As we explained earlier, companies can specialise in one or more aspects of the chain of technology adoption and implement a number of activities at the same time.
Hence, for companies that include various services in their business offer, we can distinguish between two types of specialisation: vertical and horizontal.
Broadly speaking, companies whose main activity is development will tend to have a vertical specialisation. If there business strategy is centred on custom development, their activities will naturally include other related services, such as installation, integration and training. However, as we shall see, companies that adopt the strategy of software as a product will also do well to exploit associated services as a way to guarantee a steady flow of income.
|
Package 1 |
Package 2 |
Package 3 |
etc. |
Development |
X |
X |
|
|
Installation |
X |
X |
|
|
Integration |
X |
X |
|
|
Certification |
X |
X |
|
|
Training |
X |
X |
|
|
Maintenance and support |
X |
X |
|
|
Migration |
X |
X |
|
|
Interestingly, a company that invests a certain amount of money in software licensing expects to invest additional sums in related services, such as maintenance and support, and in updates. Thus, selling products to business clients will open the door to obtaining service contracts with the same clients and hence, a more consistent flow of income over time.
In contrast, companies that exploit the needs generated by the general use of software products will often offer services in a variety of packages, focusing on one or more of the phases of the adoption of a technology.
|
Package 1 |
Package 2 |
Package 3 |
etc. |
Selection/Custom developments |
|
|
|
|
Installation |
|
|
|
|
Integration |
|
|
|
|
Certification |
X |
X |
X |
X |
Training |
X |
X |
X |
X |
Maintenance and support |
|
|
|
|
Migration |
|
|
|
|
Although some companies specialise in training or support, service companies often touch on a number of the phases described, generating typologies such as consulting (with an emphasis on selection, advice, and/or certification), or integral solution providers, which cover all categories, including custom developments and even the provision of hardware.
Companies that create GNU/Linux distributions use a service provision model with horizontal specialisation.
Example of horizontal specialisation
Canonical, creators of the distribution based on Debian Ubuntu, perform a task of selection and horizontal integration that encompasses a complete operating system along with several applications, with the basic aim of providing a distribution that is easy to use, install and set up under the slogan "linux for humans". However, since Ubuntu is free software, Canonical's income comes from related services, namely support, training and certification.
These service-oriented companies often observe that their clients prefer to receive integral solutions and deal with a single technology solutions provider. To be able to offer this comprehensive type of service, companies often need a powerful infrastructure and technical capacity, which limits the entry of SMEs as they are unable to meet every single need by themselves.
A common solution is for the service company to contract out the parts that it cannot handle alone. Another very interesting solution is the "pyramidal model of consulting" proposed by Daffara (Sustainability of FLOSS-Based economic models), which we will now explain.
Recommended website
For more information about the "pyramidal model of consulting", see: http://www.cospa-project.org/Assets/resources/daffara-OSWC2.pdf)
Generally speaking, computer support and maintenance can be said to follow the 80/20 rule: 80% of queries are easy and can be resolved immediately. The remaining 20%, however, are important problems and account for 80% of the effort. Hence, a service SME could take care of a high number of clients, dealing with 80% of their incidences and earning a reasonable amount for the service. To solve the remaining 20%, it will require the technical services of the software creation companies, who will obviously need to be paid more than what the company receives from each client but less than what it earns from all of these clients together.
This model will generate sustainable cooperation between the development companies, with vertical specialisation, and the companies offering integral solutions. The former will be able to reach more users through the horizontal consulting firms, which will also mean a significant source of income. The latter will be able to manage a large customer base and provide quality support for a range of products, maintaining a profitable business so long as the customer base is big enough.