Business Management

Steve Goodman (US) - Giving It Away: Why Offering NMS for Free is a Viable - and Profitable - Long-Term Strategy - Part 2

Profiting from Free NMS

NMS are one of the enterprise software categories that have been commoditized during recent years. NMS is an absolute requirement of every IT department. It is the foundation on which all other software and applications are placed and is needed to maintain a healthy network infrastructure. As the market has evolved, NMS vendors are competing solely on price - not features - which has resulted in commoditization in this category.

Because an NMS is a fundamental IT requirement, vendors can be more competitive and attract more customers - including smaller companies that would typically be outside their primary customer base - by offering its solution for free. There are a number of benefits for both the vendor and enterprise to employing this type of strategy, including:

• Building Trust and Sales Channels - A free NMS is a great value particularly for small companies, who cannot afford even the low cost of NMS solutions now on the market. Providing a free NMS enables vendors who have broader product lines to attract new customers and demonstrate how well their software works. This, in turn, builds a relationship of trust between the vendor and customer, and paves the way for sales of other premium products and services.

• Simplifying Integration - By selecting a free NMS from a vendor that offers a breadth of other software, enterprises often find that integration is easier. Select NMS offerings on the market today were designed specifically to integrate with the vendor's other products, such as database management, application monitoring management, virtualization management and Windows management. Though free, many of today's open source solutions can be difficult to integrate with other enterprise software into a seamless solution that can be easily managed from a single point.

• Being Well-Positioned for Growth - Smaller companies who take advantage of a free NMS offered by vendors with a broad product set are better positioned to manage their growth. Free NMS solutions eliminate some prohibitive costs for these small companies, for whom the savings can go directly to bottom-line growth. Then as the companies' network infrastructure expands and becomes more complex, they have a natural migration path with a single software vendor, making it easier and more cost effective to purchase additional software to meet their new needs.

Enterprise software vendors should not fear that giving away some of their technology - particularly solutions in commoditized markets - will cannibalize their revenue and weaken their market position. In fact, the opposite is true. By delivering a free solution that is easy to use and meets the basic needs of the customers, vendors have a unique opportunity to expand their customer base and build a foundation for greater sales of premium software well into the future.

By Steve Goodman, VP and GM of the Network Management Business Unit,Quest Software



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