Describes a contract that defines the vendor’s contribution to the customer in terms of specific benefits to the customer’s business. Such a contract also defines the payment the customer will make according to the vendor’s performance in delivering those business benefits. Gain-sharing contracts require the development of a delivery paradigm that links a customer’s business metrics to a vendor’s IT solution. The key elements of this paradigm, in order, are:

1. Business metric definition and selection

2. Client metric benchmarking

3. Development of key performance indicators

4. Investment options evaluation

5. Gain-sharing contract development

6. Financial engineering

7. Delivery of services

8. Re-evaluation and adjustment of metrics