Open Source Franchising (Matt Asay)

I’m glad Matt Asay found time to post about my franchising idea. The ball is rolling.

Matt reporting numbers I cited from IDC and Forrester studies said:

IDC found that 38% of enterprises hire outside consultants to do their migration services and 39% hire outside consultants to do implementation services. For these same services, 59% and 66%, respectively, do the work themselves, internally.

This means that either a) this sort of work is best/cheapest done internally or b) no one has created a viable model to do these basic services better/cheaper/faster.

I believe both a) and b) apply, and it makes perfect sense to me because:

  • Medium to Large companies use OS to take back control, and to save money;
  • SMEs use OS just to save money, and they keep outsourcing IT services..

Large companies demand OS add-value services, and they don’t want to cope with the myriads of small to nano firms delivering OS-based solutions. Today they have no many options, since medium to large System Integrator are not ready yet to deliver those services, at least in Europe.

SMEs instead need more basic service than anything else, and they’re the perfect target.
No one has created yet a viable model to do these basic services better/cheaper/faster, as Matt said, and setting Service Level Agreement (SLA) could greatly help.

SLA in my vision are a must, and the reason is simple: customers don’t know much about open source, but that “it costs nothing”. And unfortunately the perceived value of a good/service is somehow related to its price. On the other hand perceptual benchmarking is done by customers comparing known reference goods/services, and here I see an opportunity.

What if those basics services would be delivered on time, on budget and respecting pre-established criteria? Entepreneurs and professionists (lawyers, technical studies, etc) are driven by the urgence of their business, they want clear and prompt answers, but local small firms don’t follow any checklist, don’t offer any real SLA, don’t match their needs.

The franchisor may offer a solid experience in organizing, training franchisees making them able to cope with customers expectations, besides all other usual services. I believe training is the key.

IT basic services today are supplied by artisans, and perceived as a sort of “digital handicraft”. What we need is moving from artisanship to an industrial age of IT services.
But Industrialising IT requires changes on the part of providers of IT services, and of customers.

Another interesting suggestion from Matt:

For this reason I think Novell, with its experience with its YES! certification program, might be in the pole position to deliver a robust franchising program. It, too, has a strong open source desktop offering (better than Sun’s, in my opinion), Linux, etc. And since a big swath of enterprises (44%, according to data cited by Roberto) use Linux for web/email services, as well as file/print, where Novell has good experience, it might be a good product fit, too.

Novell the mixed-source company might well be a candidate. I found two reason to say Sun is the perfect candidate, and I’m curious to know your opinion on that:

  • Sun is (mostly) an hardware vendor, being a franchisor might help them to sell hardware;
  • Sun is giving away almost all its software, and it has no clear OS strategy yet..

The first reason is quite simple, and it’s a very good one to spend time and effort in developing a franchising model. The second doesn’t deserve any explanations, I guess.

IBM is my the second best.

Frank Hecker, executive director of the Mozilla Foundation, author of the classical Setting up a shop – The business of Open-Source Software, on Matt Asay blog argued that:

I’m also not an expert in ISV channel programs, but these two aspects seem a major departure from traditional arrangements. I have to wonder how successful a vendor like Sun or Novell with an existing channel program would be in moving their channel partners to such a model.

He is right, overlapping between the franchising model and the channel program is an issue.
Open Source Franchising demand an effort to clearly identify differences between those channels, and this it’s definitely much easier for Sun than for Novell (because of different channel programs).

The ideal franchisee is a startup company, young people able and willing to invest time and money, smart and rigorous hacker.