I had my first briefing with IT management provider Spiceworks today. I use the term ‘provider’ rather than ‘vendor’ because currently, at least, it does not sell anything to the organisations using its software. Rather, its IT management software tools are free to download, and the revenue model is based on selling advertising space ‘around’ the application, much like you see on The Register, Silicon.com etc. The interesting part is that the adverts that the users of the Spiceworks are exposed to are designed to be complimentary to the subject area (small business IT).

The value of the platform could be exponential in the future as it has the potential be used in a wider remit—community discussion, interaction, problem solving, access to related content, IT procurement and so on. These are all areas under consideration from a software provider which has so far harnessed user feedback to guide its rapidly evolving offering to the tune of 8 releases in the last 15 months.

Delivering user influenced improvements at this rate looks like a high speed version of what some of the bigger application software vendors do between releases—except the point is that it isn't, because it's happening in a place where larger vendors have had relatively little success in penetrating. There are many reasons, but not least because it is incredibly hard to balance licence sales against cost of sale, even with a ‘deep and wide’ channel strategy.

Indeed, scale could ultimately be Spicework's Achilles heel—not in terms of reach, but in terms of being able to support the needs of growing IT shops. It's probably the key criticism that a larger vendor could levy—beyond the intimidating (i.e. no licence revenues from users) business model, that is.

Spiceworks’ challenge, as I see it, is to ensure that it grows with its users. 200,000 daily users so far suggests that there is cause to maintain the highest possible level of innovation, so that its impressive early years are matched by a steady move to maturity and scalability, rather than remaining as an entry level tool set which has to be handed off to a larger vendor as the user organisation grows up. It also needs to ensure that it exploits the potential of its platform as a distribution mechanism for related materials so that advertising revenues at the very least make it a sustainable endeavour.

Freeform Dynamics research has shown that there is a significant ‘step up’ in terms of burden on ‘the IT guy’ when an organisation moves above 10 employees. It steps up again at around 50. This is precisely the target user base of the Spiceworks offering, which, fundamentally, focuses on a pretty critical capability—asset management—at an important time in a small IT shop's lifecycle. We often refer to ‘mindset’, something that later on in an organisation's lifecycle is proving quite difficult for many to change. Get this right early enough and it might be possible to scale up an IT shop which enjoys the level of control and business alignment that larger IT shops are now trying to achieve. Imagine that.