Do Enterprises care whether it is really Open Source?

There’s a pretty stable definition out there what Open Source software is all about and what license models should allow for and what not. Despite of that Enterprises seem not to care too much about this.For many enterprise using Open Source support and services are more important than the true nature of software, it seems. Often the prefer the commercially licensed product with the attached subscriptions to be on the safe side. But this can mean that the software they use isn’t Open Source at all and that changes and modifications they do might not even belong them.A lot of Open Source software today is consumed as Software as a Services (SaaS). In this case nobody – cares whether the software that is the basis of the application is Open Source or not. And this makes sense, because in this case a service is purchased not a software.Many customers also buy appliances instead of – software and hardware separately. Again, nobody needs to worry about what’s in the box, it’s purchased as an integral product.And, when Enterprises buy commercial software products, a lot of it today is assembled from Open Source components. But there is no need to care about this as what companies buy is the packaged software.So, four cases, but only in one of them the nature of the software is critical. There hasn’t been enough push back from Enterprises to force commercial open source companies to come up with Open Source compliant commercial license models. Some of the problems can be resolved in individual negotiations, but that’s cumbersome. So, what would be preferrable are license models that allow the commercial software company to make money while protecting as much of the Open Source nature of the base software. Let’s see what new models we’ll see over the next months and years.

Open source business solutions very active on SourceForge

-I just reviewed the list of the most active projects on Sourceforge.net during March 2009. It’s quite telling.Of the top 12 five of the projects are business solutions. You find the usual suspects like OpenBravo ERP or ADempiere, but there are also less known representatives of this category such as PostBooks ERP, WebERP or OrangeHRM. For the other seven projects it can be said that it’s the usual mix of tools, gaming components and frameworks.Here’s the list of the top 12 projects:1. Notepad++ (editor, tool)2. Openbravo ERP (business solution, ERP)3. ADempiere ERP Business Suite (business solution, ERP/CRM)4. ZK – Simply Ajax and Mobile (Ajax Java framework)5. Zenoss Core – Enterprise IT Monitoring (Infrastructure, monitoring tool)6. MediaInfo (tool/component, reads meta data from multimedia files)7. PostBooks ERP, accounting, CRM by xTuple (business solution, ERP/CRM package)8. Mumble (tool/component for gaming)9. phpMyAdmin (infrastructure, tool to manage MySQL databases)10. ffdshow tryouts (tool/component to view multimedia files)11. webERP web-based ERP -Accounting (business solution)12. OrangeHRM – Human Resource Management (business solution)Activity isn’t the best indicator for Enterprise Readiness, but it certainly displays the traction of a project and to a certain extent the ability to survive. So it’s a good idea to look at the activity ranking of software deployed in enterprise IT.

Are successful commercial open source vendors a safe bet?

When enterprises are selecting a technology to implement, one criteria is whether the technology and the company behind have a good chance to survive. So, what about commercial open source vendors such as SugarCRM or Alfresco? There are usually three exit scenarios for these vendors, going public, being acquired or folding. Let’s forget the third scenario for now. If commercial open source vendors go public (especially during these days) then that’s a good news and a sign for a strong track record. If a commercial open source company is being acquired then this is probably good news too. In most of the cases these companies are bought for the technology, not the customer base. So the risk, that the product is going to disappear is fairly small, most likely the technology is going to survive. Conclusion, picking a strong commercially oriented open source vendor is in most cases a good choice and probably more future proof than picking a traditional commercial product coming even from the largest vendors.

Updated German language Open Source catalogue published

New German language Open Source CatalogueFor our German reading audience we have updated the “Open Source Catalogue” that was published last time in December 2008 as PDF. It can be downloaded on a new site that will host the German language catalogue going forward. The new version of the catalogue shows some 40 changed projects and also the latest additions already published on EOS Directory. For the time being we haven’t planned to published an English version as we assume that English speaking people are happy enough with the online site. Should there be other oppinions around then we are happy to hear them.

