When will open source get the SMB market right?
Eating dinner with Larry Augustin in London this weekend, we fell to talking about open source's relevance to the SMB (small- and medium-sized business) market. Augustin is currently CEO of SugarCRM, a company with over 5,000 customers, many of them SMBs.
But SugarCRM is the exception to the rule. Open source has long been billed as a savior for the SMB market, but the reality is that open-source adoption has largely been an enterprise IT phenomenon, despite other exceptions like KnowledgeTree, which recently updated its product suite to further appeal to this market.
Why aren't more SMBs adopting open source? Following recent Forrester data, Savio Rodrigues of IBM points out that many SMBs still cling to the perception that open source is not secure and is overly complex.
In many cases, it's not perception. While it's tough to generalize about open source at this point in its history, it's absolutely the case that some open source is complex, some open source is not secure, etc. Much open-source software mimics the enterprise software world it strives to leave behind.
Dell is trying to overcome these concerns by selling prepackaged open-source applications, and I would assume we'll see more companies following Dell's lead.
While some big vendors like Cisco already have significant SMB focus, others, like Oracle, SAP, etc., could use an open-source runway to the SMB market. Unfortunately, as noted, open-source vendors haven't necessarily penetrated the SMB market any better than the proprietary vendors have.
This suggests a strategy for open-source vendors, one that could lead to a big exit: figure out how to pitch to the SMB market, then sell to those big, proprietary vendors that need an entree to SMBs. The new hybrid model for open-source vendors might well be to make the "enterprise" version the one that is easiest to administer and use.
First, however, open-source vendors need to start making software easier to use, and not emulate all the wrong behaviors of the proprietary past. Fortunately, the way to make software easier for SMBs and to monetize it might actually be cloud-based computing.
How fortunate.
Disclosure: I am an advisor to SugarCRM.
Follow me on Twitter @mjasay.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay. 
1) It runs on a Window server
2) It runs in the cloud/is SaaS
As much as I would love to suggest that businesses can run only Linux (or BSD) servers, the reality is that lots of software simply is not yet available for Linux. A key example I ran into recently is the Blackberry Enterprise Server; it supports Lotus Domino and Novell Groupwise, both of which run on Linux, but the BES itself must run on Windows Server. I don't think iPhone users are that much better off, but feel free to correct me.
To that end, our firm is actually turning small businesses on to using open source applications everyday. And as we all know, if more people would become aware of the benefits of open source in certain areas, they just might clamor for it in others.
We're showing companies the value of Drupal as a web platform, as well as SugarCRM and civiCRM, and of course Ubercart.
We're integrating these open source applications on the web to their closed source applications running their businesses.
All the while, people are being turned on to the benefits and possibilities an open source solution and it's community provides. They are joining Drupal Camps and even attending with us, all because they ARE hungry for an actual solution to their problems. And more and more, small and medium businesses seem to be catching on. At least from our perspective, that is.
The first step to the perfect solution is improvement in the current environment.
If you would like to know more about how we're helping small and medium business see the benefits of open source, check out our website at www.orchestrateam.com. Or visit with us at DrupalCamp Colorado on June 27-28 in Boulder.
Disclosure: We really like Drupal.
And here my point: IMHO, SMBs rely on their IT local providers, no matter whether the software is open source. They look for solutions to their problems, currently looking also for better TCO proposals (say, cheaper).
Therefore, the real customers are the SMBs, yes, but the IT providers (SMBs themselves). The channel is the key to reach the SMB market.
An offer that combines software easy to use -deploy and manage-, what means saving time while offering a better service to their customers; and at the same time gives the channel enough freedom to build their own value proposition on top of that, will be the _right_ combination for open source.
Finally, monetization, I agree, would be not only based on the typical support services offered to the channel (again, your real customer), but also in SaaS, a more scalable model.
- by jmitja June 18, 2009 2:11 AM PDT
- @pzb2
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(4 Comments)Openbravo ERP runs both on Windows and Linux servers (or actually on any other operating system). The vast majority of our clients, both small and large companies, prefer to deploy in on Linux.
We are also witnessing a growing adoption of Openbravo deployments in the cloud with small companies, too.
Josep Mitjā
Openbravo