Creating OSS differentiation

It’s astounding to see the huge range of products and services that are becoming commoditized. Consumers can’t see differences between major brands in most categories, and as a result, many are buying based on price. If companies want to increase their margins — maybe even survive — they must learn how to develop value-add brands that set them apart from the competition in their customers’ minds.”
Dr. Kevin J. Clancy
, in a study, “The Commoditization of Brands and Its Implications for Marketers,” by Copernicus, a marketing consulting and research firm, and the international marketing research firm Market Facts.

Ask a hundred OSS customers in the large enterprise space what the best OSS is and chances are you’ll end up with well over twenty different vendors/products. The market is highly fragmented, and due to the vast array of nearly equivalent products, many customers find it difficult to choose the right solution for them. Conducting paper studies doesn’t tend to differentiate, so customers and vendors alike need to get involved in costly proofs of concept (PoC) where vendors are placed in a head-to-head battle to see which is a good fit (and who is willing to cop the biggest hit to their margins).

Having assisted customers with their vendor selections, most would greatly prefer a much easier decision process. If there is a clear leader in their niche, with a word-of-mouth track-record of adding value to their existing customers, then the decision is much easier than to get into PoCs. They’ve got more important things to do than conducting PoCs.

For vendors, it’s becoming ever more difficult to differentiate on functionality, because any distinct advantages that are established can generally be replicated away quite quickly in software by competitors.

When helping OSS vendors / integrators with their differentiation strategies, I have often used the principles suggested in “Blue Ocean Strategy.” It’s an oldie (2005), but a goodie.

The cornerstone of the book is revealed in this paragraph, “The creators of blue oceans, surprisingly, didn’t use the competition as their benchmark. Instead, they followed a different strategic logic that we call value innovation… We call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space.”

The key to creating value innovation is to understand your current (or desired) customer base and tailoring value innovation to them. Understanding them means knowing them, their digital businesses, their challenges, their environments, their corporate advantages and how to help them succeed in their own competitive environments.

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