This past week I spent traveling to Oslo, Norway and Stockholm, Sweden to participate in a series of presentations, round-table discussions and workshops on Configuration Management and the future of ITSM. Before leaving Norway and traveling to Stockholm to do a presentation and a three hour question & answer session for itSMF Sweden hosted by SwedBank where I answered any and all questions about Configuration Management, I was invited to participate in a panel discussion at the itSMF Norway annual conference to discuss the future of IT Service Management. It was a privilege to be invited and be on a panel of, in my opinion, a “who’s who” in the industry. On the panel was Paul Wilkerson; the “ABCs of ICT and Co-owner GamingWorks , Rob Stroud; Vice President Innovation & Strategy at CA and 2014-15 International President of ISACA Board of Directors, Kaimar Karu; Director of ITSM for Axelos and Colin Rudd; former itSMF UK Chairman of the Board. For the next hour, we sat in front of several hundred people and discussed as well as answered questions regarding where we felt the industry was going, the problems clients of ours all over the world were having and how culture was at the core of most of the challenges. What didn’t come up however was the costs of tools. It really wasn’t on the radar from the questions that were asked. In my opinion, for the cost of tools to even approach the discussion, it would have to be something fairly large, bold and disruptive.
So, as I normally do before a trip, I gathered reading materials for the flight. That’s when I came across something “fairly large, bold and disruptive”. An IT Service Desk vendor named ManageEngine, a product I know of but admittedly only have passing knowledge of their tools, announced that they have decided to give their Service Desk product away for free from now on. I think you’ll have to agree that “fairly large, bold and disruptive” is a good description for that move. Also interesting is their impressive installation size given the relative obscurity from a name recognition perspective. One of the articles stated that they have 66,000 customers so, they’re not a small player and after some quick research, I also confirmed that my awareness of them was because they are a 2013 Gartner Magic Quadrant IT Service Management vendor. So, this is no little decision that ManageEngine is making to give up this revenue freely.
I give ManageEngine and its leadership a lot of credit for recognizing that the Service Desk area is becoming increasingly commoditized. Companies shouldn’t have to spend so much on a commoditized product. BTW, if you pull a move like this, it’s a leadership move not a management move. We’ll have to see if they end up leading a directional shift in the industry or at some point reverse their decision and go back to the traditional cost model.
It is going to be very interesting to see how the other players in this space respond. Years ago, ServiceNow came into the market with a Saas solution that forced all of the established players to convert to Saas, close up shop or offer some hybrid of solutions including Saas in order to stay relevant. The vast majority did and Saas is now essentially a required option from every vendor. Will offering your Service Desk up for free also become a required option?
I am hopeful that ManageEngine succeeds in changing the trajectory of costs for companies with this move. Let’s be real, who doesn’t want something for free? Of course it has to be a good product and with the size of their customer base, I have no reason to believe that it isn’t at least comparable to all the other players. This means that if you hadn’t considered ManageEngine before, you have to now. Let’s not kid ourselves though into thinking that ManageEngine did this purely out of the kindness of their heart. They are seeking to make up the losses elsewhere and I am OK with them doing that. My first introduction to what is called “loss leaders” came as a teenager working in retail stores. It’s sort of interesting though to see such a large “loss leader” at this stage of my career in this industry.
I have to admit that I am also hopeful that the savings garnered by companies taking advantage of this bold move will be reinvested into efforts to address the cultural challenges that our industry is struggling with rather than just adding it to the bottom line. After spending the last week in Norway and Sweden speaking with IT professionals from all over Scandinavia and Europe and hearing about their struggles with culture, how could I not hope that this move somehow benefits them?
How will the other vendors respond to this move? Will they follow ManageEngine’s lead and begin offering their Service Desk product for free? Will they try to ignore it and see if ManageEngine loses so much revenue and can’t make up the difference elsewhere that they eventually go back to the old model? Will they reduce their prices temporarily simply to put financial pressure on ManageEngine while not totally sacrificing their own revenue? In any of these scenarios, customers should benefit from a temporary savings or better yet, a permanent savings. For us, it will just be fun to watch and see if the deck chairs get shuffled again.