It’s a fine line

This blog regularly discusses the need to simplify everything in OSS. However this runs contrary to the perspective of many integrators. From their perspective, the more complex, the more effort required, therefore the greater the income for them (albeit greater cost [and sometimes bitterness] from their customers).

After all, services usually have higher margins than products so the higher the services to product ratio, the higher the project profitability (in theory). So promoting simplicity is a fine line between pleasure and pain for integrators.

One selling point of simplicity for integrators is in reducing risk.

There are a few other benefits that might be overlooked though:

  • Reduced cost means there is a greater chance of their offerings fitting within the price point of a larger number of customers (ie increasing the size of the pie)
  • Solutions become more repeatable, thus building assets that are re-saleable
  • Simpler services companies are more scalable
  • Your most highly skilled resources can work on the tasks that differentiate long-term, not just pay-by-hour compensation
  • Less churn risk (from bitter customers)

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2 Responses

  1. Ive not seen evidence that big integrators have any desire to reduce risk. A few interesting products have appeared in the last 10 years, then disappeared again for this very reason. There were several products that made data migration and integration lower risk, but SIs wont buy them. Why? Because it’s easier for them to bill more hours than to purchase 3rd party software. An SI will rarely want to justify adding more software line-items to the customer’s bill, and the margin on 3rd party software (rather than in house software which does have great gross margin) is generally worse than billable hours.

    Smaller SIs do have an interest in reducing risk. I’m thinking the SIs that would put 5-10 people on a project. They dont have endless consultants to add to the project, so they’re looking for a product-solution. Good products allow small SIs to compete with much larger SIs. Unfortunately most OSS products are pitched at a price point out of reach for smaller SIs…

  2. Hi James

    You’re absolutely right. The big SIs want to increase billable hours, not reduce them so they’re delighted by complexity.
    The thing is that their customers are now less willing to be burdened with uncontrollable services charges. There is generally less appetite for the massive OSS projects of the past and less appetite for the SI’s uncapped hours,

    You also rightly identify the price point I was implying. It is the smaller ICT integrators taking OSS to the masses (ie enterprise, ISP, utilities, etc) where I see this potentially striking more of a chord.

    Thanks for clarifying for the readers James!

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