Open Source Solutions

There's a blank space in the agenda for this time slot. A panel has been brought together to discuss if open source companies can survive the M&A. The panel includes Harold Goldberg, CEO, Zend Technologies, Ben Sabrin, VP, Sales & Business Development, Appcelerator, Zack Urlocker, EVP of Products, MySQL, and Rex Wang, VP, Product Marketing, Oracle.

The community, the employees, the product - everything could change.

Zend and MySQL are strong partners, as over 50% of development on top of MySQL is in PHP. Sun acquiring MySQL initially was upsetting, but more from the standpoint that the world needs strong, independent open source companies. The two companies are dedicated to supporting the overlapping communities through the transition and to maintain the direction of MySQL. Sun and MySQL, whether still being in the honeymoon period or indicative of long term cultures, are having open, supportive conversations.

Red Hat and JBoss had no such conversations, and the cultural shift was very negative, though the results may be positive.

Harold brought out that there are three types of M&A: acquire a business, consolidate markets, purchase a piece of technology. Open Source doesn't make this different.

Sleepycat was acquired by Oracle two years ago, and it was announced at OSBC 2006, and thus has been the longest in the transition. Sleepycat personnel were integrated with comparable groups within Oracle, e.g. Sleepycat engineers joined database engineering, marketing joined marketing, sales formed with sales folk from other recent Oracle acquisitions, a new sales group focused on embedded databases and small devices. Though this integration and dispersal happened over many months, and some processes, such as the release cycle are still done the Sleepycat way and may never transition to the Oracle way.

There are gradations of M&A transition & integration policies, ranging from complete absorption into the new culture, to maintaining the acquired company intact while the acquiring company learns the new business. Most acquisitions fail. It's too early to tell how these acquisitions will run, but a lot depends on the M&A experience and competency of the acquiring company.

I haven't been doing any "live blogging" this OSBC. Yesterday was very hectic. I did some interviews, attended some sessions, and had many great conversations. Today was less hectic, and I even got to pull out the MicroTrak to record a podcast with Brian Reale of ProcessMaker.

I actually got to this panel session early enough to grab a piece of table and set-up my laptop. This panel is "Open Source: Out of the Server, Into the Network" moderated by Larry Augustin, Managing Director, Augustin Ventures and comprised of Artur Bergman, Director of Engineering, Wikia, Fabrizio Capobianco, CEO, Funambol, Kelly Herrell, CEO, Vyatta, and Mark Spencer, Founder and CTO, Digium.

Much of the conversation in the first part of the panel centered around Cisco as a monopoly, pricing of "enterprise class" at three or four orders of magnitude over similar items from the the local electronics store, and adapting Linux for network use. What I heard was the commoditization of the network. The same discussion I was having with the CEO of a communications VAR 10 years ago. At that time, the industry was going through a sea change where the old way was to have system engineering as a free, value-added service as part of the sales process for large, multi-million dollar PBX, EDGE Router, telecomms & networking deals. The new way hadn't been decided yet, but the margins were being forced down to under 15% - commoditization. Today this panel was talking about COTS hardware running specialized open source software to replace network gear and PBXs - commoditization.

But where's the value? Fabrizio hit the nail on the head: community, the power of community and using open source to build a community. Why is there value in community? I think we can sum this up with customization, localization, and common needs.

Larry summarized it as a vertical market coming apart horizontally.

Great session all the way around.

I met with Bill Soward, President & CEO, and Greg Schneider, Vice President Marketing of Adaptive Planning. Adaptive Planning provides packaged solutions for business performance management (BPM), but I think that the best description of Adaptive Planning is that they provide focused BI tools, both on-demand as SaaS and on-premise as open source software, which is licensed under GPLv2.

Since its founding in 2003, Adaptive Planning has tripled its customer base year over year, and has grown to over 220 customers, with 90% of these being customers of the on-demand SaaS. However, approximately half of the largest customers use the open source on-premise version. Most of these customers are companies with 100 to 2500 employees. In toto, they've taken US$29 million in VC funding.

The open source version is available from SourceForge and SugarForge, and has been downloaded over 65,000 times in 85 countries. They have data that suggests that a significant percentage of these downloads have been by finance folk, not IT. These fits well with our experience that end-users are starving for simple BI tools that simply aren't being provided by IT in many cases. I told the "lake of data" story, and I'll repeat it again. Several years ago, we were giving our benefits of BI pitch to a VP of Marketing at a business unit of a Fortune 100 company. She stopped us and brought in one of her marketeers. This very non-technical fellow had recreated data warehousing using over 100 linked MS Access database applications that he called the "Lake of Data". It was amazing. It worked, and it filled their needs. This story pre-dates any significant open source options for BI, but it is exactly this type of person who might download Adaptive Planning Express.

Their community model is a bit different and I believe that it is very worthwhile. They build their community around partners with specific domain expertise. This expertise may be within a vertical niche such as health or the public sector, or specific geography. One example of this is the Adaptive Planning partner in Japan worked with their customer AKTIO to implement localized version of Adaptive Planning's open source budgeting, planning and reporting tools for 800 seats, on-premise at AKTIO. There are currently 65 partners working on extending Adaptive Planning in different ways.

Adaptive Planning is also looking to partner with other open source companies, particularly in the area of data integration. When Adaptive Planning added reporting tools, they originally looked at using one of the open source tools. At the time however, the existing open source reporting tools were very much for developers, and not for end users. Adaptive Planning is very much about ease of use for the end users, so they decided to build their own dashboarding and reporting set. However, with the maturation of open source offerings over the past two years, Adaptive Planning will likely not build their own data integration tools, but will partner with an existing open source solution.

