The concept of risk-reward contracts is hardly new, though it can be hard to negotiate them. That makes them relatively rare in practice. Nevertheless the concept is sound, especially when there are two businesses that genuinely wish to be partners in a common enterprise. The supplier in the partnership does work without receiving any up-front payment, but expects to be given a share of the value they generate. Such deals may become more likely where services are delivered via the cloud, and there is hence a relatively well-defined interface that allows objective measurement of the tasks that have been performed. This intriguing article by Bennet Bayer argues that B/OSS providers should enter into partnership deals with telcos where their software platform is given for ‘free’ but they receive payment that is linked to the service provided in actual practice.
As the author notes, a partnership arrangement based on ‘free’ B/OSS may be an especially attractive mechanism for stoking business in emerging markets. It could also be a way to disrupt a global marketplace somewhat dominated by Huawei and Ericsson. Like all novel suggestions, we can only wait and see if anyone is willing to take the risk of supplying B/OSS without the guarantee of a payment linked to the cost of providing their software. But it would make life very interesting if somebody did.