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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

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