What recession? Lessons learned through Free Software

Jon

Paw Prints: Writings of the maddog

Nov 15, 2011 GMT
Jon maddog Hall

 

It all started ten years ago, at a beach party called (appropriately enough) “Open Beach”. A young programmer named Douglas Conrad had discovered Free Software about two years before, and dreamed of having his own company devoted to Free Software, making a living from the use and production of Free Software.

 

Douglas started his company “OpenS Tecnologia” a year later in 2002, but still did not have a good idea for a sustainable business plan. In the years between 2002 and 2006, his company grew slowly while Douglas investigated different parts of Free Software, until the year 2008.

 

In 2008 Douglas created a business plan revolving around VoIP, utilizing software from the Asterisk PBX project and developing a product called SNEP, with the goal of involving the Free Software community to both help develop SNEP and to allow people to make money from SNEP.

 

As SNEP evolved Douglas had another realization (something that I have been preaching for the past ten years), that Free Software developers should not be charging for their “time and materials” in the projects they address for customers, but should be charging for the value they deliver to the customer. To determine customer value, of course, requires that the Free Software developer learn about the customer's problems and issues, how much the customer is spending to address those problems currently, and how much a software implementation or change to the customer's existing software could reduce those expenses. This type of analysis is rarely done by “shrink-wrap” software producers, but often allows Douglas to charge a significant amount of money for his company's services, instead of charging “just enough to cover expenses”. Douglas has found that the “sales pitch” of saving or making the customer money is a strong one.

 

An example that Douglas gave me was a customer that was experiencing huge costs with calls between cell phone companies. Douglas studied the customer's call flow patterns (made easy by using the logging facilities of SNEP), and wrote an extension to the SNEP PBX software that re-routed the calls in a more intelligent way, saving his customer 25,000 Brazilian Reais (about 14,000 USD) in charges every month. It took Douglas three days to write the code, but he charged the customer R$ 25,000 (one month's savings) for the service of writing the software. Not a bad wage for about four days' work, and Douglas was free to apply this same software to other customer's problems.

 

In another example, the solution required no code to be written at all. Analysis of the call logs kept by SNEP allowed Douglas to analyze the spikes in the client's call volume which were losing customers when they could not get through to the client's call center. A slight change to the client's tactics allowed the client to influence and change customer calling habits, and save the client from having to install more telephone lines and hire more people, yet still address the client's call volume needs.

 

Knowing your customer and your customer's business. Tailoring the software to meet your customer's needs. Recognizing the value of your time, and not the cost. These are the strategies of Free Software.

 

In the years of 2008 to 2009 Douglas' company grew 100%. From 2009 to 2010 OpenS grew 250%, and from 2010 to through 2011 OpenS has grown 70%. During an economic time where a lot of companies are laying off employees, Douglas turns away business because he can not hire enough good employees to meet the needs of his customers.

 

Now Douglas is moving to the next part of his business plan, which is to engage the community to make money through his product and services. Since SNEP is Free and Open Source Software and is available through the Free Software Portal sponsored by the Brazilian government, any one can use it for free, and without even telling Douglas that they are using it. However, to help meet the needs of his customers, Douglas is actually going to give courses in how to extend SNEP, write modules for SNEP, integrate SNEP with customer's businesses, and show developers how to make money with it. Some of his partners ask him "Why are you helping other people make money with your software?" Douglas just smiles and tells them that he knows what he is doing, and the power of the community will continue to make opportunities for everyone.

 

Douglas has a plan to bring together customers, developers, integrators, manufacturers and end users to allow everyone to make money with SNEP Free Software and to describe this plan at the first SNEP conference on December 1st and 2nd in Florianopolis Brazil. The first day is a tutorial day for people who have knowledge in telecommunications, but do not have to have detailed knowledge in Free Software PBX systems. The second day is targeted toward developers and complimentary to the first day. The training will be done in Portuguese, and of course the participants will be welcome to stay over the weekend and participate in the tenth anniversary of “Open Beach”, to be held December 2nd, 3rd and 4th.

 

To help to promote the SNEP conference I have offered Douglas one of my “famous clocks” made from a CD-ROM autographed by Linus Torvalds, to be raffled at the conference.

Carpe Diem!

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