Thursday, September 17, 2009

Free IT SI and Outsourcing services pointers: Can we offer such services for different IT service categories?

Having looked at the problem statements for free IT System integration and outsourcing services, lets now look at some examples of 4 free IT pricing models based on the categories suggested by Chris Anderson in his Free book:
1. Direct Cross-subsidies: This category is defined by as those services that are offered as free in relation to another good. In simple terms we are cross-subsidizing one service while charging for the other. Given this definition, here are the problem statements:
1.1 For an integrated SI and Support service can we offer the SI service free to client if the support pricing exceeds a certain threshold?
1.2 For just support services, can we offer transition service free to client, instead of charging them for the transition service?
2. 3 Party markets: This category is defined by the fact that IT services are offered free to the actual consumers but being paid for by a third-party. For example in Radio & Boradcasting services, Newspaper and digital newspaper industry; advertising companies pay for the free services to consumers. Going by the statistics provided by chris the market for these services in US alone is USD 45 billion in 2006 and he estimates worldwide this is to the tune of USD 80-100 billion. In IT services space the following problem statement arise:
2.1 Can Hardware and IT product vendors sponsor the free IT service to client? Why not they do charge a huge AMC or Software Update and product support fees every year on clients? What is the minimum portfolio of services that can be offered free in this mode? Are their any companies already providing this in open (lets forget for a moment about IBM).
3. Premium or versioning: The service here is defined by the fact that few clients who can afford and are willing can pay for these services. In reality there can be tiered service offering to clients. For example Flicker and some Startup companies Web 2.0, etc. offer tiered services for free and some features and functionality only for premium clients. According to Chris, in 2008 there is an estimated USD 36 billion worth of business done through this medium: corporate clients USD 800 million, Retail clients USD 200 million, Opensource 30 billion (Red hat ), other apps ~1B, Online game markets (Multiplayer games is USD 1b; Casual is USD 3 B ). Now lets turn focus on IT services problem statement:
3.1 Can we offer a shared service model for outsourcing where we can offer free services for small support footprint? This may also help in smoothening the load of resources?
3.2 Can we charge premium whenever the bespoke service support requirement is high? Typically large and complex home-grown system. The challenge ofcourse is how do we qualify "Large and complex system" objectively?
4. Non-Monetary markets/ Gift Economy: Wikepedia example. Here no dollar figures attached. Apple iPod USD 4 billion, my space 65b (free music), 2b music concert business due to online trading of music.
4.1 Can IT product companies offer these IT support services for free like the Linux ecosystem? Can this atleast be modeled for PHP platforms? I'm sure there are lot of freelancer/mavens who would love to do it for free (just that it gets them the recognition)?

What are your views/insights? I'm sure the model can be better qualified and refined to a great extent.

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