“Shift No. 5: From Cost Reduction to Breakthrough Business Models.
OLD QUESTION: How can we reduce our company’s production and distribution costs?
NEW QUESTION: What new supply-chain and marketing approach would lead to a breakthrough in customer value?”
Laura Ross Kopczak and M. Eric Johnson in the “MIT Sloan Management Review.”
The old and new questions mark a fundamental shift in the relevance of a modern OSS. In the past, they were built to reduce a company’s production and distribution costs (as well as ongoing support costs). They were used by the operations teams within a CSP and often had little influence outside the operational sphere.
The modern OSS has to lead to breakthroughs in customer value to justify its existence. It no longer has internal focus, but cross-department and external focus as well.
When a customer signs on with a CSP, they never ask to be on-boarded using Vendor ABC’s OSS. As such, there is little pull-through from customers to make the CSP “need” to invest in ABC’s products. Compare this to the latest smart-phone or tablet, whose desirability is so strong with customers that the CSPs clamour to sign exclusivity deals for the device.
That makes sense right? One product (the device) sits in the customer’s pocket and is perceived by the customer as adding value to their life, whilst the other product (the OSS) is a back-office system that customers have no visibility of.
There’s no reason why this has to remain the status quo for OSS vendors, but they would need to change their business model to gain more end-consumer desirability.
But how do you achieve this? ICT is a means to an end for most customers, albeit providing a means to differentiate and streamline if done well. Not too many customers will get too excited about data / insights / tools relating to their CSP’s core network. But customers might start to get excited if you’re giving them data / insights / tools that relate specifically to them.
Customer-specific insights (analytics), applications and content would appear to be more exciting to customers. There are probably others you can think of too. Can you also think of the insights, apps and content that your OSS could deliver as value-added services for end-customers? Do you know the end customers well enough to understand what would add value to them and make them desire your OSS specifically?
As just one example, I believe the M2M (Machine-to-Machine) / IoT (Internet of Things) trend will drive the customer need for insights, applications and content that an OSS can deliver.Read the Passionate About OSS Blog for more or Subscribe to the Passionate About OSS Blog by Email