Open Source lowers the cost for all industries

There have been many debates on whether enterprises can lower their IT cost using Open Source. As we learned it depends on the situation and the case. Does this mean that the cost argument for Open Source is a lost case? Not at all! It’s just that the thought to start with the enterprise is missing the point.In reality Open Source is has changed the IT industry. Not just the software product business but also the services business. Open Source has been instrumental in lowering IT cost on a macroeconomical level. Take these examples:

  • SaaS (software as a service) is changing the way we do IT and has lowered the cost and time scale for setting up new applications and functionalities drastically.
  • Cloud computing allows to run applications at a fraction of the cost compared to the past. Open Source plays a key role here.
  • Most software producers today leverage Open Source components,Open Source software management tools, testing tools, collaboration tools, etc. to be able to produce new releases in less time and finally at a lower cost. Some of these gains are transfered to the buyer who can acquire software at lower prices.
  • System integrators are profiting of a large range of tools, frameworks, technologies out of the Open Source portfolio. This allows them to be more productive and to have lower internal costs. Again,a big share of these improvements are resulting in lower project prices or daily rates.
  • The competition between Open Source and proprietary commercial software products has forced the vendors to lower their prices and to even give away entry level products.
  • The list could go on for quite some time.

Open Source has influenced and impacted all the “players” in the IT world, be it buyers/users, producers, integrators and other service providers. The real economical impact of Open Source probably can’t be estimated easily but certainly goes into the billions of USD and higher. There is of course also a bit of an offsetting factor to be considered, as some/many of the contributions to Open Source projects are paid by the same players mentioned before. But as always you could ask the question – what would these people have done otherwise?

The financial value of Open Source

What’s the cumulated financial value of the today existing open source code base? It’s a big number, for sure. If you take published numbers and multiply them in a simple exercise, you might come close to the truth. Blackduck claims to have indexed a couple of billions of lines of code in its repository. Assuming they only index 70% (they mention 185’000 projects) and “a couple” is “5” then we might end up with 7 to 10 billion lines of code. If we multiply this with the estimated value (or cost to develop) of one line of code (let’s take 15 USD for the exercise here), we end up with a total value of USD 100 to 150 billion. What is interesting here is that only a little piece of this is funded by Venture Capital (the 451 Chaos blog mentioned 2.95 billion USD total investment (and most of it goes into marketing and sales, rather than into product development) until today), so where is the rest coming from? I would assume that some of it comes from enterprises and large organizations, but this is probably max 20-30% of it. The bigger share actually comes from individuals and small companies, people either sharing what they have done with a social idea behind or planning to build or extend a business around it.Another interesting question is whether these “investments” will go up or down during the tough times we are going through. I actually think they are likely to increase because of two reasons. First, there’s a lot of development capacity available in large companies, but little money to spend for buying software. Companies are trying to keep their staff busy, so it’s well possible that they invest in some piece of software and share it with others. Secondly small companies will suffer of less demand from their customers, they will have time available to invest into the future. As the open source approach has proven to be a good vehicle to publish and market software, many will take this route.What does this mean for all of us? Well, yes, we can expect more good software coming from the Open Source world and the innovation will continue.

Planning to redesign and improve EOS Directory – need your input!

After almost one and a half years of existence, it’s time to think about a redesign of EOS Directory. – Not only feels the current design a bit old fashioned, there are also a number of usability aspects to be corrected. And not all the functionalities and features were really – successful.We would of course appreciate input and feedback when – going for the redesign. So if you have good ideas on how to make EOS Directory more effective for you, then please drop us an email to eos@optaros.com.We already have some ideas. Looking at the analytics for example it seems that more than 76% of all the users are having a browser with at least 1280 pixels in the horizontal, no need therefore to focus on 1024. We have even seen quite a significant number of people with more than 3000 pixels! There are few people with iPhones and the likes, but if we can easily do it, we will prepare a specially rendered access for small devices.The focus in the redesign will be put on a more useful directory section while we will also improve the content around what makes Open Source enterprise ready. – We certainly will simplify the forum section and try to make user input simpler. We plan to add a newsletter and a project specific alert function. – We would also like to integrate some external data (e.g. ohloh, sourceforge and the likes) if possible.But again, if you have good and implementable ideas, don’t hesitate to send us an email. – Thanks for your contribution

Is Open Source more cost effective? Is Alfresco 96% cheaper than Sharepoint, Documentum or OpenText?