In many ways, the chief competitor for Adaptive Planning is MS Excel. That is, the end users choose the status quo of slogging their way through Excel workbooks and pivot tables. Bill emphasized that the Adaptive Planning strength is allowing user collaboration on modeling, assumptions and background information in a secure, controlled way.

I'm having lunch with Gianugo Rabellino, who is very excited about the new partnership between his company SourceSense, the leading open source integrator in Europe, with the little known software vendor from Redmond Washington in the USA. The partnership centers on a new top-level Apache project, Apache POI, which is the open source file format reader and writer to create, edit and read Microsoft Office formats used in Excel, Word, PowerPoint and Visio, and supports Open XML.

Microsoft provides the detail in a press release, Microsoft and Sourcesense Partner to Contribute to Open Source, Apache POI to Support Ecma Office Open XML File Formats. Congratulations to Gianugo and Sourcesense.

I met with Paul Fremantle, Co-Founder & CTO of WSO2 at OSBC 2008. Paul and WSO2 CEO Sanjiva Weerawarana both come from IBM Web Services architecture and founded WSO2 to provide an IBM level of quality of service in a simpler implementation. I was actually introduced to Paul and Sanjiva about an half-hour before our scheduled interview by our mutual friend Gianugo Rabellino. Here's some of the information that Paul provided about WSO2.

WS* for security & messaging is a major focus for WSO2, and WSO2 is filling some of the gaps we mentioned in our "suggested topics" for OSTT, especially in the area of exposing data through WSO2 Data Services and Governance in the WSO2 Registry:

• RESTful not UDDI
• ATOMpub
• Social Governance: Tags, Comments, Ratings, subscribe via any feed reader to tags, versions, etc.

Independent security through WSO2 User Manager or standard APIs and applications

Fifty percent of the WSO2 developers times is spent in Apache projects, and the company is 95% engineering. This shows one of the strengths of Open Source in that the company is not heavy with GS&A costs.

As anyone reading this blogs knows, we feel that Community is the major strength of any Open Source company. The WSO2 Community provides requirements & bug fixes, primarily. One recent example of the value of the WSO2 community is where Hessian provided requirements & testing.

WSO2 is very much a platform company, much like Spring. WSO2 worked with Spring to have Apache Axis2 work as a component within Spring using Axiom (AXis Object Model).

1. Spring WS requires Contract First
2. The WSO2 framework for Spring allows POJO Code First

The Axis2 beta was published six weeks ago and a GRAILS contributor has already contributed a plugin to the community that is dependent upon the WSO2 web services framework for Spring.

Business models for Open Source companies are still being developed. WSO2 achieves monetization through subscription, training, developer support [email & IM] and product support. All WSO2 products fall under Apache Licenses.

In addition, WSO2 provides Open Source Development: customers pay to get customizations into the main tree of the code base of Apache projects that are important to them. This is a great way to provide support to your favorite open source project.

We ran out of time at this point. In conclusion, we feel that WSO2 is filling some of the gaps in open source products for SOA, as well as having some unique approaches in extending their business model.

The OSBC 2008 started with a Keynote from Matt Asay. Here are some of my "takeaways"

1. There has been a large uptick in participation at this year's OSBC from members of IT [customer-side]
2. 2B$ invested in OSS & >2B$ given back through M&A activity in the past year
3. Some stats
   • 71% of enterprises using OSS are expanding their use of OSS
   • 65% say use of OSS sparked innovation
   • 85% say 0SS hiqher quality
4. Matt shows off his video editing & mashup skills. The result defies my ability to describe, you'll just have to wait for the YouTube download ;-)

The next Keynote was from Jim Whitehurst, President & CEO of Red Hat. He started with a marketing multimedia that gave some interesting facts:

• 3000+ certified applications are available
• Red Hat linux is certified on thousands of hardware systems

Red Hat is seen as one of the largest and most successful open source vendor, and it will be stepping up to its role as an OSS leader.

The career path at Red Hat starts in Services with promotion to Development. This reminds me of my time in aerospace, where a "proper" career path was to start in QA/Test, move to development and then "retire" back into a QA role.

Jim has never seen a company as focused on the customer as is Red Hat.

Jim went over some points that fall under Red Hat's evolving Business Model.

1. good for customers as increase value every day through iterative innovation with stability through enterprise edition
2. Red Hat will do a better job of involving large enterprise customers in the community
3. Red Hat's goal is to become the defining technology company for 21st century through its work with the community

I had to skip the next keynote to prepare for my first scheduled meeting of the day.

Clarise and I have registered and we're just getting coffee. We've already run into a few folk from the Open Source Think Tank. Matt Asay's keynote starts in 15 minutes. We'll see how different it is from last year.

The WiFi is free, the coffee is hot, and the Open Source Showcase room is filling up and the booths are already active.

We'll try to keep you up to date as it happens. But we're not going to try and live up to Coté's calling us a "blogging machine" last year.

The Open Source Business Conference starts tomorrow in San Francisco. We have a fairly full schedule of interviews we're conducting and sessions that we wish to attend. But if you want to meet, let us know, and we'll arrange it. A lot is happening in the data management and analytics open source world. We'll be conducting interviews with:

• WSO2 founder & CEO, Sanjiva Weerawarana
• Bill Soward, President & CEO of Adaptive Planning
• Dominic Sartorio of the OSA
• Kirstan Vandersluis, founder and chief scientist for XAware
• Brian Reale, Colosa’s CEO
• Grazia Cazzin of Engineering Ingegneria Informatica S.p.A. and SpagoWorld

And perhaps some locals, either at or after the conference. We're looking forward to seeing some old friends, like Gianugo Rabellino and Dave Rosenberg, as well. Speaking of Dave, don't forget to sign-up for MuleCon2008 starting appropriately on April Fool's day.