Open Source Solutions

The highlight of JavaOne for me has become supper with Gianugo Rabellino, the founder and CEO of SourceSense. For now, each year…

"'The time has come,' the Walrus said, 'To talk of many things: Of shoes—and ships—and sealing-wax— Of cabbages—and kings— And why the sea is boiling hot— And whether pigs have wings.'"
-- from the poem "The Walrus and the Carpenter" within Through the Looking Glass by Lewis Carroll

… For our conversations are wide ranging and thoroughly engaging as we indulge our enjoyment of fine food and open source.

This year, Gianugo has been in the USA several times, for the Open Source Think Tank and the Open Source Business Conference, and on business. An employee of SourceSense even had a gig in the town in which I was raised. Unfortunately discovering it to be the arm pit of the United States. Ah well, it's why I live in the SF Bay Area now.

We talked of tempering chocolate, unusual eating habits of various cultures, the worsening economy, European vs USA political views, and Gianugo even had me read, while sober, the Pronunciation Poem. [I flubbed a few words, and disagree with some of the rhymes given that my dialect is as Philly as a Chesse Steak.]

But we also talked about Open Source; all the open source related conferences and blogging and work and newsworthy activities of the past few months. Here are some of my thoughts.

Open Source is a Philosophy

This one has been bubbling around in my head for years. Open Source, in and of itself is NOT

• a licensing template
• a business model
• a development methodology

It is a philosophy that can provide the framework for those three things with which it is most often identified. The variations among what the open source philosophy means to each of its followers can best be seen from the proliferation of licenses, business models and methodologies all claiming to be open source.

To me, the open source philosophy is very simple, and it can be applied to solutions for some very complex problems and concerns: the source is available to anyone who obtains the end-product, whether one has obtained the end-product through a no-cost download or through a purchase agreement of whatever type. The "source" may be the "source code" for software, but, to me, it should be whatever specifications and design documentation are required to recreate the end-product in either the original or a modified form.

There are a variety of reasons that a developer, an engineer, an inventor, a creator, might what to subscribe to an open source philosophy. And each individual or business must decide if those reasons make creative and economic sense for them. Once one has decided to subscribe to open source, or any philosophy, then all your other decisions will only lead to success if they are logically consistent within that philosophy. The licensing language, business model, economic forecasting, internal processes and external relationships should form a coherent whole within the underlying philosophical framework.

Business Models Will be Different for Different Markets

Organizations often look for the silver bullet or the golden mantra or the platinum ring that will solve their problems, lead to dominance in the marketplace, or allow them to rule them all. So we hear a lot of talk about the "best" open source business model. This search ignores that fact that there are open source solutions for many markets. Without going into specific verticals, let's just consider four general, horizontal markets that are addressed by open source software.

1. Information Technology Infrastructure: including operating systems such as the various flavours of linux and BSD unix, application servers, and other middleware such as the Mule ESB, WSO2 SOA solutions & KETTLE for ETL, web servers, email MTA, the Funambol Mobile Server platform, and many more.
2. End User Applications on the Desktop/Laptop/Mobile-Device: with OpenOffice.org and its MacOSX offshoot NeoOffice, Projivity OpenProj, and Mozilla Firefox and Thunderbird likely being the most well known, but also including many thousands of open source projects for artistic creation and enjoyment, as well as office and personal productivity, and gaming, and all things that one personally does on a computer
3. Software Development Tools: from the Eclipse IDE to hundreds and thousands of specific language libraries and everything else a developer might need; this is even more "by geeks for geeks" than the infrastructure area
4. Enterprise Applications: these are end-user facing applications, often fulfilling mission critical needs, such as ERP, CRM and BI, and is the least mature market for open source providers and the hardest area to gain acceptance

No one business model, no matter how generically expressed, could satisfy these four disparate markets. Monetizing these areas will come from combining innovative and traditional packaging of support, customizations, system integration, training, licensing, and subscriptions.

Automated maintenance, repair and update networks might work very well for monetizing IT infrastructure, but might be insufficient for the other markets. Ad based monetization, directly or through partnerships with ad networks like Google's, might work for some end-user applications. Putting out the begging bowl, asking for PayPal contributions might also work. But for many open source projects, there simply isn't any path to monetization.

One area that I think has been insufficiently explored, and might well be the only path to success for the Enterprise Application open source vendors is Software as a Service. The SaaS approach, whether through partner channels or directly, is the most sensible means of monetizing a wide variety of open source applications. Embrace the open source philosophy, leverage the strengths of flexibility and community in the licensing, business models and processes, and monetize through SaaS delivery into vertical and niche markets.

And for the rest, just acknowledging that your company is a software company embracing an open source philosophy, and building appropriate support and licensing structures will be the best path.

Communities are Strongest when Open

Developing a community around a product is not unique to the open source world. Microsoft, Oracle, SAP, SAS, SPSS, IBM, etc, etc, etc have all developed and supported great communities made up of ISVs, VARs and Users. The difference however, is that open source projects are very dependent on their community. Conversely, communities are strongest when there are no artificial limits to communication.

I think that most companies are embracing at least this one ramification of the open source philosophy. Though it seems to me that when the source isn't open, the community can only converse and support each other in surface issues.

