I’ve been talking with John Willis quite a bit recently as he’s in Austin for a client project. If you’ve been following John Willis’s blog, you know he’s recently gotten enamored of the open source IT management projects and companies. More importantly, he’s an IT management (or “ESM” as he’d put it) veteran and his BS meter is finely tuned.

The Common Theme of Services

Two things that keep coming up as in our talks and as I reflect on our conversations are:

• While there’s plenty of opportunity in IT management, most big enterprise sales require a lot of servicing. Servicing is a tricky thing to scale because it’s bound by flesh: you need actual people to do it. Folks like The OpenNMS Group and Reductive Labs (Puppet) are finding enough of service deals, to keep going, other VC funded companies (some RedMonk clients like Zenoss and Groundwork) are getting sales by a software shop with “support” as their primary labeled sale (folks like Hyperic get revenue from OEM and partnership deals). The tension at an open source company is figure out if you’re a software shop or a services shop. For whatever reason (services based businesses are harder to “flip” than software companies?), I get the feeling that the word “services” is VC-poison, so people try to avoid using and thinking in it.
• There seems to be the opportunity for an open source IT management services firm. This firm would span above all the open source projects and focus on being a services rather than a software shop. Unless you’re mega-company like IBM, balancing services and software development is tough and pricey. Here, you might expect someone like Covalent to offer support & services for various open source IT management frameworks. Groundwork’s ethos sort of fits well here too.

What’s the “services” opportunity here? Now, this part is getting into the territory of wild speculation, but it’s worth scenerio’ing out.

Services: Getting Stuff to Run

First, by “services” I mean all the activity post-purchase to get the IT management software to do what you, the client wants: installing, customize, maintain, train, upgrade, etc. Enterprise software (typically) requires quite a bit of servicing to fit the software and other IT to the way the company works. As a meta-service, if you will, IT management software requires plenty of servicing to fit to the already customized IT a company is running.

The truth of the matter is, setting up and maintaining IT management software can be a hassle. It’s even more of hassle if the underlying IT the always changing, primarily by adding new IT (they say IT never dies, read: gets uninstalled). Indeed, the difficulty can be so high that an IT department really just does a sub-set of all the possible management. Simply monitoring everything is a hassle enough even though there’s the wide perception that monitoring is a “commodity” (read: not “sexy”).

The Battle to Make IT Matter

The promise of much IT management software, of course, is to automate management or otherwise reduce he need for customization and updating. This is the sort of Nick Carr zone of IT: the more normalized/commoditized your IT becomes, the easier and cheaper it is to manage; at the same time, then you’ve got IT like all your competitors; if you’ve got the same IT as your competitors, you can’t differentiate on IT; thus, IT doesn’t matter.

While it’s cheaper to normalize your IT by “making it like everyone else’s” you then throw out your ability to differentiate your business (and hopefully make more money) via IT. The cost savings versus the loosing that benefit will vary, no doubt, company to company, if not group to group.

Sort of ironically, until recently, electricity use was the analogy technology to point to here now: no business differentiated itself on how it used electricity. But, now that energy prices are higher (and/or, if you prefer the less money-driven mind-set, that we want to stop screwing up the environment), there is actually the potential to differentiate on electricity usage. As a side-note: the lesson here is that things go in cycles. Maybe we will have Chief Electricity/Energy Officers again ;>

Customizing IT

So if you accept that customized IT can be used as a business advantage, then the question comes of how you go about customizing your IT. For some time, the Big 4 and their partners have done well providing IT management platforms and the services to fit those platform’s to a company’s IT. Indeed, the “highly advanced” versions of this come up with a whole new vision of how you go about managing IT: BSM and other ITIL-impementations.

The point here is to drive home the fact that there’s a lot of servicing when it comes to setting up and maintaining your IT management software at the “enterprise level.”

Now, this is where the speculation and what-if scenerio’ing comes in. So I warn you, this is all hand-waving theorizing on my part.

The Rip-n-Replace Window

If the enterprise IT management market collectively decided that it’s time to redo their IT management platforms, the open source alternatives big and small have a strong chance to be on the table as the replace in “rip-n-replace.” Indeed, people I talk with tell me that a handful of large companies are already asking about open source IT management platforms.

Where does this rip-n-replace leap come from? I’m a huge fan of cycles in IT. The biggest cycle I know of in IT is the buying cycle: you buy some IT, use it for 4-5 years, and then start getting antsy about updating that IT. If you’re lucky, your vendor(s) is good enough to deliver those updates and keep you as their client. Lucky for you because you can reduce the amount of change that occurs during the cycle. If you’re unlucky, your vendor’s technology and/or culture becomes cemented and doesn’t change at the same pace as your IT needs: think enterprise content management companies that never quite got blogging, RSS, and search.

Under this model, then, there are windows in the cycles where companies will consider switching from their existing technologies. Spotting these windows, and being able to sell into them. As a vendor, if you hit one of those windows, you can drive years of sales until the next window hits, where you’ve got to “re-qualify,” as it were. The important thing is to have the right sale at the right time, not just the right technology.

The issue, then, is providing the servicing needed for those massive, enterprise installs. And it’s not just installs, but maintenance and ongoing “support,” to use the term loosely.

Open Source IT Management Services

Thus, in my mind, there’s plenty of room for open source IT management servicing firms. As mentioned above, there are product-specific groups and firms that service their product or stack, but I’m not sure there’s a service firm that will do any open source IT management stack you might want. And, there are several open source support firms — Covalent, SourceLabs, SpikeSource — that could add IT management to their portfolios. Of course, the Big 4 themselves could leap into it if they could figure out balancing their closed source culture.

Disclaimer: Covalent, SourceLabs, Zenoss, IBM, BMC, Groundwork, and CA are clients.

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