Subject: Re: filtering for expensive customers?
From: Thomas Lord <lord@emf.net>
Date: Thu, 21 Dec 2006 17:00:46 -0800
Thu, 21 Dec 2006 17:00:46 -0800
Whether the premium support business is moribund because it doesn't 
exist or because it is already crowded by big players doesn't matter 
since we all agree that, regardless, there is a huge amount of economic 
activity in that market.   Maybe you aren't getting those budget 
line-items because they are going to in-house or to a big provider but 
that money /is/ being spent.

What can you provide upstream or downstream of that economic activity, 
where you might yet claim your premium?

For example, some people make downstream plays of which various Web 2.0 
startups may be the best example.  If "in-house FOSS support" is such a 
valuable property, how much of such property can you manufacture for 
yourself?   I.e., how much sweat can you spend being your own, 
business-focused in-house FOSS support team?   If the amount is enough, 
then maybe you can turn around and sell FOSS-based value add directly to 
consumers.

Other people make upstream plays.   These days, there is muttering in 
the halls of academia and professional societies about the shared 
problem of identifying relevant FOSS software and /qualifying/ FOSS 
software: objectively ranking its suitability for tasks of varying 
degrees of mission criticality.   Those in-house teams have trouble 
doing all of that themselves: perhaps you can find a premium-price 
service which helps them identify and qualify FOSS solutions.

-t


Federico Lucifredi wrote:
> I fully agree with you Sergio -- my point was on monetization, not on 
> adoption.
>
> In terms of adoption (and even in terms of making a sale), in-house 
> expertise is the greatest enabler. in terms of returns, however, the 
> point stands.
>
>  Best-F
>
> Sergio Montoro Ten wrote:
>> It is my personal belief that it works just the opposite way: the 
>> more in-house know-how that a customer has, the more likely is that 
>> he favors F/OSS.
>>
>> This is because the highly experienced customers like the added 
>> control that they can have over software when they use F/OSS, whilst 
>> customers that do not have anysoftware development skills of their 
>> own do not care of whether the software is open or not, as they 
>> cannot take advantadge of the Open Source nature of whet their are 
>> using.
>>
>> I think that this point of view can be supported by a couple of 
>> articles.
>> One from Andrew Conry-Murray in Information Week stating the SMEs 
>> fear Open Source because they do not have the IT manpower neccesary 
>> to install and run Free Software.
>>
>> http://www.informationweek.com/windows/showArticle.jhtml?articleID=192300168&subSection=Open%20Source

>>
>>
>> And another study from Simula Labs that reveals that 33% of customers 
>> choose F/OSS because of the extra feeling of control that it gives.
>>
>> http://home.businesswire.com/portal/site/home/?epi_menuItemID=989a6827590d7dda9cdf6023a0908a0c&epi_menuID=c791260db682611740b28e347a808a0c&epi_baseMenuID=384979e8cc48c441ef0130f5c6908a0c&ndmViewId=news_view&newsLang=en&div=-762569457&newsId=20060816005229

>>
>>
>> So my conclusion is that the more developers a customer has, the more 
>> it favors F/OSS over closed source software, as developers tend to 
>> preffer F/OSS and influence the decision makers when the time to buy 
>> comes.
>>
>> Sergio Montoro Ten.
>> hipergate.org
>>
>>> Hello All,
>>>   I have recently struck a reflection that I consider interesting:
>>>
>>>  Postulate: Market analysts tell us that the #1 competitor to F/OSS 
>>> companies is internal expertise at the customer site: in short, if 
>>> the local crew is smart and attuned with the state of the software 
>>> they want to deploy, possibly even maintaining ties to the relevant 
>>> part of the community, they will deploy and support said software 
>>> themselves. Vendors might come in (much) later, and only because of 
>>> a need to blame-shift in very large/critical deployments (or in the 
>>> mind of a new director of IT operations ;-)
>>>
>>>  Given the premise above, it looks like more often than not F/OSS 
>>> vendors are vying for the business of the customers who do *not* 
>>> have sufficient on-site expertise - in other words, it looks like 
>>> one might be selecting customers coming from the most clueless part 
>>> of the pool!
>>>
>>>  Why is this an F/OSS concern? Well, we all know that, in general, 
>>> engineers like to think that "customers suck", but this thinking 
>>> pushes it to a new level: while in the proprietary market, all 
>>> customers must purchase support from you, in our brave new world, 
>>> only the less clueful  need to. Besides the inherent higher stress 
>>> this places on the support crew, this is also expensive from a 
>>> business perspective - the ideal support customers are, obviously, 
>>> the ones who never need it.
>>>
>>>  Am I wondering about the obvious?  Perhaps I am being too 
>>> pessimistic. But if you accept the postulate, the thesis seems to 
>>> follow.
>>>
>>>  Best-F
>>>
>>
>
>



