Relying on transparency alone in ICT contracts just leads to daylight robbery

I’ve been a video games enthusiast since the first blocky space invader .  Over my lifetime the size and complexity of the games has increased hugely, as has the market and industry supporting them.  Games now often have the revenues of Hollywood blockbusters and the development budgets to match.

As with films games can fall into many categories – popcorn franchises, high concept creations and ‘indie’ productions all fight for attention from the consumers wallet.  And similarly there are different channels used to get revenue – whereas film lovers may choose to subscribe to a satellite/cable channel, use a streaming service over the internet or build a library of boxed set blu-rays, gamers can still buy a physical copy of the latest game for their console for £50, but increasingly their choice is to visit app stores for their smartphones and tablets to acquire games on a free-to-play (FTP) model.

The rise of FTP has been quite staggering.  Free to play is of course generally not free at all – the aim of most FTP applications is to attract the consumer (in what is a very congested marketplace) to download their product in the first place.  But purchases are required in order to unlock some of the content, speed up game play and generally enhance the user/gamer experience.  The argument being that the consumer pays for what they want, rather than taking a risk on a lump sum up front and then not liking the game.
As a concept this is quite reasonable but what do we end up with?  One of my favourite games of a few years back was called Dungeon Keeper.  It had  huge sense of fun which I think in retrospect was down to the pacing of the game as the player tried to excavate and then fortify a dungeon before the good guys (yes – you played as the baddie!)  broke through and attacked.  Indeed I wondered why no-one ever thought to update it for todays generation of gamers as the gameplay would really suit tablets.

And of course it has been  ‘re-imagined’ into a new game downloadable on a FTP basis from an App Store near you.  In this new version of the game one still excavates, but what formerly took seconds can now take up to 24 hours (!) unless of course the player ‘spends’ some gems to speed up the process.  Gems can be purchased for real money and different deals to the player depending upon how much they are willing to spend.  These range from a supposedly paltry £2.99 to the most expensive deal – fourteen thousand gems for £69.99.  Incredibly this is described as the ‘Best Value’ option by the publisher!

The idea that anyone would see the value in paying £70 for a bit of progression through a game would be ludicrous…………….if the publisher wasn’t confident that enough people will actually do so.   And after all it is the player’s choice, the prices are clearly highlighted by the game.  So whilst many might view this as akin to daylight robbery, no one can accuse the publisher of hiding the prices.

ICT partnerships also generally have transparent pricing – through kit and consumables price lists, day rates schedules and the financial algorithms for demand modelling.  Yet so often there are claims that the partnerships are not delivering value.  Whilst part of the toolset to help manage a contract we think it is dangerous to rely on pricing, open book and transparancy clauses alone to deliver value.  The reality is that suppliers will point to calculations and figures already in the contract or its schedules to support their argument – even though the client thinks these may not represent good value in the current circumstances.

We believe the sustainability of an ICT externalisation depends heavily on addressing this problem, so that from start to the end of the contract, the client continues to obtain value from its purchases.  Part of the solution may be structural (e.g.. separating ‘towers’ for the provision of kit and consumables from other components of the service), and part will come from the scoping of targets and outcomes for a partnership prior to commencing a formal procurement.  Our approach to advising on externalisation projects addresses both.

As such we always welcome the opportunity to commence our support for an externalisation project before the procurement strategy is finalised so that we can build in these tools and levers from the outset.


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