Thursday, September 17, 2009

Free IT Services - Pay nothing for IT Implementation (System Integration, Application Development) & Outsourcing (Maintenance & Support) Services

I was listening to the Free audio book "Free" and was quiet intrigued by why we havent seen any IT service provider offering free IT Implementation and Outsourcing services. This excited me and I had formed some interesting hypothesis based on my insights in the IT products and services industry.

Lets look at good examples cited by the author about 3 formats of free forms in markets and let me problem statements (some lead to hypothesis) on what similarities do we see in the industry:
1. Paying people subsidizing loss making products/services: I never imagined if IBM ever made any money selling some of their Hardware and software products like Lotus notes, z series and so on! IBM shift to services from their product focus may be a great example....see some companies like Sun never managed to make that shift and ended up getting bought out by Oracle...
Problem statement 1: Can we offer some (need to qualify this well) SI/AD services free and cross-subsidise this with some (qualifications needed) Outsourcing service?
2. Paying later subsidizing paying now: Well Red-Hat Linux or Novells Suse Linux is a classic example....no license cost for software but imagine paying their support through your nose...any CIO will keep scratching their heads on how to associate a firm value...wondering why Oracle dropped the idea of acquiring Red-Hat...theyy seem to be happy just allocate R&D investments to support Red Hat platform...
Problem Statement 2.1 : Can all SI/AD engagement services be billed (through claw back clauses) to client on annuity basis instead of charging them upfront?
Problem Statement 2.2: Can transition costs (for outsourcing engagements) be billed on annuity basis instead of levying an upfron fees on clients?
3. Paying people subsidizing free people: Adobe Reader is a great example where the reader is offered as free downloads to all, but some enterprises and media companies will be forced to buy the Adobe Writer so they can use the Adobe reader to reduce their distribution costs...Well ofcourse some may never buy Adobe Writer but use tools like Amyuni or Open-offcie ports to achieve the purpose....Poor Adobe!
Problem Statement 3: Can we offer free services to some clients who cant pay and cross-subsidize with other paying clients? (Ofcourse yes but what are these qualifiers. You have to pay me to know it or implement it!

What are your insights and data points that can help prove/disprove such hypothesis. IOfcourse it should be an econmoically feasible solution...I dont want to sell my brethrens to unemployment!

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