A comment on Agile Programming

I recently received this email from Steve O.

Geri,

My comment had to do with Agile programming. The problem I see is
getting a customer to pay for something without knowing what the final
cost will be and what final functionality will be included. 

For example, we are an application service provider (ASP).  We create
the software apps and provide the servers and data stores for our
customers who log in remotely. We are in the transportation management
industry.  We manage rail and truckload (multimodal) shipments for
railroads.

They pay hundreds of thousands of dollars up front and a per transaction
fee that amounts to millions over the life of their contracts (multi
year).  We become a core business process for our customers. 

I don't see how a new customer will sign up for our services with all
the TBDs of Agile.  They won't be able to sell, "trust me", to their
boards.

I like the idea of building small parts and letting the users try it
out.  We are bringing a new way of doing business to our customers.  But
there still needs to be a fairly detailed plan with costs, time lines,
and a good idea of functionality to be delivered.

Thanks,

Steve O

What feedback would you like to offer Steve? Who has experiences with Agile they would like to share?

Geri