Dennis D. McDonald (ddmcd@outlook.com) is an independent consultant located in Alexandria Virginia. His services and capabilities are described here. Application areas include project, program, and data management; market assessment, digital strategy, and program planning; change and content management; social media; and, technology adoption. Follow him on Google+. He also publishes on CTOvision.com and aNewDomain.

Is Your Web 2.0 Software a Razor or a Blade?

By Dennis D. McDonald

We hear a lot about the customer- and user-side benefits of Web 2.0 -- the collaboration, the rapid development and deployment, and the rapid formation of "communities" around common interests.

As a change from this it's a pleasure to read some clear thinking about the business models that support Web 2.0, especially models associated with open source, software as a service, and software as an "appliance." Ismael Ghalimi does this in his Services kill Software post. Here's one of the things he says:

But make no mistake, a lot of money can be made selling support & maintenance contracts once you tie them to automated software updates. When a RedHat customer buys a maintenance & support contract for RedHat Enterprise Linux, what she really buys is the assurance that the very latest security patches will be part of the next software update.

Does this mean that traditional concerns about licensing, intellectual property, and core technology ownership are passe? I wouldn't go that far. Having a true monopoly over a piece of valuable intellectual property can still be turned to the owner's advantage.

Plus, if you're in the razor blade business, you may still want to give away the unique handle and make the money downstream on replacement blades.

But let's face it; if a customer has a choice between two "identical" products or services, each with similar features, then that customer will choose vendors based on ongoing maintenance, support, services, and upgrades. Isn't it logical in such situations that the differentiator will not be the product but the ongoing maintenance and support?

I think about Ghalimi's points when I scan all the "social software" offerings available or in beta testing that make some clever use of bookmarking and tagging and are being readied or adapted for "enterprise" use as tools for sharing knowledge, learning, and expertise. (It takes a bit of an effort to keep track of such offerings. Web sites like Library clips really help; just waiting for all the badges and doodads to load is an education in itself!)

I have a hard time keeping all the features of these systems straight. A common factor seems to be the sharing of structured data that represents certain types of transactions that are automatically or manually captured and tracked through a remotely accessed source, commonly accessible through a standard web interface that may be augmented via an add-on or extension of some sort.

Even if the underlying data of such services consists of the "same old" elements of bookmarks and user assigned tags, the downstream potential for service and support -- and upgrades -- are still there.

 

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