Thinking about renewals in a productive fashion
Matt Asay realises the "support" model is broken in an Open Source economy.
Or at least buggy.
In Thinking about renewals in a productive fashion
he starts wondering with Savio Rodrigues
What happens when 15 percent of your current paying customers decide they can use your (open-source software) product without paying you a dollar. Worse still, these are users you convinced to buy support/license from the mass of nonpaying users. Customers surely realize that their support/license payments enable the OSS vendor to continue developing the product in question. Sure, you get some free development from the community, but 95 percent-plus is still done by the vendor's employees. What happens when more and more customers pass the "pay for continued development" buck and simply become users???
The big question is why does he stop paying you for support ?
Savio thinks of a couple of reasons but he fails to dig deeper into his 3rd and most important reason.
I`m writing this from the viewpoint of a Linux and Open Source Consultant who does implementations with local customers and supports these customers. The problem when we do an implementation of a comercially backed Open Source product is that we bascially have to charge a customer twice for support. First he buys the support service from the vendor.
But who do you think he is going to call when a problem arises, some phone number in the UK, or his local integrator who can be at his office in a couple of hours and speaks his language . Off course he'll call the local expert , but then he has to pay us for the time we spend on solving his issues, and most often we don't have to escalate to the vendor. (Actually in my 10+ year Linux career, the only times when we had to escalate to RedHat/Mysql/Suse etc is when we were either doing beta tests on bleeding edge software or when we were using proprietary products from these companies that we couldn't troubleshoot ourselves)
So from the customer point of view he doesn't need the RedHat/Novell/MySQL support.
He is getting al the support he needs from local people with similar skills as the RedHat/Novell people, so he won't renew.
(Oh and it gets worse when he buys his "licenses" from a Hardware vendor.. but let's not go there..)
Now often these local integrators are actually the real problem, and most often it's not the Open Source consultancy firms but the general IT firms that happen to do Linux, in most cases RedHat or Suse, they are still living in the old mindset, they resell products, RedHat today Solaris tomorrow, and HP OpenView the day after they move boxes and don't think about solutions, they don't have the right skills to solve the problems or even to document the real problem, (so what if they have a RHCT on staf with a crashcourse on Linux but no actual experience) but the end customer gets a really bad support and probably blames the product they bought.
However the RedHat and Novells love these companies because they keep selling licenses to customers, and thus generate revenue . But I woudn't want to be on the RedHat support staff to tackle a support call from one of these general IT companies, I'd prefer to get the call from the actual opensource guy pointing me to the problem with a potential solution already in the back of his mind.. because he has looked at the code.
Then there is the problem of communication between multiple layers of partners, we have some local companies with no Linux skills that use our support staff for their customers. Now we sometimes get calls from the actual customer why a problem hasn't been tackled and most often it is because their actual supplier never escalated the ticket to us.
On the other hand both for integrators and vendors, selling opensource support renewals is hard, especially since Open Source tends to be rock stable . If it doesn't break, if you don't need service on it, if you don't need support would you pay again for nothing ? Off course not.
Fabio claims that "you get some free development from the community, but 95%+ is still done by the vendor’s employees", this might be the case for JBoss and MySQL, but for a Linux distribution that's by definition wrong. Yes the Linux vendors contribute a lot and we wouldn't be where we are today without them. But not everybody is working for them, and companies such as we sureley have equally skilled people on board wo have been contributing as much to Linux and other Open Source tools as similar people on the vendors payroll. So by paying local partners they also guarantee the continued
development of Open Source products, maybe even better.. as a local employed developer might listen better to their needs and make sure the are implemented upstream than a far away vendor.
But have you ever seen anyone drop his fire insurance because his house didn't burn down for 5 years ?
So the question becomes what do you sell ?
- Something a customer doesn't need, such as the right to call someone when he has a problem when he doesn't have problems, or the right to download updates for a system that he doesn't want to upgrade (Lots of people think "If it's not broken don't fix it" , rather than .. "Security as a LifeStyle")
- Something a customer needs, the guarantee that in the rare event that something really goes bad, and he and his local supportteam can't fix it he will have someone to call who will look at his problem. Or just the proof to his boss that the product he chose is backed by a larger entity.
The whole support question is not easy, it's not because the Open Source vendors are doing a bad job that a customer doesn't renew. There's much more to it and I probably haven't touched half of the issues either. But heck .. an 85% renewal.. I'd call that really good. But if it is the ideal business model for an Open Source company .. I`m not sure.. time will tell.