The old adage “Free has no value”, just doesn’t seem to be holding up anymore.
When I was running my startup SMAK, I was plunged head first
into the world of Freemium SaaS services. Running a Social Media analytics and management technology, I knew my product and my competitors were to have some sort of Freemium to Premium business model. Since, the tools we supported (Facebook, Twitter, LinkedIn, Email) were all free to begin with.
Now that I’m back in Enterprise ITSM, I’m shocked by the number of products selling Freemium to Premium offerings. SysAid, SpiceWorks … the list goes on.
I guess on one hand I shouldn’t be. Small IT shops need support, probably more so than larger shops. So giving away the base product to re-coup fees on support and up-sell makes sense.
However, I’m talking about Enterprise ITSM. Large distributed IT, support groups with complex infrastructure and critical SLA’s…
At lunch this past Friday just such an organization told me that they are looking at Managed Engine, why…. “Because it’s free”.
What? When did Managed Engine become free? Apparently March 5th (According to TechCrunch: http://techcrunch.com/2014/03/05/zoho-seeks-to-disrupt-it-helpdesk-market-by-offering-servicedesk-for-free/)
This got me thinking… is Free of Value. Did all of a sudden we accept that any software is going to have an implementation and configuration cost, so why not save on the licenses and spend on the services?
It’s an interesting strategy, but is it sustainable.
Well I guess it depends on the strategy of Managed Engine.
As the TechCrunch article related, the ServiceDesk product is one of Zoho Inc’s most profitable product. So why would they start giving it away for free?
I can only imagine 2 reasons
Possible Reason #1) Their ServiceDesk product is only marginally competing in the Request and Incident Queue management space. Yet, their plethora of other tools are finding tactical footholds in are of Event, Configuration, Problem, and Change. Thus providing their product free will keep them entrenched in their customer base enough to capitalize on other areas.
If this is the case, I sort of like this strategy. Let’s face it, Incident and Request have little value in and of themselves. So if you are not spending on areas that are not strategic and low value, and re-allocating your funds to higher value areas like config & automation, then it is actually a very sustainable strategy.
Possible Reason #2) Their ServiceDesk product is keeping customers engaged, while their other products are waining. Support is not Free from ManagedEngine, so having more customers on support contracts can increase product value and the residuals can be invested in functionality expansion. Thus allowing them to transition potentially point product customers to a more robust platform.
I’m not sure I’m buying this second strategy. It would make the assumption that the current ServiceDesk platform is able to complete with the likes of Cherwell and ServiceNow. While I’m not familiar with ManagedEngine as a user, I’ve certainly come to know a lot of customers who have moved on to these platforms to achieve more robust integration.
So how about the IT companies that buy these Free products?
The question really comes to what are you Buying?
One could argue ServiceNow is free and you are simply paying for Support, (Hosting, Backup, Security, Backup, etc…)
This cloudy, sassy world has made it very difficult to exactly measure value.
There are 3 things to remember though no matter what option you go forward with:
1) Are you leveraging this platform for Queue management or for Business Agility?
Any dollar spent should have a return on investment, and remember nothing is ever free, you are just choosing to spend someplace else.
2) Are you deploying this solution to support IT or support the Business?
Yeah, yeah, we are all the business, but is this a department tool, or product to help support service delivery.
3) Is the product delivering the capabilities you want one to two years from now?
Your ITSM products capabilities should far exceed where you are today maturity wise in your processes and in your capabilities.
A fool with a tool is a fool. A fool with a foolish tool, is a foolish fool who hurst themselves and others.
What say you? Do you think free tools are a great idea or a bad idea?
Hit me up on twitter: @vigilantguy