fixed, only the initially scope of work which is typically not defined well enough to be all inclusive. Most vendors will factor in a buffer on top of their estimated hours for the proposed work, which will often amount to more than the true cost of the original project fee.
We don’t fix our implementation fees at FWRD, instead we offer complete transparency across our timelogs and budget management. You are in full control of how your project budget is spent and there is no commitment to a set fee required. You only pay for what you need when you need it, not what the fixed fee contract dictates.
This model has been developed as a result of ten years experience delivering Zoho projects. We strongly believe an agile approach to project scope is the best strategy for project management in delivering a software solution that perfectly meets the requirements of your business within an affordable budget.
Our team at FWRD CRM has extensive experience with Zoho implementations and would be happy to discuss how we can assist you with your Zoho project.