How Datavail’s Business Model Determines Pricing
A Collaborative Database Administration Environment
A simplified contract structure and a true shared model allows Datavail to scale for any size enterprise. Watch as Keenan Phelan, EVP of Global Services and COO of Datavail, describes how we establish a level of effort base – no matter what size the client. Because we work with our customers and fit the level of effort onto the contractual load, we simply do not have significant overages, which are always pre-approved by our Clients.
Keenan Phelan: Well, having come from a world where the fixed price contract and a 100-page scope documents were the rule of the day, we have a very simplified contract structure and there’s a reason for that. Unit pricing for things like routers and switches and servers and email boxes and things works fairly well. The amount, the number of them is relatively commensurate with the level of effort. That couldn’t be less true in the database world.
One database could keep three database administrators busy and one data administrator could manage 50 databases depending on how they’re structured, what’s in there and how dynamic the ins and outs are into that. We have structured our contracts around, level of effort. Now, as soon as somebody of effort they immediately think, “Oh Geez! Unpredictable cost, lots of volatility, a lot of adversarial relationship between client and provider.” Well, nothing could be further from the truth.
What we do is, we establish a level of effort base that is essentially a split between our primary and our operational team with our client and we do an estimate of that. What we don’t do is, and then we establish whatever that is. Our standard offering as an example is something we call a full shift. A full shift is 40 hours a week. 40 hours a week split between 8 hours of primary and 32 hours of operational DBA. That’s sort of a base offer.
What we don’t do is, we don’t get hang up on and stand on ceremony about whether it’s an operational task or it’s a small project or it’s this or it’s that. What we say is, if you bought a full shift of Microsoft SQL and the work you’re asking us to do is Microsoft SQL and you’ve got a small project to this month, we will do that small project within that bound level of effort, as long as we don’t materially exceed that.
We build less than 2% of our revenue in overages. So, that covenant over contract concept that, you know, you ask about is that if the contract was the only thing we lived by, we would be looking to build overages on every single thing, but because we work with our customers, with the service delivery management team and we basically typically fit the level of effort into whatever the contractual load is, we simply don’t have a tremendous amount of those overages.
Those overages are always pre-approved by our customers. It’s a very collaborative environment. Level of effort somewhat counterintuitively has helped tremendously in predicting costs for our customers. Staying within that level of effort but then not standing on ceremony about the type of work that’s being done as long as it’s being done in the right technical discipline.