My colleague Jeff Potts analyzed a recent white paper coming from Alfresco, comparing the cost of Open Source versus Proprietary solution. According to Jeff, this is a good read. Here’s his assessment:If you are evaluating ECM solutions, particularly if you are interested in cost, you need to take a look at Alfresco’s TCO Whitepaper. In it, Alfresco uses licensing numbers they snagged from the United States government to compare the first year costs of their solution with EMC/Documentum, OpenText, and Sharepoint.When the whitepaper came to my attention, I expected it to be Marketing hype, full of soft numbers and exaggerated claims. While readers must take the paper with a grain of salt considering the obvious bias of the source, Alfresco does a good job of avoiding Marketing speak for the most part and simply laying out the facts. The whitepaper shows line item detail for licensing and support for the first year. If you want to include supporting infrastructure (OS, application server, database) in your analysis those are provided for you as well.The paper shows that for document management plus collaboration and integration with SharePoint, you’d have to pay EMC/Documentum $863,937.98 for a 1000 user configuration as opposed to $318,738 for SharePoint and $33,500 for Alfresco for similarly-sized systems with equivalent functionality. Those numbers exclude the supporting infrastructure software.So what’s the fine print? Here are some considerations…The numbers Alfresco used are from a government price list. It isn’t clear to me whether those numbers are “list” or are a negotiated, reduced rate, but from my past experience with Documentum, I’d say they are closer to list. I don’t think it is likely that anyone would actually pay $800k for a 1000-user Documentum system. Even if you were to negotiate 50% off of those numbers, though, the difference is still significant.A portion of the “first year’s cost” is maintenance and that recurs every year. For Alfresco you are only paying for maintenance, so the entire $33.5k will be due every year. Using the numbers from the whitepaper your Documentum maintenance bill would be about $115k every year. I think in all cases, the maintenance is probably understated for what typical clients will pay because most will want “top shelf” SLA’s. The numbers used here are for lower levels of service.The legacy vendors have 1000’s of product configuration options. The line items Alfresco chose to include for the Documentum configuration look roughly right, but with so many options you can’t say with certainty that what’s listed is what everyone who needs a 1000-user document management system built with Documentum will use. So tweak the table using the quote your vendor gave you and come to your own conclusions.Alfresco showed a 2-CPU configuration for their 1000-user config priced at $33,500 which included a test server. Then they showed a “high availability” config with a $9,250 up-charge. But they didn’t double the procs. If you’re going to be HA, you’ll need at least two of everything. While they did double the test server procs, they didn’t double the production server procs so the HA version of the 1000-user config should be more like $76,250, in my opinion. Incidentally, it isn’t clear to me what you get for that extra $9,250. I have an open question with the Alfresco folks to clarify both issues.What about services? Honestly, it’s usually a wash. There are things you can get done faster because you can see the source code but there are other things you may end up spending more time on. When it comes to services, the primary value of open source is in the ability to spend less on the software and still end up getting something closer to what you actually need through customizations (See “Why Open Source?”).Obviously, big decisions like this should never be made on cost alone. Documentum, FileNet, SharePoint, and Alfresco aren’t perfectly interchangeable. You still have to figure out which one is a better fit for you along all sorts of dimensions. But the stark analysis Alfresco is providing is likely to get a lot of attention from buyers who are particularly price-sensitive in today’s market.

Can open source companies be successful in 2009 and 2010?

A recent blog entry by John Bennett posted the question, whether many open source vendors will continue to struggle, and some well-known vendors will shut down. This triggered some thinking on my side, as I hadn’t thought about this recently.The question on whether companies can make money with open source has been discussed broadly and lengthy. And yes, there are many good examples of companies being able to make money and attract investors. We all know RedHat, JBoss, MySQL, SugarCRM, Alfresco, MuleSource to name just a few. Well, we do not know exactly how much money they are making, with the exception of RedHat of course. Many so called successful open source company actually just made money by selling the company. Obviously it takes more than a couple of developers, ideally working for free, and a good idea to come up with a convincing business model. And the current recession will even more clearly point out who the winners and who the loosers are. What is clear is that pure services revenue don’t drive very high margins and don’t create the interesting multiples VCs are hot on. What is also clear is that combining the open source and the proprietary software product model is a challenge. And, what we have learned the hard way is that sales and marketing is expensive and difficult to get right, even if we leverage all the cleverness of modern marketing 2.0 techniques. So, stay tuned. In 2009 and 2010 we will most probably see a major shakeout in this space. Only the strong ones will survive, not that different to other markets.

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