Given the momentum behind open source, and how it has grown through the economic downturn, it's not surprising that more and more vendors are getting involved to commercialize open-source projects. What is perhaps surprising, however, is how early in the open-source project lifecycle that commercialization is emerging, as Gartner indicates in a December 2008 report ("Predicts 2009: The Evolving Open-Source Software Model").
Gartner suggests that by 2012, "50% of direct commercial revenue attributed to open-source products or services will come from projects under a single vendor's patronage." What this means, however, is open to interpretation.
Here's Gartner's:
Driven by expanding mainstream IT adoption, open-source usage profiles are shifting to more-conservative, risk-versus-reward dynamics. As a result, new adopters now place an increasing premium on commercial support channels to establish service-level agreements on par with closed-source alternatives.
In response to commercial open-source demand, many new projects are being commercialized early in their maturity phases--often by a dot-com startup, and before a broad community "network effect" is firmly established. These projects are often under the patronage (if not authoritative control) of a single vendor that employs nearly (if not entirely) all key code contributors.
While Gartner suggests that this trend will lead to cost parity with proprietary solutions 50 percent of the time, the facts don't bear out this assertion. For example, Forrester finds that 87 percent of enterprises surveyed reduced costs through open source.
In part, this is due to commercial open-source vendors charging dramatically less than their proprietary peers. We can pass on sales and marketing cost savings in the form of maintenance savings.
It would be nice to discount this cost savings as transitory--a near-term phenomenon that dissipates once vendors control open-source projects--or related to community-based open source. But Forrester's Jeffrey Hammond, supported by IT executives from Virgin Mobile and San Francisco International Airport, argued at OSCON in July that open source, commercial or community-based, saves money in deployment costs, acquisition costs, and ongoing maintenance costs (if any).
Pixie dust comes and goes
Still, Gartner has a point. It's true that there are trade-offs that come with commercialization of open-source projects. Some of the magic pixie dust arguably evaporates when a company is behind a project.
But other "magic pixie dust" appears. Polish. Documentation. Enterprise acceptance. And more.
Was Linux hurt by Red Hat's involvement? Hardly. Linux has thrived in tandem with Red Hat's prominent role in developing the Linux kernel.
For those that think community-based support is the way to go, consider CentOS, a clone of Red Hat Enteprrise Linux. CentOS recently had its leader go AWOL. While the situation was eventually resolved, a serious vendor like Red Hat mitigates the vagaries of community whims, like Red Hat's Alan Cox deciding to stop working on tty development.
But it's not just Linux. Is Drupal adversely affected by Acquia? Lucene/Solr by Lucid Imagination? MySQL by MySQL? Jasper Reports by JasperSoft? And so on.
In every case, I'd argue that the projects have been significantly blessed by vendor involvement, not cursed. There are downsides to company involvement, but those are primarily the vendor's issues, not the customer's.
Regardless, Gartner is right to highlight the significant benefits of open source that transcend price tags.
Adopters will continue to receive benefits from open-source solutions, but these benefits will be increasingly realized by advantages in investment protection, innovation and technology alignments, rather than by simple cost savings alone.
Forrester, too, called this out at OSCON, articulating that while many companies adopt open source to save money, and do, they discover a myriad of other benefits along the way. Increased flexibility, higher quality, and more.
(Credit:
Forrester)
For example, the U.S. Federal Aviation Administration argues that "Being able to look at source code is a huge benefit, instead of just getting a black-box executable we can't even look at....[I]t's always nice to be able to modify something on our own. We count on [open-source vendor] Progress to do the heavy lifting, but we do keep our own options open." The FAA depends on Progress, without being dependent on Progress, and gets a great deal of benefit from both the open-source software and the open-source vendor.
I'll buy that. Frankly, whether it ultimately costs me more or less is somewhat immaterial. I don't buy Macs because they're cheaper. I buy them because they're better. In like manner, I buy open-source products because they are often much better, in several ways, than proprietary alternatives. Not always, but often enough that if you're not at least considering open-source alternatives, you're missing out.
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For years, the analyst community has largely ignored open source or, worse, has actively advised against it. While there are exceptions--Forrester, The 451 Group, Redmonk--the general mood in the analyst community seems to be one of steadfast denial of open-source's impact on computing.
Ignoring open source is a bit like denying gravity, however, and even open-source agnostics like IDC and Gartner are now stating the obvious:
Open source is having a massive impact on enterprise computing, and it's becoming big business.
IDC, for example, significantly revised upward its estimate of the market size for open-source solutions, now projecting a 22.4 percent compound annual growth rate (CAGR) to hit $8.1 billion by 2013. The firm suggests that the revision is due to the surprising growth of open source through the economic downturn. It's unclear why this should have been a surprise, especially given that it was already calling out Linux as a big winner in the recession but...we'll take it.
