Who owns the on-demand customer?

Jamcracker this week released version 2.0 of its on-demand ecosystem, the Jamcracker Service Delivery Network (JSDN). This is a move I previewed in January, in Jamcracker unlocks a Web 3.0 role for the channel, when I wrote:

"The next stage, which is due to happen this year, will be to build out a live network of shared services. At that point, the JSDN will become a living example of the aggregation layer I described in my posting last month about What to expect from Web 3.0, while channel partners will draw on the aggregated services to create and deliver finished applications to end customers."

At the time, I was having an online debate with John Hagel about Who will rule Web 3.0?.Suppliers don't so much 'own' the customer relationship as hold it on trust We agreed on the starting premise that few customers will want to interact with dozens or hundreds of separate on-demand providers for their application needs. That will create a role for intermediaries to aggregate all these separate services together. Where we disagreed is that John took the view that a small number of grid-like aggregators will control the market. My response was that there will be a separate customer-facing layer of solution providers (in the widest sense) who will own the customer relationship. Jamcracker's JSDN provides an interesting test of that proposition, which I'll discuss in a moment.

But before I go any further I need to make a disclosure. To coincide with the launch, Jamcracker has commissioned me to present a webcast, Solution Providers — Key to On Demand Success, which takes place tomorrow (Aug 3rd) at 10:00 am Pacific time. Obviously that client relationship has kept JSDN front-of-mind for me. But the views expressed on this blog are my own.

Now that the details of the live JSDN are public, it's evident that Jamcracker sees its role as part aggregator, part enabler. The main function of JSDN is to shorten the time it takes for a solution provider — which might be anything from a large telco to a traditional VAR — to assemble a portfolio of on-demand services and start offering the bundled offering to customers. One part of that is bringing together a wide range of services — the aggregation part. The other is the provision of enabling services and technologies that solution providers can use to present their offerings, sign up customers, bill them and so on.

For Jamcracker, this is just sensible market seeding. It's in its interests for more and more companies to get into the on-demand market in one way or another, because that will widen its market opportunity. JSDN makes it possible for companies to put a 'toe in the water' and test out on-demand offerings without having to spend huge amounts of time and money upfront on building an in-house on-demand infrastructure.

But although Jamcracker is the aggregator, it doesn't own the customer relationship. That remains in the hands of the solution provider. Nor does it have a monopoly on the aggregation. Naturally it hopes that providers will continue to use its software and services as they scale up, but it's quite open to them to strike their own deals with the back-end providers. In that sense I suppose Jamcracker has foregone the aggregator opportunity identified by John Hagel to lock in its delivery partners, but in today's world of open systems and open interfaces, it's becoming less and less acceptable to impose those kinds of restrictions. So the real power in this market hierarchy is held by the solution providers themselves, in the sense of owning the customer relationship.

In another sense, though, this whole debate ignores where power actually resides, which is with the people holding the purse strings. Suppliers don't so much 'own' the customer relationship as hold it on trust. It's the customers themselves who are really in charge and suppliers delude themselves if they believe that incumbency either as an aggregator or as a solution provider gives them any durable hold over customer choice. In the end, it's the purchasing decisions of the market that decide the winners and losers.