“It has always been my belief that a man should do his best, regardless of how much he receives for his services, or the number of people he may be serving or the class of people served.”
Have you ever noticed that the most successful* OSS integrators/vendors are more heavily focussed on providing services than products?
* Note: The term successful is in terms of financial gains and not necessarily in terms of delivering great outcomes to customers
Have you also noticed that some product vendors do the hokey-pokey (ie they put their left leg in, they put their left leg out) in terms of doing or not doing their own project implementations?
There are a few things at play here:
- OSS Vendors tend to have a product mindset but find it difficult to maintain a services mindset in parallel
- Vendors are often forced into being integrators because nobody else knows their product well enough or can control their brand value without implementing the solution by themselves
- Services integrators tend to develop heavily customised solutions that require constant maintenance and ongoing revenue streams that are often not identified by the CSPs before signing up to a contract
It seems that the OSS services groups (ie integrators) are able to extract a larger TCO (Total Cost of Ownership) from the CSPs over the life of the OctopOSS. This is a great thing for the integrators, but not such a great thing for the CSPs, particularly if they weren’t aware of it up front. Project blow-outs, multiple change requests and increasing OPEX (ongoing costs) are common.
The larger TCO extraction might be a reason why many of the ICT / network product companies are in the process of transitioning into services companies (there are many other reasons of course too).
So what does this mean to your OctopOSS? Are you able to simply buy products and do most of your own services / support? Are you able to build a business case that supports large services costs?
From the other side of the equation, if you’re a current OSS product-focussed vendor, should you look to develop stronger services arms to expand your revenue streams?
If a vendor is able to come up with a product that is many orders of magnitude easier to use and integrate, they are likely to open up a much broader market of CSPs lining up to use their products. But is the market big enough for product revenues to replace the massive services revenues paid by some of the major CSPs? Is there enough blue ocean in the enterprise market to increase product revenues?
To get to the point, customers would love simpler, easier tools, but they might seriously hinder some highly profitable integrator business models.
One last point. There is a current trend for product companies to become services companies (not just in the OSS market) due to the lower margins in products. What is the next big trend when services are commoditised and no longer support large margins?
Or is special service always worth paying for if you’re a CSP?