Today’s best conversation was with Christopher Young, of B2BSX, a startup software exchange where corporate IT departments can buy and sell their development efforts, and make a little cash to offset stressed budgets. It’s an interesting idea, and spawned some ideas in a couple of different directions.
Andy Hardy, IT Director
Every company I’ve worked for has toyed with the idea of selling some of their custom-developed stuff – well, every company except the first one, since it was a software development house (we weren’t playing around). My “growing up” years as a developer have really jaded me on the idea of selling the deliverables from IT- or business-funded projects, typically for one simple reason – everyone underestimates technical support.
Operating systems change, DLL or JVM dependencies must be managed, and no one reads the manual – they all want support over the phone. Unfortunately, wide-eyed project sponsors or IT directors with dreams of P&L responsibility see COGS limited to the price of a CD, and revenues that match their ERP packages – it’s not that simple.
Vertical Open Source
A solution, as presented by B2BSX, is to tweak the open source model a bit, offering source code for specific customizations, at low cost (well, much lower that building it yourself, I would assume). No long term warranties, no 1-800 support lines, you are on your own – but you are getting pre-built solutions that you can adapt into your own business, jump-starting your efforts with a basic shell, and adding your own refinements later.
I think of it as highly verticalized open source – sounds like they are limiting things to SAP right now, and I’d expect to see very specific solutions listed. By vertical, however, I’m thinking about reports / queries / wrappers that are very specific to a particular type of industry – the “long tail” of software niches, where most IT departments really do need to tweak that “collection of best practices” you were sold. I’m expecting to see stuff that is too specialized for a global software company to bother adding to their product.
- <aside> Maybe the “long tail” of ERP requirements is where the untapped value is for those guys … </aside>
Custom Often Means Really Custom
Of course, there are still predictable hurdles for this model – not the least of which is the fact that this stuff is written by corporate IT. Hey, most of us have short deadlines and long backlogs, and little experience developing flexible software architected for iteration and flexibility. “Hard Coding” stuff is an academic Bad Thing that is often required to git ‘er done (yes, I went there …). Chris characterized this as software with tentacles, reaching all over your portfolio and gripping on tight – makes it tough to pull out and wrap into a nice package.
There may also be IP concerns – something to work carefully through with your legal department. Note: don’t think that Legal has little to offer here, because every company should have some concern about IP and competitive advantage, even if you are not in the software industry. You should be maintaining control of your software IP when you customize COTS or contract work out – now might be the time to leverage it!
We’re All from Missouri
I have no idea yet whether this exchange idea makes sense – but it could be just the time to look into this. We’re all under budget pressures, and Mr. Young tells me that once you get the basic relationship set up, putting software out there takes very little effort.
Maybe this is where the real future of ERP is going. What if our maintenance fees kept increasing, but the acquisition costs plummeted – all the money is in the add-on services? The Xerox model, where you give away the copiers and sell toner and paper? Gives a whole new meaning to the term “copy protection” …