Like most readers, I’m sure your OSS/BSS suite consists of many components. What if you were to look at each of those components as assets? In a share portfolio, you analyse your stocks to see which assets are truly worth keeping and which should be divested.
We don’t tend to take such a long-term analytical view of our OSS/BSS components. We may regularly talk about their performance anecdotally, but I’m talking about a strategic analysis approach.
If you were to look at each of your OSS/BSS components, where would you put them in the BCG Matrix?
Image sourced from NetMBA here.
How many of your components are giving a return (whatever that may mean in your organisation) and/or have significant growth potential? How many are dogs that are a serious drain on your portfolio?
From an investor’s perspective, we seek to double-down our day-to-day investment in cash-cows and stars. Equally, we seek to divest our dogs.
But that’s not always the case with our OSS/BSS porfolio. We sometimes spend so much of our daily activity tweaking around the edges, trying to fix our dogs or just adding more things into our OSS/BSS suite – all of which distracts us from increasing the total value of our portfolio.
To paraphrase this Motley Fool investment strategy article into an OSS/BSS context:
- Holding too many shares in a portfolio can crowd out returns for good ideas – being precisely focused on what’s making a difference rather than being distracted by having too many positions. Warren Buffett recommends taking 5-10 positions in companies that you are confident in holding forever (or for a very long period of time), rather than constantly switching. I shall note though that software could arguably be considered to be more perishable than the institutions we invest in – software doesn’t tend to last for decades (except some OSS perhaps 😀 )
- Good ideas are scarce – ensuring you’re not getting distracted by the latest trends and buzzwords
- Competitive knowledge advantage – knowing your market segment / portfolio extremely well and how to make the most of it, rather than having to up-skill on every new tool that you bring into the suite
- Diversification isn’t lost – ensuring there is suitable vendor/product diversification to minimise risk, but also being open to long-term strategic changes in the product mix
Day-trading of OSS / BSS tools might be a fun hobby for those of us who solution them, but is it as beneficial as long-run investment?
I’d love to hear your thoughts and experiences.