Earlier in the year, we wrote a series of articles about the chasm that exists between OSS/BSS buyers and sellers (pt1, pt2, pt3, pt4, pt5, pt6). “The chasm” is best exemplified by the situation where a buyer (eg carrier) desperately needs a new OSS and a seller (eg a software vendor) desperately wants to sell their OSS to the buyer, but it still takes 18-24 months to formalise a contract and/or partnership agreement.
There are many reasons for, and many ramifications of, the existence of the chasm.
The previous articles have looked at the chasm from the perspective of the Buyer and the Seller at different times.
Today, we’ll look at one of the factors impacting Buyers that the Sellers might have never even stopped to think deeply about before….
The most expensive thing about your OSS product often isn’t your price.
Hmmm…. Wondering what that means exactly?
There are probably elements of this that you (the Seller) would understand well. However, there are possibly a variety of other Buyer-side costs that stem from your offerings without you even knowing about them. Buyer-side costs that you could help to reduce without reducing the price of your OSS offer!
The Buyer-side OSS costs you probably know well
Let’s start with the factors you probably already know, in part because you’re involved in them. For example, there’s the following:
- Implementation and Integration Costs
- Initial Project Costs (eg Setup & Configuration): This includes the financial and resource investment required for the initial setup of the OSS product in readiness for go-live. Many of these are vendor-side professional services costs, but there are always buyer-side resources required too (BTW. if you’re a buyer, you get back what you put in here)
- Integration with Existing Systems: This includes the Buyer’s risks and costs of integrating the OSS with their existing IT (eg email, DNS, security, etc) and network systems (eg DCN, EMS, etc), including potential delays and the need for specialised expertise
- Customisation Needs: This includes the additional costs of tailoring the OSS to meet specific business requirements or workflows, potentially including Business Process Re-engineering (BPR) to cater for the new tools
- Training and Adoption Costs: Vendors often only think of the costs associated with training employees to effectively use the new OSS product, including course delivery, materials and possibly external trainers for wide-scale training. These training course costs generally come from you (the Seller), but are only a tiny fraction of the real adoption costs if the Buyer considers putting their team through the necessary OSS apprenticeship
- Maintenance and Support Costs
- Ongoing Maintenance and Annual Support Costs: This includes the regular costs associated with maintaining the OSS, such as updates, patches, and bug fixes
- Technical Support: This includes the additional costs of ongoing support services, including both routine assistance and emergency support
There are probably a bunch of others that I’m forgetting right now, so feel free to suggest additions.
The Buyer-side OSS costs you might not know so well
These are the costs incurred by the Buyer that are often as a result of your offer – costs and risks that you (the Seller) could reduce for the Buyer and make it easier / faster for them to choose you. The great thing about these is you’re making it easier for the Buyer without necessarily increasing your sticker price.
Let’s start with the 13 OSS friction continuums. If you can push any / all of these further to the right along the continuum, you can reduce the cost to your Buyers (click on the image to read more hints on each).
Furthermore, the following “hidden” Buyer costs can also be inferred from the Friction Continuums:
- Implementation time: Let’s say your typical project implementation takes around 9 months before your clients (Buyers) can start to realise business value (eg a big bang project deployment). If you can think totally differently and reduce the time to value (TTV) to 2 weeks, you significantly reduce your client’s risk and cost profiles. Just because all your competitors take 9 months to implement isn’t an excuse. It’s one of the reasons why 19-24 month procurement cycles are the norm, which comes at great cost to you and your clients!
- Decision-Making Costs
- Choosing the Right Solution: This includes the costs associated with selecting the most appropriate OSS product, including research, evaluations, and potential consultation fees. As we discussed in part 2 of the series, a major chasm exists between buyer and seller across many different factors, but the three key ones are as follows so efforts should always be made by you (the Seller) to minimise their impact:
- Trust
- Risk
- Confidence / Skill-set
- Human Factor Considerations: The greater the fear, trust and risk issues felt by key decision-makers (for their company, but more importantly for their personal career trajectories), the more unnecessary procrastination that occurs in an OSS project (with the associated delays and costs)
- Vendor Evaluation: Closely related, this includes the resources spent by the Buyer on evaluating different vendors and their products to ensure the best fit for the Buyer’s needs
- Solution Longevity: The implications of selecting a solution that may become obsolete or require frequent updates, affecting long-term costs
- Differentiation: These costs of indecision above can be far more expensive than your price! If you can differentiate, turning your OSS solution into a noteworthy purple cow, and vastly exceed competitors on all important evaluation dimensions, then perhaps decision times (and everyone’s related procurement costs) will go right down for you! [OSS product fragmentation isn’t good for the industry]
- Long-Term Impact of Decisions
- Scalability and Flexibility: This includes the long-term (TCO – Total Cost of Ownership) costs and implications of choosing a solution that may not scale effectively or adapt to future needs
- Vendor Lock-In: At face-value, this one works in your favour… but not if you try to engineer forms of undeserved stickiness. We all know that Buyers need to address the financial and operational risks associated with becoming too reliant on a single vendor, which can limit future flexibility and increase costs. Transparency around lock-in reduction can actually expedite buying decisions
- Legal Professionals: Buyers don’t want to engage lawyers to negotiate around your selling terms and conditions. “Lawyers at 10 paces” is a guaranteed way to add costs (yours and theirs) and delays into the projects you’d love to initiate
- Unintended Consequences
- Operational Inefficiencies: Linking back to trust, risk and confidence / fear, choosing the wrong OSS product can lead to operational inefficiencies and the need for additional tools or processes to compensate
- Impact on Business Processes: Decisions regarding OSS configuration complexity can impact the effectiveness of business processes, including potential disruptions and additional costs.
- Change Management: Extending on the “training and adoption” costs described earlier, the expenses related to managing the transition, including employee resistance and the need for ongoing support is often overlooked. As a vendor who already knows your own product well, you may think that a 1-2 week training course in a lab is enough to get the Buyer ready to take up your solution in production. It’s usually far, far more nuanced, complex and costly than that. If your customer (the Buyer) thinks that a 2 week training course just prior to go-live is sufficient for change management, then your solution is almost guaranteed to fail no matter how technically perfect it is
If you (the Seller), looks at this through the lens of the Friction Continuums and the dot-points above, you may find ways to make your solution “cheaper” without even reducing your costs!
At PAOSS, one of our biggest contributions to the industry is to bring buyers and sellers together more efficiently than traditional techniques in procurement and product design. We do this via various approaches, including helping both sides reduce their hidden costs and time-to-partnership. Whether you’re an OSS seller or a buyer, reach out to organise a no obligation discussion to see how we might be able to assist you.
