Zoho's winning strategy: open source + cloud
These days, it's virtually impossible to avoid open-source software. If you're a Web company, don't even bother trying.
That's the message I got from a conversation Friday with Raju Vegesna, evangelist at Zoho, a leading competitor to Google Docs. According to Vegesna, the company--formerly known as AdventNet, now called Zoho Corp.--has been around for 13 years, and has always used free, but not necessarily open-source, software as part of its strategy. The company has released software under open-source licenses before, including the somewhat controversial vTiger project.
With 1.8 million users of Zoho.com, growing at roughly 100,000 new users per month, and profitability expected in 2009, Zoho's use of open-source software offers a glimpse into the development strategies of the next generation of software companies.
As Vegesna explains it, "In 2003 we were trying to determine whether to go open source or SaaS. We opted for both." Expect to see a lot more "both" software strategies going forward: open-source software inside with a cloud delivery strategy, and open APIs to give external developers access to that cloud.
Q. Tell me about how and where you use open source at Zoho.
Vegesna: We are completely open-source at the core of Zoho, from the operating system (CentOS) to the database (MySQL) to the application server (Tomcat) to Hadoop for scaling our systems.
Do you modify any of these projects and, if so, do you contribute back those modifications?
Vegesna: Yes, at times we modify open-source software to meet our needs, but often, like with the operating system, we don't modify the source code. We simply strip it down to the essential components that we need, thereby improving performance and security. But for other areas, we may modify a project like MySQL to improve scalability.
As for contributing back, it depends. If our changes help us but likely won't help the community, we won't contribute them back. But if it's code that would help the general community, like a security improvement, we contribute that back, unless it's something proprietary to our business. Whether the community accepts and incorporates it, however, is up to it.
Could Zoho.com exist if it were built with proprietary software?
Vegesna: Technically, we could do the same thing with proprietary software but the cost would be prohibitive. Imagine Google trying to run 600,000 servers on Windows. Could it do so technically? Probably. But it's doubtful that it could give so many different services away for free if built on pricey, proprietary software.
Without open source I can't imagine SaaS [software as a service] taking off. The economics simply wouldn't work.
Open source gives us flexibility so that we can add our own layers of business logic. For example, we use OpenOffice for document conversion. There are some conversions that OpenOffice doesn't support, however. Because it's open source, we can split the code to allow our proprietary software pick up the slack where OpenOffice can't handle transformations.
Most of our applications are built from the ground up by Zoho. Ninety-five percent of our employees are engineers. We use open source strategically but we need to be able to understand our code intimately, so writing it ourselves is important.
We use the best of open-source software, contribute back strategically, and write our own software where it makes sense.
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. 