One area though, where open source vendors still seem to be uncertain, is the definition of community, and what groups make up their community, and if they must develop different communities for different categories of members: developers, users, non-software contributors, paying customers, or partners. I think this is self-defeating. There is only one community for each project: those who want to be involved and will benefit from that involvement, ultimately to the betterment of the project, whether directly or indirectly, whether monetary or not, whether contributing code or documentation or use cases or testing or playing around with the project or complaining about it or just soaking up the ambience. Can any open source project community manager give a valid reason why any of these should be excluded from the community or ignored?

Open Source Sales are Very Foreign to Most IT Buyers

Whether we're talking about senior IT management, the CIO, or the purchasing department, the idea of freely downloading the fully operational, unlimited version of a product, and using it for research, prototyping or production, without handholding, cosseting or sales incentives is complete anathema to those making purchasing decisions.

Did you ever see a "vendor bake-off" among products from Oracle, IBM and SAP without vendor involvement, without vendor sales engineers fine-tuning and providing weeks of free labour? Is there any open source company that provides a corporate jet and box seats at the super bowl? And is there anyone who has ever been part of selling (internally or as a vendor) a large, big-budget enterprise project to a CIO or purchasing committee, who doesn't believe that such freebies and perks are essential elements to the approval process?

Many, too many, open source vendor CEOs believe that bloatware (more features than most users will use), vendor lock-in and lack of interoperability, and high prices of initial licenses are the problems CIOs worry and that open source software solves. They think success will come from "80% of the capabilities for 20% of the cost" of their closed source competitors. I don't believe any of it. CIOs worry about being beat up by the business side and greasing the squeaky wheel. The two highest costs in a data center are people and energy, not licenses or maintenance agreements. Implementation costs: hardware, software licenses, personnel and training, are spread out over three to five years with appropriate tax implications. For really large projects such as a full ERP or data warehouse, there is at least a ten year life expectancy. Why do you think that there are so many mainframes and COBOL applications still around? The implementation costs were written-off long ago, and the on-going support costs are minimal because they still JUST WORK. Those with an eye to economics are more concerned about the total cost of ownership over the complete 10-year lifecycle of a capital project, than with the 10% or less of those costs that go towards initial software licenses.

So, if the only way for open source vendors to become big players, or as one CIO put it, to "move out of the junior varsity", is to look like the big players, to provide pre-sales engineering and collateral beyond a T-shirt, then what will this do the business model and the belief in "20% of the cost"? It will destroy it. This is why there are more openings for sales & marketing than for engineers at open source companies today.

Open Source Vendors will grow and evolve and come to operate more and more like the big players they're destined to become. As long as they continue to adhere to their form of the open source philosophy, are internally consistent and true to the logic of their open source framework, they'll continue to benefit from the true value of open source: flexibility and community knowledge to a greater degree than can be achieved by any closed-source vendor or any isolated, enterprise data center with home-grown solutions. Speaking of which…

Open Source is the Middling Ground between Build vs Buy

This is another point I've been hammering for years. Traditionally, IT shops were either build or buy. The build shops were very development oriented and created custom solutions to implement business processes and support business users. The buy shops bought COTS software, and either convinced the business that the software they bought implemented industry best practices, or spent millions of dollars in customization.

Build shops suffer from isolation and the total burden of maintaining and updating the software they built. When the only developer left who remembers and understands the code, retires, faith often becomes the best practice for ongoing support.

Buy shops suffer from ongoing dependancy on the vendor(s) and ongoing compromises for the users.

Build shops should be (but often aren't) more flexible to respond to changing business needs, and can be more valuable to the business.

Buy shops can be more reliable and cost-effective - really. But not always.

One result of Y2K [remember that?] was that most IT departments became much more of a blend of build and buy, with buy decisions winning out. Coupling this with the facilitation of distributed workgroups made possible by the Internet expanding world wide, and offsourcing [outsourcing operations to offshore companies] decimated many corporate data centers by solving the personnel and energy cost problems. Guess what? Implementation and licensing and maintenance costs remain the same. Some CIOs use offsourcing as the reason that they don't use open source; the outsourced vendor isn't familiar with it, and has no incentive to use it.

As companies bring IT back inside, and as its importance to the business is once again realized, open source offers a third path to the traditional build or buy. However, offsourcing will still be a substantial part of the solution, and should lead OSVs to recognize the importance of offsourcing vendors and embrace them as partners and very important channels.

The IT shop that responds to the business using open source can be both flexible and well-supported. The open source vendors that make such IT shops succeed through flexibility and reliability will be the most successful ones. This can be achieved through the OSVs growing their support, professional services and training organizations, or by partnering with all sizes of PS, VAR and outsourcing firms, or both.

Conclusions

The real conclusion is that bringing the open source philosophy to fruition in business is still an evolving process. The advantages gained by the openness of the source and the strength of the community is being recognized by both the IT shops and the OSVs. While there are cost savings to be had, OSVs need to stop relying on initial licensing cost reductions as their main selling point, and begin to market the advantages to the IT shop of using open source: responsiveness to changing business needs and increasing reliability over time, all while providing the best TCO and ROI.

There's a lot more to be said on all of these topics and opinions, and maybe I'll even get the time do so.