Open source thrives in downturn

Open source thrives in downturn

Summary: Collaboration initiatives are all about streamlining business processes, and the interfaces between legacy closed systems and open source stacks are an increasingly common place to find business collaboration environments.According to research firm Gartner, open source software is present in 85% of enterprises and the remainder expect to deploy it in the next year.

SHARE:
TOPICS: Open Source
22

Collaboration initiatives are all about streamlining business processes, and the interfaces between legacy closed systems and open source stacks are an increasingly common place to find business collaboration environments.

According to research firm Gartner, open source software is present in 85% of enterprises and the remainder expect to deploy it in the next year.

While the large closed vendors struggle to steer their supertankers through increasingly unsettled waters, open source looks all the more attractive to budget constrained businesses looking to maximize their cost effectiveness.

Faster time to market with lower total cost of ownership and greater transparency into the engineering process are balanced by governance challenges, and to a lesser extent issues with conflicting terms and conditions and/or licensing confusion, according to Gartner.

Matt Asay, VP of business dev at open source company Alfresco, the open source Enterprise Content Management (ECM) set up by the original founders of Documentum, has a terrific blog on CNET and quoted some CMP media research in his 'Where the channel is investing in 2009' post yesterday:

• Economic uncertainty is pushing companies to prove technology before buying it, which skews toward open source, which is all about trying before buying;

• There are fewer trusted options. Many vendors meet or exceed requirements, so buyers want to spend with brands they trust. (Note: Ironically, the "try before you buy" mentality will not always mesh well with this requirement, due to conflicting licensing models);

• End customers are planning smaller initial projects, with incremental add-ons. (Advantage: open source and SaaS, since both allow vendors to start small and grow organically);

• Forty-eight percent of end customers are looking to streamline business processes, rather than endure pure cost cuts. Basically, they want to spend money more efficiently, rather than simply cutting heads

• Seventy-five percent of end customers are buying some version of managed services, but the definition of "managed services" is quite broad;

Matt really knows his stuff around licensing, running the annual Open Source Business Conference, and his channel post is well worth a longer look.

I had lunch today with Ismael Ghalimi, CEO of Intalio. His open source Business Process Management System (BPMS) company is exploding with new business, going from 12 to 500 clients in the last 24 months despite having a sales force of zero. With 64 employees in 13 locations Intalio is a truly international company (Ismael has flown a quarter million miles so far this year to meet with some of his new customers) and they are planning on making 8-12 acquisitions in the next 12-18 months to further expand their platform offering.

The confluence of challenging conditions in the business world has resulted in open source being taken very seriously indeed by those mapping out strategy and tactics in enterprises, as Gartner's report demonstrates. While it is virtually impossible to decouple the enterprise class systems which are the IT spine of companies while running the business (like trying to rebuild an aircraft while in flight as a friend put it), I believe we are going to increasingly see such systems constrained and compartmentalized and in some cases with little new investment.

The global scope of a company like Intalio is pretty amazing with both customers and employees spread out across both hemispheres. In many ways open source is the purest form of international capitalism, and the stakes are high for Intalio to establish itself as the de facto Business Process Execution Language (BPEL) engine in the best of breed technology stack. The world market is literally at stake for those able to achieve the economies of scale open source enables.

Alfresco's Matt Asay believes money will be spent more strategically, and therefore more efficiently, in the 2009 open source world, and the relative safety of established open source vendors or partners will be attractive to buyers, who will be balancing cost effectiveness in terms of time and money against upgrades of legacy infrastructure.

Gartner again: IT leaders deploy open source for customer service business process, enterprise integration, finance and administration, and business analytics, sales and marketing, customer analytics, field service, enterprise resource planning and customer relationship management.

It's going to be interesting to see what kind of momentum open source picks up during what will be a grueling recovery from the recession over the coming years.

Topic: Open Source

About

Oliver Marks leads the Global Digital Enterprise Team at HP, having previously provided seasoned independent consulting guidance to companies on effective planning of business strategy, tactics, technology decisions, roll out and enduring use models that make best use of modern collaborative and social networking tools to achieve their business goals.

These are Oliver's views and not those of his employer HP.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

22 comments
Log in or register to join the discussion
  • 85% of what?

    Such figures mean nothing if it isn't accompanied by some idea of HOW MUCH they are used in each.

    Using does not imply anything more than having obtained at least one copy of a product. It says nothing about how much its use permeates those oganisations, nor how critical to those organisations its use is.

    Rubber statistics to support a rubber theory.
    Patanjali
    • Sometimes it is hard to get all the information you want. Some of that 85%

      are probably using very little open source software, where some, like Google are running everything on open source.

      In the surveys, people will tell you they are using open source, but, they will typically not be willing to say where and how much.

      In any case, the number is interesting, and is a trend to watch.
      DonnieBoy
    • Lies, damn lies and stats

      Typical FOSS PR tricks.
      LBiege
      • I agree....

        Those MS TCO arguments are nothing but LIES!!!
        storm14k
      • Do I detect a hint of desperation? :-) (nt)

        ..
        Henrik Moller
  • The way my rep and I see it....

    Open Source will actually suffer in this downturn. As we all know, Open Source is mainly created by out of work people with nothing better to do. While high powered corporate visionaries like myself are using a "Microsoft everywhere, anywhere, anytime" strategy, Open Source shops are bleeding cash due to the lack of collaboration tools like SharePoint. As more people fall out of work due to their companies using Open Source and failing, there will be a glut of open source developers creating little market incentives. When our CFO asked me how I could justify a 35% increase in IT spending, I told him "that is the price of dignity, the cost of honor". My rep and I then went to Daniel's Broiler for steaks and cognac.
    Mike Cox
    • Great! What brand of cognac, by the way?

      lol

      A good one! Kudo's.
      pjotr123
    • Background of open source developers

      Mike,

      You say, "As we all know, Open Source is mainly created by out of work people with nothing better to do."

