It seems that the lesson from systems management vendor Spiceworks is - yes it can. Spiceworks has a business model that sounds very bubble 2.0. It provides a set of systems management tools for free and makes its cash by other means. But can Spiceworks actually return a profit where Facebook, Twitter and many others have not? Spiceworks is a private company with VC backing and does not disclose its profitability, but having gone through two rounds of capital raising, it says it has no need for a third.
Spiceworks helps small businesses manage their IT systems - its target market is organisations with 20-500 employees. Some 700,000 users have installed the product and registered as users - as opposed to having just downloaded it - so there seems to be something in it. A browse though some of the customer reviews at the Spiceworks Community supports this.
Spiceworks is a hybrid deployment. Much of the functionality for actual systems management, which, to be clear, is carried out by the users themselves, comes from software installed on-premise. Spiceworks claims users can get the product up and running in 20 minutes or so. The online component is about providing the community support. It is with the latter bit that "IT gets social", as Spiceworks likes to put it. The Spiceworks Community allows users to help each other solve problems, see what products others are relying on for their IT needs and share reviews and best practices.
Spiceworks makes its money in three ways:
1. Advertising IT products to its online community - its current advertising customers include HP, IBM, Avaya and RIM
2. Selling access to the community for online surveys, with the obvious caveat that this is only useful for surveying systems managers. Spiceworks can muster a few thousand responses on a given product or issue and the value of this service has been recognised by customers that have paid for the service, including Microsoft.
3. Buyers' clubs which allow users to share their buying experiences and aggregate their purchasing power to get better deals on hardware and software. Spiceworks then helps to broker the deal and takes a cut from the vendor. This is targeted at $1,000+ value products such as email servers, backup suites rather than cheap commodities. There are 15 vendors participating in the backup Buyers Club including Dell, EMC, HP, Seagate, and Symantec.
Spiceworks is not unique; there are many other systems management tools including some that are fully online such as NTRadmin, which have the same potential, but as this is a paid-for service so there is less pressure to use the community itself to make money.
We have all got used to advertising and other intrusions from online service providers in return for free online services. Spiceworks is making it work for IT management, what next? Perhaps we will see accounting get social? Watch this space.
