Ingres: Is this the dark horse of the enterprise software pack?

Leading IT industry execs and financiers are behind Ingres, an open-source enterprise database venture. Can the startup disrupt the pricing of enterprise software?

Ingres might be a small database software company, but it is one worth watching because it has attracted some large industry names to its team. And the outcome of its business strategy will be certain to influence many other enterprise software startups.

On Tuesday, Ingres announced that Jim Finn joined Ingres could do well against the high pricing of Oracle's license and maintenance fees, but it's not that simple. as senior vp and head of communications--leaving a very high profile job as head of communications at IBM Americas. Leaving one of the top jobs at IBM to work for a small software company seems like a strange thing to do. Clearly, there must be more to Ingres than meets the eye, as suggested by some of the other industry heavyweights that have joined Ingres.

But what is it about Ingres, and its open-source database software, that it is able to attract a star-power executive team? After all, how much money can there be in open-source enterprise database markets?

MySQL is currently the most popular and most widely used open-source database. And MySQL makes its money in the services-side of the database business and works mostly with small companies. Profit margins in such businesses are decent, but certainly not stellar.

So what else is going on at Ingres?

I managed to catch a few minutes with Jim Finn to talk about his move, and about Ingres. Mr Finn is convinced that Ingres can be a disruptive force against Oracle. And that it can capitalize on resentment in IT departments about rising maintenance costs of Oracle software.

"The installed base of Oracle users is fed up with paying high license fees, high maintenance fees, and paying for features that few enterprises actually use. And they Oracle has promised Wall Street that it will raise profit margins which means Oracle's enterprise software customers will likely see a continued increase in IT costs."

Ingres has a database which was built for enterprise customers, and it has been in use for many years. In contrast, MySQL lags in many essential enterprise-class features and it has a much shorter track record.  This is where Ingres fills a need because it has evolved over a 25 year span, and claims more than 10,000 customers/partners. It used to be owned by Computer Associates.

I spoke with Jamie Lerner, CEO of Cittio, an enterprise network monitoring software startup, about some of the trends he sees in enterprise software markets.

"I'm not convinced that we need yet another database. And just because you say you are open source, that doesn't necessarily mean very much. You need to build a community that can support open source development."

Such communities also act as evangelists for the software--a valuable service given the high cost of marketing enterprise software.

The Ingres database has been around for a long time but the company itself is very new. It was founded in November 2005 and will be interesting to watch because it is testing out the viability of startups based on open source software. The VC community in Silicon Valley  is very keen on open source software because it saves on development costs, and time to market.

Ingres could do well against the high pricing of Oracle's license and maintenance fees, but it's not that simple. Oracle's enterprise customers are not going to be swapping out databases. As Cittio's Mr Lerner points out, "Databases are mission-critical to a company and it is something they don't mess around with. The opportunity for Ingres would in new business markets, but I don't see too many of those."

Mr Finn says Sarbanes Oxley compliance is one key market because it requires companies to store massive amounts of financial and operational information.

The future for Ingres might also be helped if the current rush into next generation web services, or what I prefer to term Internet 2.0 businesses, continues to grow. As online commerce grows in volume around the world, there will be demand for enterprise-class databases to handle large transaction loads--something that MySQL is not designed to handle.

Another key factor that could favor Ingres is the integrity of its intellectual property, compared with MySQL. In October of 2005, Oracle bought Innobase, a Finnish company, whose technology is key to MySQL.

That purchase provides Oracle with several business strategy options if MySQL starts to eat into Oracle sales. That would be an opportunity for Ingres to snag some of the MySQL market too.

The challenge for Ingres is that it needs to develop/offer as much of an enterprise stack as it can. Few IT shops have the time, or the urge to integrate a bunch of open software/commercial components.

Ingres will need a sales force too. But it is difficult motivating salespeople to sell open-source software deals, compared with the multi-million dollar sized deals that engage Oracle, SAP, IBM, and the other enterprise software giants.