How Open Source can be a Game Changer
A few years back, I read a very interesting article (that I can’t find anymore) by John Newton, the CEO of Alfresco, explaining how Open Source changed their strategy. Of course, one of the main interests of having an Open Source version of your product is to expand your market by making it more accessible, thus creating opportunities for high-value services such as training, customization and so on. But beyond this shift in “how do we make money?”, he explained that it totally changed the nature of their salesforce. When you sell that kind of enterprise system, the best way to get potential customers to know and see your product is to invest a whole lot of money in marketing and sales. And you end up with a sales cycle of several months between the first prospection call and the actual sale… when it goes through. No wonder why license fees are so expensive for that kind of product, making it even harder to sell, increasing the length of the sales cycle, and here goes the vicious cycle.
Having at least an Open Source version of your product completely changes that because people who don’t have the checkbook but will eventually use your product can try it on their own. Maybe they’re working on personal projects, maybe even Open Source projects, and they can install and use your product for free. Then if they like it, they are more likely to go see their boss at work and recommend your product. In other words, you can replace a big chunk of your very expensive salesforce by free happy end-users and their recommendations. Hence not only does Open Source change how you make money, it makes it possible for you to save money where it’s not that necessary, and focus a lot more on your core business: building a great product.
But the way I see it, there’s another very important change with Open Source. As I said before, when your business model is based only on license fees, you focus most of your attention on your salesforce, which costs a lot of money, which makes your license fees so high that it is very likely to represent a big investment for your customers. So your salesmen end up attacking prospects at high levels of management. The problem is that the guys who have the checkbook also have very different concerns and priorities compared to the people who will eventually use your product. Let’s say you are building a software project tool suite with things like issue tracking, source control and so on. You try to sell your product to companies who do in-house software development, and the people who will eventually use your software are developers. But you don’t talk to those guys directly because they have almost no decision power, especially when it comes to spending several hundreds of thousands of euros for software tools. So you talk to their Program Manager or VP of Software Engineering or CTO of some sort. And all of a sudden, you realize that those people have concerns like keeping things under control whatever happens, minimizing risk (whatever that means), reporting, making sure that no developer does anything on their own, and so on. So of course, you will implement features to satisfy those needs because you want the big guys to be happy.
Now let’s go back to the Open Source alternative. If you hope that developers will use your software on their own project, find it cool and then go back to their boss and say “we should have that”, you’re not talking to the same people. It really makes things straight again because you’re back to consider end-users’ concerns first. Developers want tools that don’t get in their way, that allow them to save some time, not waste it, that are integrated in their development environment, and so on. My point is that an Open Source model does not only change where you make money, or how you balance your own investments. It can also change your whole product itself by changing whom you’re talking to.
Now of course, I’m opposing 2 strategies here: the traditional top-down approach that forces you to focus on upper-management priorities versus the Open Source bottom-up strategy in which end-users are the ones you have to convince. And I know that this kind of 2-way alternative is likely to create controversy because project managers will read this article and think “but we need reporting, we need control, we need power!”. Now of course you know that I don’t agree with this obsession for power and control as it is associated to the software engineering mirage. It’s like the big guys couldn’t stand the IT guys anymore, with their strange language and culture and so on. So they irrationally tried to isolate us from them with layers and layers of project management and control. But they lost a great deal of intelligence in the process and they’ve created a whole generation of frustrated developers who just execute what they have been asked to, even when decisions are made by people who don’t understand a damn thing about what software is and how powerful it can really be. And of course, big old-school software vendors have created opportunities out of this mess and we’re all forced to work with their products now. But hopefully, Open Source is already changing that, it is participating in a movement of IT empowerment, together with Agile methodologies, that will lead to more intelligent uses of technology and fill in the gap between business and IT.
Now to conclude, I’m not saying that management is totally useless. YES, we have a strange culture and a weird way to look at things. So YES, we need people to help us interface with business people and teach us how to do it ourselves. NO, the solution is certainly not to reduce our field of action to the minimum but YES, we need people who understand both the power that we have AND the big picture of what is necessary, and are able to make them coincide. And YES, this mission might require additional features in the tools we’re using, for things like reporting, prioritization and so on. But those features should never conflict with our concerns as end-users, they should never get in our way to building better software. But the good news is that there are very clever ways to do just that: have a look at Mylyn, or FogBugz. And of course, I myself am thinking about bringing my own contribution. So stay tuned…
Now I would love to try an experiment and use comments on this post as an informal survey. So if you are a software developer, what tools are you using at work for things like source control, issue tracking, documentation management, and so on? Do you like those tools and why?
From http://sebastien-arbogast.com/
My name is Sébastien Arbogast, I’m 26 and I’m an IT consultant for Axen in Brussels, Belgium. I’ve been working there since I graduated in Computer Science Engineering from the “Institut National des Sciences Appliquées” in Rennes, France. Sebastien is a DZone MVB and is not an employee of DZone and has posted 25 posts at DZone. You can read more from them at their website.
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Comments
Jakob Jenkov replied on Tue, 2009/07/28 - 2:08am
Alex(JAlexoid) replied on Tue, 2009/07/28 - 8:16am
in response to: jj83777
You can't see one of the most obvious things on this planet. Microsoft has a really big user base, and that brings it money. Is there any reason to use Microsoft Windows and Office on the clerks' computers, if Linux and OpenOffice would suffice? Reason is simple, familiarity and no need of training.
Having a lot of users that are familiar with your product also benefits SpringSource. That is why Spring is even taken into account when selecting technologies for big projects, do you really think that someone would choose Spring if spring is little known product?
"How big is the tallent pool for that framework/application/whatever?" - Is a very often heard from people with the chequebooks.
