By guest author Tony Scott
The ODM Model – Will It Happen for Software?
Tony: Building products faster at a lower cost because you have in-depth expertise in a market segment and are componentizing part of the product development process – it’s going back to your example of Flextronics for software. Will we see ODMs like Flextronics in software?
Anand: I believe you will see ODMs start to happen in software. If you have ODMs for software and you want to put up a social networking site for doing whatever, it should not take you more than a few weeks for that to happen. There is infrastructure you should be able to plug into as well. Mobility is also going to change the game quite a bit, because people are going to do more and more things on the mobile phone, and products are going to have to be developed and launched very quickly for that environment. It’s going to be very hard for people who are stuck in a particular way of doing product development to move with the new technology shifts that are happening. It’s a tough market.
Tony: There is also a big issue in the mobility market in the sense that many carriers and some platform providers, such as Apple with its iPhone and iPad, don’t want to have stuff going on to their systems that they don’t feel is bulletproof, so you have to have capabilities and expertise to make sure you can build carrier-class applications. That should play even more into your sweet spot, because that isn’t a simple skill set and expertise for a smaller company to develop internally.
Anand: Exactly. Let’s say you are in the financial industry, and you have a great idea. You know how to solve a problem, and you want to make it available on every mobile phone. You as an individual just couldn’t do it because you need to create a whole bunch of infrastructure. But if you come to me, I could make it happen for you, because I have already worked with the carriers, I have worked with the handset people, and I know what the capabilities and specs are of the next set of handsets that are coming out.
Tony: Then the carriers and handset manufacturers are going to trust you much more than they would any new company with a cool idea and no experience in the space, because you have become a trustful provider in that space.
Anand: I am already there, so my ability to get you started and quickly deployed is much better than your trying to do it yourself. And it’s not just about your ability to find the right people so you can deliver on that yourself. Yes, maybe you can go hire people, but it will take you three months to hire, it will take another three months to train those people, and you are going to pay a lot of money, and then after the product is ready you don’t need them. So, it’s a very different game.
Tony: Do you see the software off-shoring, IT off-shoring, and outsourcing business in some ways following the same path the auto industry has been following?
Anand: Yes, and also the semiconductor industry.
Tony: As you continue to move toward an ODM-like path, what do you see as your biggest challenges in terms of leading your company over the next 18 months , and over the next five years.
Anand: One challenge of course is management bandwidth: there are just too many things going on, and being able to hire the people so we can delegate things and make sure we don’t stumble [is important]. The second challenge is related to the fact that we are undertaking an IPO. There are all the things that go along with being a public company, such as the fact that I need to show predictable numbers. That’s again something we haven’t done in the past. We’ve done reasonably well with our financials and budgeting, but being public is a different game, and you are looking at a very different kind of scrutiny. How do we sustain ourselves in a market where everything is changing very fast? So one of my challenges is, how do I hire the team and make sure that happens? The third challenge concerns managing investors and predictability. The fourth is our customers and markets: they are starting to change very rapidly. There are opportunities to change with them, but how we react to their requirements and how dynamic and agile we are, those are things that are tricky to manage