Gartner, for its part, started warming up to open source in 2008 when its conversations with chief information officers revealed 85 percent enterprise penetration. In 2007 the closest it came to recognizing open source's impact was to suggest that open-source solutions would cannibalize proprietary software products.
But now it has done the unthinkable: it has actually included an open-source vendor (GroundWork) in its Magic Quadrant, and in a positive way.
Gartner Magic Quadrant for IT Event Correlation and Analysis
(Credit: Gartner)Granted, Gartner has included open source before (e.g., Liferay has featured in two Magic Quadrants), but it has also ignored obvious candidates, as it did in the business intelligence market.
This is positive movement from Gartner and reflects a new pragmatism. I consider Forrester a leading indicator--at least, among the big analyst firms--of where technology is going, and its open-source predictions bear this out. Gartner and IDC tend to be lagging indicators of technology adoption.
The good news? For open source, leading and lagging indicators now say the same thing: "Open source is having a major impact on computing and will continue to shake up the industry."
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Open source delivers significant cost savings, and the market is taking notice: IDC has significantly revised upwards its estimates of global revenue from open-source software. IDC now expects worldwide open-source revenue to grow at a 22.4 percent compound annual growth rate to top $8.1 billion by 2013.
That's a lot of money for free stuff.
The reasons, as I wrote on Wednesday, are clear: open source delivers increased flexibility, improved performance, vendor independence, and, yes, cost savings. According to Computerworld UK, London Paper reports saving 66 percent by using an open-source CMS (Drupal). The Gap, meanwhile, dumped Windows for Red Hat offerings to save money and improve platform flexibility.
Open source: it's what the smart CIOs are using.
But you don't have to take my word for it. Sigurd Magnusson, co-founder of open-source Web content management company SilverStripe, recorded the "Beyond the Hype: The True Costs of Open Source" session at OSCON last week, which he has graciously shared here:
So, yes, you could waste your IT budget on expensive, "sustaining innovations" from old-school vendors. Or you could buy best-of-breed open-source solutions at 10 percent of the cost.
It's your money, after all. Well, unless you give it all to your vendor.
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Talk to any open-source vendor (myself included), and we'll tell you that there's a lot of money to be saved by dropping your proprietary software in favor of open-source alternatives. But is that always the case? And, if so, what are the necessary preconditions for saving money?
I chaired a panel at OSCON 2009 where we explored this topic, with some interesting results.
Jeffrey Hammond, a senior analyst with Forrester, provided the underlying data, but Matt Deuel (Virgin Mobile) and Barry Klawans (San Francisco International Airport, IT&T Department) offered real-world experience deploying open-source software, while Zack Urlocker (MySQL/Sun/Oracle) highlighted the balance open-source vendors must strike when working with customers and communities.
Hammond noted that in the rush to save money, CIOs are increasingly turning to open source, though often "open source" isn't the end goal, per se, but rather it's a natural road to vendor independence, IT flexibility, and other goals.
Hence, while we see increased interest in open source, that interest doesn't adequately measure just how pervasive open source has become:
(Credit:
Forrester Research)
Even so, Virgin Mobile's Deuel and SFO's Klawans both reported savings of 80 percent or better with open-source solutions, this despite ongoing maintenance/subscription costs, higher salaries for qualified developers/architects, etc.
In fact, a full 87 percent of companies surveyed by Forrester in a 2008 report indicated that they reduced costs using open source.
Why? Or, perhaps more appropriately, where?
Yes, there is the obvious fact that open-source software comes with a $0.00 license charge, which cost savings can be significant.
But while Microsoft and Oracle duke it out over price increases on licensing, there are far better ways to save money than just reducing license fees, according to the panel.
One way, as Urlocker points out on his blog, is that open source allows enterprise IT projects to succeed or fail with little risk. You know before you pay anything--if you pay anything--that open-source software is going to work, or not.
Klawans suggested that particularly in this economy, he has more people than budget, which makes investing in open source a great idea, because he can use those people to trial and deploy open source rather than consume demos and slideware from vendors.
But there's a much deeper point, and it's something that is often overlooked:
Open source tends to offer best-of-breed solutions that aim to do a limited range of functions well, rather than to be all things to all people.
Indeed, it is this desire to get the core right that enables open source to be all things to all people, because enterprise IT can take an open-source solution that might be 85 percent of what it needs, and spend some time and consulting dollars to custom-fit the software.
Hence, customers can spend less money to get exactly what they want, rather than buying into a vendor's bloatware, which is bloated precisely to justify the upfront license fees ("Look at all this stuff we're selling you!") and ongoing maintenance fees ("Even more stuff we're selling you!").