      That was partly true in the early days (counting the college kids like Linus Torvalds) - but even back in the early 1990's a significant portion of open source development was provided - like me - by professionals in their spare time.

      Today's typical open source developer is paid well by big, middle-sized, and even very small corporations, to develop [b]full time[/b]. Full time pay for developing open source software, Mike.

      Why? Because open source software is very valuable to those corporations - and the collaborative development model provides very high value for the investment made, compared to the aging proprietary model.

      $1,695 for a pint of the best cognac is well within the budget of many open source developers. With your current described "understanding" of the IT sea change around you - maybe you'd best go easy and stick with Gran Marnier.

      Best wishes and Happy Holidays, Mike!
      bbaston@...
    • Mike feasting on Steaks and cognac !

      I wish I could get some of that, but alas I am retired .

      However you do make my day with you witty posts, keep it up and I will remain young.
      elderlybloke
  • If not before, then why OSS now?

    I don't get this argument. I mean if OSS is such a cost savings then why does it matter what state the economy is in? Saving money is saving money.
    mikefarinha
    • Change cost lots in time and money

      Its the FOSS FUD that ignores that businesses in hard times cannot afford to add substantial expenses to its bottom line by changing its core software. If it ain't broke, don't even think about changing it!

      With businesses not hiring and putting existing contractors on enforced LWOP, who is going to keep its existing inhouse proprietory expertise AND hire/contract experts in the FOSS software.

      Get real!

      Some people live in dreamland waiting for the 'Great FOSS Hope'.


      To the FOSS programeers, I'd say spend the time getting the software to be a real no-brainer must-have to businesses when they can spend again. By no-brainer, I mean not just the same as the proprietory competition, but a quantum leap beyond.
      Patanjali
      • Exactly...

        "If it ain't broke, don't even think about changing it!"
        frothy2
      • Dear Patanjali,

        Surely a business should look further ahead that the short period required to learn the new OS.

        How difficult is it to use a spread sheet , word processor , whatever that is basically doing the same job.

        Any employee who can't handle it is probably not much of an asset to the firm.
        elderlybloke
  • Recession-proof since 1996!

    My company has been recession-proof since about 1996 using open source for our infrastructure. That's about the time a lease ran out on an AIX machine and we switched to Linux for most server-related things (mail, web, etc).
    scott1329
    • Open Source != Recession-Proof

      How the heck did you make that mental leap of faith?

      Holding the line on CAPEX may keep your burn rate down and make it a bit easier to pay the bills, but it doesn't make a business recession-proof.

      For one, OPEX is the source of fat in most companies. And two, a lean business with an unsustainable model is still a dead business, eventually, and open source isn't going to make a bit of difference.

      As for the article, I think the author's focus on CAPEX is misguided. Licensing costs, while expensive in some cases, are but a small piece of the operational puzzle. I'm more concerned about the $540+ billion dollars in wasted annual human productivity in the U.S. alone (source: salary.com 2006 survey).
      josephmartins
      • Agreed!!! TOS is The Bottom Line.

        We are $255M SaaS Company, which means the cost of software is down in the noise level compared to the cost of software development, security checking/improvements and general maintenance.

        Someone needs to remember that there is NO Such thing as a Free Lunch, much less Free Software.
        Most Upper Level Management knows what to do when someone offers them a Solid Gold $1.00 Pocket Watch.
        dragon@...
        • Agreed!!! TOS is The Bottom Line.

          Free in the Open Software sense means Free as in Free Speech, not necessarily as in Free Beer.

          Do a little investigating , it could be beneficial for you .
          elderlybloke
  • RE: Open source thrives in downturn

    Amen. Firstly, open source software is available to fulfill needs that every business has (wordprocessing, spreadsheets, e-mail, CRM, graphics, Web design etc). Secondly, it obviously does save money on licensing costs. In lean times businesses must save money wherever they can. Software licenses may not be the business' biggest expense - but if you "look after the pennies the pounds will look after themselves", as the old adage goes.
    Of course there are issues such as implementation and training, but the biggest reason that open source is not bigger in busnesses than it is is fashion. IT directors like to follow the fashion AND have well known software implementations on their resumes. Could anyone really argue that using MS Office as opposed to OpenOffice, gives their businesses competitive advantage?
    whittam
    • A little too dismissive I think

      "Of course there are issues such as implementation and training..."

      "Issues"? Focusing on the cost of software licensing rather than the related operational expenses is a bit like driving 10 miles out of your way to save $0.10 on a loaf of bread.

      Read: http://www.datamobilitygroup.com/saltworks/archives/5

      Points 7, 8 and 9, and to a lesser extent 6. I've been at this game a long time on the buy and sell side and I know precisely how it works.
      josephmartins
      • This is not Open Source.

        From your link: "There had better be a damned good reason for wanting to bring the development of a complex business system in-house, and the threat of vendor lock-in isn?t it."

        He makes some good arguments but he really hammers on not using in-house projects. Well, what does that have to do with Open Source? Yeah plenty of Open Source companies do their own modifications but so do proprietary companies. He also seems to be saying that vendor lock-in applies to Open Source too. So he's saying you can't avoid vendor lock-in no matter who you choose? Right. So don't worry about getting locked in. Just choose your vendor on his merits.
        kozmcrae