Whether the premium support business is moribund because it doesn't exist or because it is already crowded by big players doesn't matter since we all agree that, regardless, there is a huge amount of economic activity in that market.   Maybe you aren't getting those budget line-items because they are going to in-house or to a big provider but that money is being spent.

What can you provide upstream or downstream of that economic activity, where you might yet claim your premium?

For example, some people make downstream plays of which various Web 2.0 startups may be the best example.  If "in-house FOSS support" is such a valuable property, how much of such property can you manufacture for yourself?   I.e., how much sweat can you spend being your own, business-focused in-house FOSS support team?   If the amount is enough, then maybe you can turn around and sell FOSS-based value add directly to consumers.

Other people make upstream plays.   These days, there is muttering in the halls of academia and professional societies about the shared problem of identifying relevant FOSS software and qualifying FOSS software: objectively ranking its suitability for tasks of varying degrees of mission criticality.   Those in-house teams have trouble doing all of that themselves: perhaps you can find a premium-price service which helps them identify and qualify FOSS solutions.

-t


Federico Lucifredi wrote:
I fully agree with you Sergio -- my point was on monetization, not on adoption.

In terms of adoption (and even in terms of making a sale), in-house expertise is the greatest enabler. in terms of returns, however, the point stands.

 Best-F

Sergio Montoro Ten wrote:
It is my personal belief that it works just the opposite way: the more in-house know-how that a customer has, the more likely is that he favors F/OSS.

This is because the highly experienced customers like the added control that they can have over software when they use F/OSS, whilst customers that do not have anysoftware development skills of their own do not care of whether the software is open or not, as they cannot take advantadge of the Open Source nature of whet their are using.

I think that this point of view can be supported by a couple of articles.
One from Andrew Conry-Murray in Information Week stating the SMEs fear Open Source because they do not have the IT manpower neccesary to install and run Free Software.

http://www.informationweek.com/windows/showArticle.jhtml?articleID=192300168&subSection=Open%20Source

And another study from Simula Labs that reveals that 33% of customers choose F/OSS because of the extra feeling of control that it gives.

http://home.businesswire.com/portal/site/home/?epi_menuItemID=989a6827590d7dda9cdf6023a0908a0c&epi_menuID=c791260db682611740b28e347a808a0c&epi_baseMenuID=384979e8cc48c441ef0130f5c6908a0c&ndmViewId=news_view&newsLang=en&div=-762569457&newsId=20060816005229

So my conclusion is that the more developers a customer has, the more it favors F/OSS over closed source software, as developers tend to preffer F/OSS and influence the decision makers when the time to buy comes.

Sergio Montoro Ten.
hipergate.org

Hello All,
  I have recently struck a reflection that I consider interesting:

 Postulate: Market analysts tell us that the #1 competitor to F/OSS companies is internal expertise at the customer site: in short, if the local crew is smart and attuned with the state of the software they want to deploy, possibly even maintaining ties to the relevant part of the community, they will deploy and support said software themselves. Vendors might come in (much) later, and only because of a need to blame-shift in very large/critical deployments (or in the mind of a new director of IT operations ;-)

 Given the premise above, it looks like more often than not F/OSS vendors are vying for the business of the customers who do *not* have sufficient on-site expertise - in other words, it looks like one might be selecting customers coming from the most clueless part of the pool!

 Why is this an F/OSS concern? Well, we all know that, in general, engineers like to think that "customers suck", but this thinking pushes it to a new level: while in the proprietary market, all customers must purchase support from you, in our brave new world, only the less clueful  need to. Besides the inherent higher stress this places on the support crew, this is also expensive from a business perspective - the ideal support customers are, obviously, the ones who never need it.

 Am I wondering about the obvious?  Perhaps I am being too pessimistic. But if you accept the postulate, the thesis seems to follow.

 Best-F