What happens when a software vendor decides not to follow the 'Silicon Valley path'

Do today's systems really reflect and capture the knowledge and aspirations of today's enterprises? Not yet, in the words of one software leader.

"I think the 20th century was one of the most unnatural things to happen to humankind," says Bryan Cheung, CEO and co-founder of Liferay, Inc. "People became machinified. They became cogs in factories, which were totally de-socialized.  Even today, there’s still a lot of dysfunctional things that happen, because people aren’t behaving naturally. They are not willing to be honest with their managers."

Cheung's company, Liferay, a Los Angeles-based company which provides portal technology to organizations, seeks to bring more of that natural interaction to enterprises. I had the opportunity to sit down with Cheung, who explained how portal technology is evolving to a new level, as well as his company's commitment to the open source model of software delivery.

Enterprise portals have been around for a long time, and their purposes are relatively straightforward: provide semi-personalized access to important applications from a single screen. Now, however, they're becoming a hotspot for enterprise social collaboration.

Cheung says he is seeing a shift in his company's business as social, mobile, analytics and cloud become the new foundation of enterprise computing. "Portals had their heyday in the 1990s, but what we're seeing today is a need for identifying the person that’s interacting with you and your digital presence," he explains. "In a way it has come full circle. Technology’s catching up to the way people have always behaved in social situations. When you give people the means and the channels, then a lot of the best attributes of social behavior come to the fore."

In the process, communities of customers or users will add far greater value to product offerings than the enterprise can provide on its own. The role of today's portal technology is to open up community collaboration and information-sharing.

True to this belief in the power of communities, Liferay Portal has been open source since its inception. "A lot of companies are following that typical Silicon Valley path," Chueng says. "They have their investors, and they’re aiming for that acquisition or that public offering. We're very conscientious about not doing that. We're still independent, privately held, with no outside capital." The advantage to staying private is that becoming beholden to shareholders stifles innovation, he adds. "We see a lot of benefits in staying private -- we can take risks,  and we can support of our superstar developers who are sometimes are working in stuff that doesn’t have practical value in the short term, but ends up being revolutionary off in the future."

For Liferay, it means building services and capabilities on top of an open source foundation. As is the case with Liferay's open-source business model, Cheung sees many types of online services moving to a freemium model. For example, both the news and music businesses are being disrupted in this manner. In the software business, the trend is to support community based, participatory software development, "and then establish our expertise in providing goods and services that are complementary."

For Cheung's organization, "it's about having a better high-quality model for producing high-quality software, that is community based and participatory, and then establishing our expertise in providing goods and services that are complementary," he says. "That ties back to our cloud strategy. You got our software for free, but here’s some very useful things that are going to add value to the core software that we gave you as open source."

Liferay's customer list includes many leading corporations, including Standard & Poor's, Intercontinental Hotel Group, Raytheon, and Accenture.

Ultimately, building an open source community around its portal platform will deliver more long-term dividends than short-term profits, Cheung relates. "If you look at Red Hat, they could have probably made 10 to 20 times as much if they were a traditional proprietary company. And you don’t know what Red Hat is going to look like 20 years from now. But they have a very strong open source community. There are a lot of fundamentals that aren’t part of the valuation of your traditional proprietary software company that makes Red Hat overall stronger than a Microsoft or an Oracle."