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Open Source - The Brave New World?

  • May 01 2005, 1:00am EDT
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During my consultations with end-user companies around the world, one of the most common topics of conversations today is that of open source. Everyone wants to know whether open source software is "ready," if it really provides a cheap alternative to endlessly paying software vendors, and what the drawbacks are. This article looks at these issues and others surrounding the controversial area of open source software.

The first problem is to decide what most people mean when they refer to open source software. There are various bodies and definitions already existing in the marketplace, but the common layman's view of open source is "free." This is not an unreasonable point of view - indeed, to many the concept is an extension of the shareware phenomenon that sprang up with the ubiquitous connectivity of the Internet. Software was made freely available by its author, others would modify or extend it, and the entire user community benefited.

In fact, most definitions center around the fact that open source software at least has an option of being offered with the source code, thereby enabling a user to make additions and extensions to that source code as desired. Exactly what the user is allowed to do with the source and any subsequent developments is usually guarded by some sort of license terms, but the principle behind most open source initiatives is that developments are fed back into the community.

However, in reality there are a wide variety of offerings in the market that claim to be open source. Some are definitely not free - there is a license charge, just as there would be for traditional, commercially available software. Often the providers will assert the license charge is much less than a commercial product would be, but there is a charge nevertheless. Other offerings claiming to be open source do not actually offer the source code, although in this case, they are often available for no charge.

Market Dynamics

In order to best understand open source, it is necessary to reflect on the dynamics of the open source market. Although people will argue about why the open source initiative originated, major drivers were certainly a general feeling that software costs too much and the technical pride that exists in almost all IT-skilled people. Shareware came about largely because programmers across the world wanted to "show off" their skill and ingenuity to others and indulge in a hobby they enjoyed. The same driver still lies beneath the surface of the open source initiative, although the more usually stated aim is to deliver more value at a fair price to the community as a whole. However, there is often an element of "taking on the big guys" as well.

One of the most popular areas for this type of community approach to software development is personal productivity tools such as browsers, mail systems, office tools and easy-to-use workstation-based databases. A major reason is that this area is naturally low-risk - that is, if the new software proves unsatisfactory, the area of impact is limited. Considering the example of browsers, Mozilla's Firefox has become extremely popular as an alternative to Microsoft's Internet Explorer (IE) and is used by many people worldwide. However, if a Windows user is unhappy with Firefox at any time, it is a simple matter to switch back to IE.

The open source initiative has not stopped at productivity tools. Perhaps one of the best examples is the Linux operating system. Linux as a desktop operating system can be regarded in a similar light to the productivity tools just mentioned, although, of course, to switch back from Linux to Windows would be a bigger job. However, Linux is now available on such systems as IBM mainframes and has, therefore, grown well beyond a mere productivity tool. Indeed, open source enthusiasts frequently look to an entire open source stack for personal and Web-based operations, adopting such concepts as the LOM (Linux, OpenOffice office tools and Mozilla browser) and LAMP (Linux, Apache Web server, mySQL database and Python scripting language) stacks.

The open source concept is now appearing in all sorts of market areas, including other system software areas such as application servers, application adapters and even application packages such as enterprise resource planning (ERP) and manufacturing resource planning (MRP) solutions.

Considering Solutions

With all these initiatives, is it time to jump to open source? The answer is, as always, it depends on what objectives the prospective buyer has. At the productivity tool level, the decision is generally less complex than at the more critical operating system and application areas. However, the same concerns generally apply across the board, although perhaps with less impact in the case of productivity tools.

The first suggestion I like to offer to companies asking about open source is to try to understand how the particular market under consideration works. Although in the world of desktop productivity and enjoyment, it may make perfect sense to share developments with one another based on excitement and pride in one's own achievements, commercial businesses operate somewhat differently. In this world, it must be assumed that no one is purely philanthropic. In common terms, the question to ask is "What's in it for them?"

If a company or a consortium is making available an open source version of a database, a software package or an operating system, quite possibly without any license charge, why would they do this? What do they get out of it? One reason this is such an important question is that unless this is understood, it is impossible to judge how likely it is that the offering will have any longevity or vitality. Who is going to support and/or update the technology?