And because buyers are not locked into a vendor at the code level--though there is always a certain amount of lock-in that derives from committing to a particular software choice, be it open source or proprietary--enterprise IT buyers remain more agile, able to proactively save money rather than slavishly paying into a vendor's most profitable (and arguably least valuable to the customer) maintenance revenue stream.
In summary, yes, open source can save your company money. Lots of money. But often those cost savings materialize in unexpected areas, rather than simply by saving on license fees.
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The market is clearly racing toward a bottom when we start looking to Monty Python for business advice and the most lucid (if profane) analysis of Google's announced open-source operating system, Chrome OS, comes from Fake Steve Jobs.
At least, not according to a survey of 200 IT executives by Computer Economics, which finds:
- About 49 percent of the IT executives surveyed plan to make further budget cuts in 2009.
- Almost 50 percent will spend less than what is allocated in their IT operational budget.
Not good, right? Well, it gets worse...
Forrester and Gartner are duking it out to see who can be gloomiest in their assessment of 2009 IT spending, as Baseline reports. Gartner sees global IT spending dropping 6 percent from 2008, while Forrester one-ups Gartner with a projected 10.6 percent decline. (Forrester had earlier projected a 3 percent dip for 2009.)
Actually, the economy being as rotten as it is, some companies are going against the economic grain by offering compelling open-source alternatives to traditional, proprietary software, as reported Wednesday. And it's intriguing to watch companies like Lockheed Martin get into open source as a way to shift costs and improve development of their software.
Yes, there are still open-source holdouts like Orange UK which has allegedly banned Firefox and anything more modern than Internet Explorer 6 from its call centers. The company is still accepting smoke signals as a form of communication, so we're trying to get the message through that open source can drive down costs and improve productivity.
That's OK. According to Forrester analyst Jeffrey Hammond, open source is "infiltrating the enterprise" on a grand scale now. What starts out as an interest in penny pinching turns into something much more, he says.
So, while I'm not cheering for ever-gloomier forecasts of IT spending, I will admit that I like the result: more open-source adoption.
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If you walk into the headquarters of open-source leader Red Hat, you'll see this quote from Mahatma Gandhi gracing the wall:
First they ignore you,
then they laugh at you,
then they fight you,
then you win.
It's a poignant reminder to Red Hat employees that Wednesday's ridicule of open source has shifted to a market that seemingly can't embrace open source fast enough.
Forrester Research has crafted its own "Five Stages of Open Source Adoption," as published recently in the May 15, 2009, edition of SD Times, which roughly follows the same pattern of doubt-giving-way-to-adoption that Gandhi suggested:
5 Stages of Open-source Adoption
(Credit: Forrester (via SD Times))I occasionally get requests from IT people as to how they can bring more open source within their organizations. My answer? It depends on what "stage" your company is at.
But one thing is clear: the adoption will happen. As with Gandhi's nonviolent resistance, open source has managed widespread adoption without ugly confrontation, for the most part. Open source doesn't need the CIO's approval. It just has to work.
Indeed, borrowing from the Gandhi idea, open source has won. Open source increasingly finds itself in virtually all software, open source or proprietary.
Now it's just a question of how much--and how, as The 451 Group points out--that victory will pay to its proponents.
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Open source has become big business, suggests an article in the Investors Business Daily, but it has done so by becoming more like the proprietary-software world it purports to leave behind.
The article cites recent research from IDC indicating that CIOs allocated up to 24 percent of their budgets to open-source software in 2008, up from 10 percent in 2007--a finding that jibes with recent data from Forrester. This open-source growth is propelling Red Hat to grow "at two to three times the rate of the broader software industry over a multiyear horizon," according to research from Piper Jaffray.
Red Hat is an example of "free done right," following analysis from TechDirt. We've moved beyond the business models that insist that every line of software be open source: they couldn't scale and tended to treat openness as an end in and of itself, rather than as a means to an end.
Today, if you look at the most successful open-source businesses, none of them pass the ideologues' unrealistic and counterproductive "100-percent freedom" litmus test. Not a single one of them.
And that's OK. Google does a tremendous amount of good in the open-source world, yet took a beating last week for not being open source "enough" on the Open Source Initiative's osi-discuss mailing list. Google's open-source program manager, Chris DiBona, responded:
Yes, I can see how people would think that Android and Chrome aren't 'real' open source. *rolls eyes* Damn foolish assertion, if you ask me.
DiBona is right to refuse to be goaded into a walk down an inaccurate and ill-conceived open-source memory lane. That "give-away-the-software-and-sell-support" model was always doomed to scale poorly and consign its adherents to minimal relevance to the wider software market.
Fortunately, the software industry has been embracing a broader definition for "open-source business" that includes many different ways to contribute to and profit from this interesting development and distribution model.
Those who persist in trying to shove the genie back into a crippled container are doomed to fail.
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It used to be so easy to be a proprietary-software vendor.
