Might 2016 be the year of the ‘Payment by Results Contract’?

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We at BMcAzurri predict that larger charities facing a second round of investments may find it increasingly difficult to justify their spending on IT solutions.

Generally speaking, charities will find that the majority of benefits will have been taken with the initial investment, and that the second application offers no tangible business advantage (resulting, for example, simply from ageing equipment). In particular, smaller charities may face the problem of not being able to get finance at reasonable rates, or indeed at all. One simple solution may be to alter the type of contract charities have with their suppliers.

We’re offering a contract in the form of a shared risk venture; supplying the necessary IT systems along with all of the expertise necessary for their smooth roll-out for no substantial upfront cost, instead negotiating a percentage of the supplied charity’s Gift Aid as payment. The IT supplier has to accept that if the product / service is unsuccessful they run the risk of receiving very little income return; the charity has to accept that if successful, the IT supplier will receive a significant income which can be sometimes a difficult point to accept and budget for.

Although the model can bring mixed feelings, as both parties must ultimately accept that the price of success is as significant as the price of failure, it can represent a win-win situation, If the attitudes and relationship between the parties are correct.