This touches on one of the first things that can bite companies that have elected to adopt an open source option. The software may be free, but documentation, advice, pre- and post-sale support and maintenance will almost certainly cost. Many companies supporting the open source initiative will be doing so in the hope that because the software is free, it will achieve rapid penetration, and they can then sell ancillary products and services to the marketplace just created.

Then there is the question of what happens next. Once a company becomes wedded to the new software, who will be carrying out the work to improve the software, exploit new technological advances and respond to user requirements? Obviously, if the buyer receives the source as part of the open source package, then it could take on these responsibilities itself. However, the cost will now need to be borne solely by the buyer unless other buyers are prepared to share their own work - and why would they? There may be altruistic companies that are prepared to share their own developments with other users, but the more critical the area addressed by the open source software, the less likely this is to be the case. After all, if a company has achieved better competitiveness by building an addition to an open source MRP package that yields a reduction in product order time, would it really want to share this with competitors?

Maybe the original backers of the open source technology in question will continue to invest in ongoing developments - but again, what is their incentive to do so? If it is already gaining enough penetration to open a market for selling add-ons and support, then what is to be gained by increasing the investment in the base technology? There may, of course, be answers to these questions. In the case of Linux, for instance, IBM has decided that Linux is a key part of its overall strategy and has consequently pumped millions of dollars into developing, enhancing and promoting it. Given this investment, it seems extremely unlikely that IBM would allow Linux to fail or wither; therefore, in the case of Linux, the concerns over the future vitality of the technology or the availability of support for it may well be non-issues.

Looking Ahead

Open source has become well-established in some areas already, while other areas still require extreme caution. However, are there business areas where continued focus will deliver even more open source benefits to end-user companies worldwide?

One area that is emerging as a strong business driver for open source is application packages that play key roles in business operations. This may seem to fly in the face of the previous discussions, but, in fact, careful consideration has resulted in a realization that open source can indeed have a part to play here. While companies are reluctant to remove possible differentiation, there is a general acceptance that some operational functionality is almost standard - that is, it is common to all implementations. For example, within an ERP package, there is a set of functions that are basic and provide no differentiation between packages or implementations.

However, there are also always areas that require installation-specific functionality. A manufacturing company may be using a standard MRP package, for instance, but have a specialized shop floor application that needs to be integrated with the MRP system. Placing support for this application as a requirement on the MRP package vendor is unlikely to provide much success unless this is a widely used package - the MRP vendor would not see the support as being either high priority or commercially viable unless possibly the company concerned was General Motors. Therefore, particularly for the small- and medium-sized companies whose buyer leverage is very limited, it may well be necessary for tailored implementations to be put in place.

If the package vendor doesn't offer many customization exits and interfaces, this tailoring will be extremely difficult. This, of course, is where the open source concept comes in. If the business package were available as open source, individual companies could develop their own modifications for specialized requirements without needing to depend on the goodwill of a large package vendor. As long as the open source package is limited to the subset of functionality that the business segment would regard as being standard and not an area of differentiation, it could be in the interests of the business community as a whole.

This has led to the establishment of a number of open source initiatives, such as OpenPro, OpenMFG and Compiere, focused on delivering these basic business packages in an open source fashion, thereby allowing companies the flexibility to customize them as required. Although some of these initiatives are levying a license fee of some sort on prospective users, the economics are still extremely attractive when compared to commercially available options.

A potential adopter of an open source solution should be careful to understand the full costs associated with the project, rather than just the license fee position, and needs to be comfortable about who or what is driving the particular initiative and the implications this has on business risk. However, there is no doubt that in some situations, the appeal of open source is strong, based both on availability and flexibility for future developments. In general terms, it is likely that while open source productivity aids may become widespread across all companies, fundamental open source initiatives more closely related to the area of business operations are likely to initially prove most attractive to the small- and medium-sized enterprise (SME) marketplace. However, the key is to look for initiatives where there is significant backing from the community as whole, preferably with a strong and reliable commitment from at least one rich backer, and where the motivations of the various players are clear.

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