That is, until the open-source neighbors moved in. As noted in a Gartner analysis from late last year, proprietary software is on the wane within enterprises while open source is gaining:
Open source gaining at proprietary's expense
(Credit: Gartner)That's not the sort of chart that Microsoft CEO Steve Ballmer likes to wake up to, but it's a message to which CIOs are increasingly warming.
The reason? Well, cost is the primary driver for open-source consideration, as a recent Forrester report suggests, but what is most significant is the overwhelmingly positive experience CIOs are having with open source, as this same Forrester report suggests.
Consider the following responses to the question, "How has open-source software met your organization's expectations in the following areas?":
- Reduced costs...87 percent (met or exceeded expectations).
- Improved quality...92 percent.
- Eased integration and customization...86 percent.
- Quickened the pace of innovation...82 percent.
- Improved support...84 percent.
- Standards compliance...91 percent.
- Decreased time to market...82 percent.
These are numbers that money can't buy. In fact, the open-source world is giving them away...literally.
Open-source software isn't perfect, and its quality varies widely, just as in the proprietary-software world. But unlike proprietary software, open source actively de-risks the IT purchasing decision by enabling you to try before you buy, buy on subscription (i.e., no long-term commitment), and pay a lot less for equal or greater value.
Small wonder, then, that CIOs are voting with their wallets, buying into open source while cutting investments in proprietary software.
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Recent survey data compiled by Forrester Consulting on behalf of information systems specialist Bull suggests that we're at the front end of a long cycle of open-source infrastructure and application adoption.
That's right. Despite Gartner finding that 85 percent of enterprises have already adopted open source and Forrester Research's consulting arm finding that 45 percent of all companies that are using open-source software use it for mission-critical applications, the adoption appears to be somewhat thin, leaving a great deal of room for even more adoption, especially in open-source applications:
Huge swaths of the market have apparently adopted open-source infrastructure like the Linux operating system, JBoss application server, MySQL and PostgreSQL databases, and other open-source systems:
Open-source Infrastructure Adoption, 2008
(Credit: Forrester Research)But the bigger and longer-term opportunity appears to be in open-source applications, which have only lightly been adopted, according to the survey:
Open-source Application Adoption, 2008
(Credit: Forrester Research)Red Hat has built a $650 million business by selling support for Linux and JBoss, a business that continues to grow and thrive. This, however, is a tiny tip of an enormous $222 billion enterprise software iceberg, with enterprise applications making up a huge chunk of that iceberg.
In other words, Red Hat demonstrates that open source can compete effectively in the enterprise, and the enterprise clearly has a lot more room in which open-source vendors, and perhaps particularly open-source application vendors, can grow.
Even better, the recession is forcing many IT buyers to re-evaluate purchasing strategies in order to save costs, with open source increasingly getting the nod. IDC found that the recession is driving even more adoption of Linux, and new Forrester data suggests that cost savings will help open source well beyond Linux:
Motivations Driving Open-Source Adoption, 2009
(Credit: Forrester Research)Whatever your corner of the open-source market, it's a fantastic time to be in open source. If you're a customer, you get the benefit of reduced cost with minimal lock-in. If you're a vendor, you get to sell a superior value proposition in a tough market. And if you're a proprietary vendor, you get to watch. Everyone wins. :-)
Disclosure: I am an employee of Alfresco, an open-source enterprise collaboration and content management vendor.
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Magento, the leading open-source e-commerce platform, has just notched a new honor: Forrester Research has named it an "Emerging Player to Watch" in its Forrester Wave: B2C eCommerce Platforms, Q1 2009 report.
This is an exceptional testament to the growing momentum of Magento. Varien's Magento is the only open-source e-commerce platform named in the report, alongside industry leaders IBM and ATG.
But it's not what Varien has done with Magento that Forrester deems exciting. Rather, it is Magento's momentum, and implicit room to grow, that Forrester calls this out in its report:
Magento is a very exciting open-source e-commerce solution and...is typically delivered at the enterprise level through the professional services of the company that developed and launched the product, Varien....Enterprise-level e-commerce organizations should view Magento as an opportunity to launch small-scale side projects and experiments, but for larger companies with limited e-commerce needs, it may prove to be a very attractive solution.
Product maturity, proof of the product's scalability, and further development of SIs and Varien's own professional services may place Magento as an enterprise-class solution in the future.
This is precisely where most successful open-source products start: departmental deployments in the enterprise with more extensive applicability in the small-to-midsize enterprise market. However, as with Hyperic, MindTouch, and other open-source offerings, Magento is unlikely to reserve itself for these more limited deployments.
Forrester forecasts online retailers to upgrade their platforms over the next two years, and I suspect that Magento will increasingly get the nod as online retailers seek the flexibility, cost profile, and embeddability that an open-source solution like Magento can provide.
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