There is this thing called "turf cost". You give up some income today, to aqcuire a hudge market in two days.
The last, but not the least thing, is the possibility of extending the product and brining more high value components to a product.People buy applications, not servers and computers. See JIRA as an example of an end applcation that has a lot of extensions and is, though not open source, but free to open source projects.
Jakob Jenkov replied on Tue, 2009/07/28 - 9:11am
Alex, for some companies growing the user base by giving away free versions brings in more money on the long term. For others, it means going out of business. You may claim this causality rightfully:
Free Software --> More users
But it is naive to claim the following causaility in the same breath
More users --> More revenue
More users does not automatically bring in more revenue, even if seems like "common sense".
It may be true for some companies like Apple, Oracle, Adobe or Microsoft, who has loads of
commercial software and services to offer the users ontop of the free software. But what about
a company that has only one product, and decides to open source it? What are they going to
make money on?
Support alone is going to sustain them in most cases. People who want "free"
also want "free of grab-you-by-the-balls support contracts". A super product without documentation
will not get many users, even if free. And a free product, with super documentation, won't make
people buy a support contract, will it? After all, the doc's tell everything they need to know to
operate it themselves.
I see so many claims that open sourcing makes you beat the competition... that it is THE way to go. But how many companies do we really know that are successfully applying that model? A handful? 10? 20?
Would you work for free, so that your product could be given away for free?
Anyways, I was asking a legitimate question:
Did the company eventually end up making more money after they open sourced their product? Or did they not?
I am not talking about the day after they open sourced it. I was talking long term. Maybe 1-2 years after. The other points mentioned from that article sounded like the article was written some time after the decision to open source the product.
You didn't answer that question, Alex. You just told me I was incapable of understanding the most basic connection in the world, that more users leads to more money. But you did not provide any facts, or any proof.
Any moron can get "customers" if they are willing to work for free. But that moron won't be able to pay his bills. I admire companies that are able to make money off their products and services, whether they are offered in free / commercial combinations or not. Convincing people to pay money for your work is an art! How many open source developers out there have ever made more than a few nickels on their software?
Mark Haniford replied on Tue, 2009/07/28 - 9:23am
Andrew McVeigh replied on Tue, 2009/07/28 - 12:15pm
in response to: mark haniford
Unfortunately the sad truth is that Sun have been going out of business for almost a decade, way before they decided to give their software away. That, of course, doesn't mean that giving away the software didn't contribute to that in some small way.
David Hope replied on Tue, 2009/07/28 - 2:18pm
I have to say i am a big open source advocate i love open source, i love the bottom up approach, i especially love the way its about engineers talking to engineers. I use open source tools at home and at work i start every problem looking for an open source solution. I have recently implemented the Sonar open source dashboard at work and think it is another piece of excellent open source software. At home i have recently integrated Kaltura into a project i am working on.
Its certainly true that what this allows me to do is get a system in place and prove to management that it'll work without them having to be promised the world by sales people. Especially when after the promises the software doesn't do what was promised and costs another bucket of cash to fix. This doesn't happen with open source because the software is at the mercy of the community and if it doesn't work YOU can fix it and talk to others about it who almost certainly HAVE fixed it. With closed source you are at the mercy of account managers, fees and budgets.
I also love being able to learn from other peoples solutions and even help them to achieve better results for potentially both to my company and other companies.
What i do find frustrating however is sometimes the overly technical nature of open source, because its made by engineers for engineers it isn't always the most user friendly software. As an example of this we use a proprietary closed source version control system mostly because the open source alternatives out there are heavily command line and Linux based or rely on eclipse plugins to get the job done. The software we use has an extremely user friendly GUI and excellent Merge tool which is something i have struggled to find in the open source community.
David Lee replied on Tue, 2009/07/28 - 4:50pm
Well the author of this article fell for the open source bait. Alfreso clearly is not any kind of open source company. The version you want requires a license for a fee and I'm ok with that. I want people to pay for software. They could have just offered a free version and just left it at that. I actually like the fact that they offer the source for the pay version. Offer free, but offer source for paying customers. Free is good enough.
Rather than keep shouting the mantra of more open source how about advocating that companies like Alfresco donate to all of the open source projects that they use to produce their product. If developers won't buy software or support open source projects with $$$ then who will.
Jose Maria Arranz replied on Mon, 2009/08/03 - 4:03am
The more software companies focused on making money I see the more closed source centric are.
When I read the phrase "Download Evaluation" alongside "Open Source" words I can't avoid to smile. Open Source usually means "Free of Distribution".
In my opinion Dual Licensing should be the path to make business with software and remain Open Source, otherwise we probably are going to see our calculator program defined as Software As A Service.
Alex(JAlexoid) replied on Wed, 2009/08/12 - 7:47am
in response to: jj83777
Where do I begin stating the obvious....
- Spring Framework and SpringSource. Spring had good documentation, would not require consultants from SpringSource, but SpringSource makes money off support and training.
- Mule ESB and MuleSource, main product is open source. They make money off additional features, contracting and support.
Will the existence of those companies suffice? Or do I need to add more?As for Alfresco, they would be in the enterprise CMS backwaters just like a lot of others, because IBM's and Microsofts saleforce will beat the c***p out of any other, by ticking them to death if needed.
And, not I was not implying that you were "incapable of understanding the most basic connection in the world, that more users leads to more money". I was implying that you might not be very familiar with a thing called business risk and that what makes or breaks companies. Maybe you are just not a enterpreneur at heart, not everyone is.
Again, as I said, it's a turf thing. It's a risk of investment. Remeber, that investment returns may come in many more forms than in plain amount of cash you have in your account. There are a lot of OSS developers that gave up, yet there always will be a few that commit and rip the rewards of long term investment.