Contingent I0: Reducing the Risk of New Projects

Summary: Software projects are often dominated by the trust created (or lost) at the beginning. The Relevance Contingent I0 provides a way to build that trust prior to any financial risk.

We're bone tired of asking clients to make profound decisions about how to invest in software based on a few hours of guarded conversation and an "estimate." It's like buying a house based on some blurry photographs and neighborhood comps. You can't really know if it will be valuable until you experience the walkthrough - everything else is just a filter to protect your time.

If you are a business owner or product manager thinking about engaging an outside firm, you care about two things: what is this going to cost me (in time, money, emotional energy) and can they do what they're promising?

There are other factors, certainly, but if you aren't confident in the answers to those questions, nothing else really matters.

And because project work is a relationship built on mutual benefit, we have to look out for ourselves as well. At Relevance we're constantly asking:

  • Is the problem clearly defined, or can we work together to make it so?
  • Does the problem need a software solution?
  • Will it be cost effective to implement that software solution?
  • Does the customer have the commitment to see the project through to completion?
  • Can we solve the people problems?

I have seen dozens of tactics to try to answer these questions prior to starting a project. Some of them are terrible (e.g. a blind RFP), others are fine but only correlative (e.g. the firm's past clients and success rate). Regardless, these tactics all have one thing in common: they don't work. Specifically, the vetting process does not predict where the real, specific risks will lie, nor does it predict how successful the project will be.

On the other hand, simply starting the project together is highly predictive. When we bring teams together and spend a few days (or weeks) fleshing out the high-level goals and release plan, the real risks and opportunities quickly become evident.

And it forces both sides to have serious, earnest, honest discussions about how to achieve success.

At Relevance, we call this initial phase of a project Iteration Zero (I0). We have been doing Iteration Zero for years, but usually only after spending weeks or months dancing around the vendor selection process. Sometimes that has been simply unavoidable. Mostly it's been a profound waste of time and energy for everyone involved.

No longer.

When we see a decision-maker seriously considering a development project, but unsure about who to trust and how to proceed, we perform the Iteration Zero on a contingency basis. This means that:

  • the customer does not pay anything up front
  • neither party commits to anything beyond Iteration Zero

At the end of Iteration Zero, the teams discuss the project and reach one of two conclusions:

  1. Both parties agree to continue, the customer pays for Iteration Zero, and the project begins as normal.
  2. If either party believes the project is not in their interest, the project ends and the customer pays nothing.

The second outcome should not be considered a failure. We have ended Iteration Zeros (or even terminated them early) when both parties agreed that the customer's problem didn't require a custom software solution (or that the custom software solution did not provide a reasonable ROI). While this is often disappointing for people who have become excited about a plan, it is a thousand times better than building something that shouldn't be built.

The Contingent I0 has worked so well for us and our potential customers that we are making it a more regular part of our process. If you are serious about investing in software to accelerate your business, and want to see a team put their money where their mouth is, think Relevance - and apply for a Contingent I0.