Innovative, rapid and cost-effective development and market share expansion are leading an increasing number of software vendors to incorporate open source, both as a technology and a business strategy, into their organizations.
Respected industry analysts agree that incorporating open source into a development model holds the future for software, because it ‘de-risks’ software acquisition and offers unprecedented flexibility. Global analyst firm Gartner notes that open source software deployments are now growing rapidly at the expense of proprietary software projects. In the firm’s recent survey, the proportion of proprietary software in use by enterprises was projected to drop to 45 percent, while open source software was forecast to rise to 27 percent over the next budget year.
It is no coincidence that stalwarts of proprietary software, most notably Oracle and Microsoft, are now making huge strides in the direction of open source. Clearly, they see this as pivotal to their long-term survival.
What is involved in making the transition to an open source model? What are the commercial implications of opening up your software, particularly if you are a traditional, proprietary software vendor? Below are some best practices and benefits for companies looking to incorporate open source into their business strategy:
1. Less haste, more speed: Be prepared to run the new open source business in parallel with your existing operations for a suitable period, allowing for a gradual cultural adjustment both internally and externally.
2. Seek external expertise: Seek advice but be prepared to filter it, as appropriate to your own business.
3. Create your own strategy: Research different open source platforms and communities thoroughly to ensure you find the right business fit. Considerations include the type of product you are promoting, the likely fit with the existing community, and crucially, whether the licensing terms provide ample scope to commercialize your product.
4. Community is king: Invest heavily in developing and supporting your open source community, in terms of your time as much as financially. Create a vibrant online community and manage and interact with it closely.
5. Evangelize open source first: Promote your open source foundation technology before extolling the virtues of any commercial offerings. This will be important in gaining credibility, trust and community buy-in.
6. Open source is not a business model: Consider how you will strike the balance between what you distribute for free and in open source, and how you will secure a profitable revenue stream. Consider putting features that fulfill common needs into open source distribution, then offering specialist enhancements at an additional charge. The open source user base then becomes your primary source of (highly qualified) sales leads.
7. Management and sales buy-in: Invest sufficient time in re-educating your sales and marketing teams on the differences of promoting open source. Be prepared to go back to basics, as they will need to understand the whole open source story so they can educate customers. In educating the business about the transition to open source, begin with management, so that buy-in is achieved at all levels.
8. Revisit your messaging: Be aware that your positioning and target decision-makers are very different now. A technical sales story will be at least as important as any business-value messaging.
9. Revisit your channels: Consider your channel strategy, as your ecosystem may need to look very different to work effectively. Think about how key partners will make money from the venture and how you can facilitate this.
10. Existing customers are king too: Finally, do not lose sight of your customer base, which will have understandable concerns about what all of this means for their investment in your technology. They may fear that the competitive edge they derived from your proprietary software to date is vulnerable. Make sure you have a strategy for managing and explaining how the new arrangement will work to allay such fears in your loyal install base.
Incorporating open source with best practices unlocks software vendors, and their customers, from expensive, proprietary technologies and sales processes. It helps to reduce sales cycles and the cost of sale by automatically pre-qualifying prospective paying customers. With open source, vendors can broaden technology adoption by allowing easy, free access to the core technology, encouraging much broader up-take with a self-serve evaluation and trial model (the idea being that they then come back to purchase enhancements, services and add-ons). Additionally, the technology can be adopted by a whole host of third parties and become embedded into, and integrated with, other solutions, expanding the market and bringing in additional revenue.
Incorporating open source can lower overall costs and arm software development companies with better access to cutting-edge development tools, techniques and resources to create innovative product functionality and speed time to market. The vast pool of technical experts and developers in many open source communities can often help to refine products. Open source enables adaptation in the development process to follow a more up-to-date model, facilitating distributed, collaborative development across company and geographical borders. This, in turn, allows for the use of offshore development facilities and exploration of alternative software delivery models, for example, based around software as a service.
Switching to open source lets companies break free of technology-specific skills crises and, instead, secure the technology’s and company’s future.
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