Freeing up the future: Is open source best for business?

Source: Exec Digital Canada

Date :6/16/2008 2:30:27 AM

We spend $1 trillion on software every year, writing off around twenty percent in failed applications. Not only is open source software free, but many are now claiming it works better too. Exec finds out more

Written by Sam Wright

There’s been a war of attrition going on for a few years now. On one side, there’s the old guard of proprietary software; heavyweights like Microsoft Windows, Adobe Photoshop and Mac OS X, providers of industry standard, premium products - at a premium price. On the other, there’s the young buck in the form of open source software, or OSS.

This upstart may need a little more introduction. Perhaps best described as publicly shared intellectual property, OSS is software for which the underlying code has been made available for users, who are then able to read it or change it as they wish. It’s very much bottom-up system, with an almost hippyish agenda in some quarters of bringing an end to the strangle-grip that software vendors have on the industry.

Typically for something tarred with the hippy brush, the latter has been branded unreliable and of questionable security. Yet, instead, some of the big-hitters of the technology world have been keen to sing its praises.

Strength in numbers

In a recent interview with Government IT magazine FCW, Scott McNealy, co-founder and chairman of the board of Sun Microsystems, stressed that fears over the security of OSS were largely unfounded.

“You know, historically,” he said, “we’ve had people concerned that open source might be more vulnerable. But in fact people are finally coming round to the fact that if you have secrets in your code, they’re going to get discovered and you’ll have breaches.

“There’s anecdotal evidence for things like Java [the programming language], which has six billion devices around the world. Name one Java virus? It’s open, people have looked at the code and it’s much safer. Transparency is much safer than secrets.”

This ‘coming round’ has seen numerous OSS successes in recent years, including Java and Mark Shuttleworth’s Ubuntu project (a free operating system with around eight million users), most of which of which stem from the Linux operating system – regarded as so dependable that internet services firm Netcraft reported back in February that five of the ten most reliable internet hosting companies run Linux on their web servers.

“I was advising the US Marine Corp. in Charleston, South Carolina,” says Michael Tiemann, President of the Open Source Initiative, “and the analogy they used was this. ‘Imagine just like you have a thousand lines of code, imagine a thousand soldiers in a battalion. In the world of proprietary software, you have 20-30 insurgents per battalion, while in the world of open source, not only is the number less than one, but it does not even round up to one.’”

What’s the problem?

Yet, outside the technology industry, the business world has been a little slower on the uptake – and this is despite research by the Standish Group, which revealed that commercial software spend is around $1 trillion annually, of which Tiemann estimates $180 billion is written off every year dealing with ‘insurgents.’ It’s a staggering figure, so why aren’t companies looking to the OSS equivalents of Microsoft and Adobe?

The answer, contrarily, seems to be a lack of trust. Without a corporate behemoth behind the product, many businesses assume that if things go wrong, they’ll be left to pick up the pieces. It’s a fear that has halted the spread of OSS among many businesses, including law firm Browne Jacobson. Peter Birley, the company’s IT director, says: “We need reliable supported software and therefore stick to the Microsoft platform. There are more people and products available with those skills and we don’t have to worry about the underlying technology.”

But what are the options for customers who want the benefits of OSS without the worries over the lack of support? The answer seems, however unlikely, a compromise between the two.

When two worlds collide

Commercial open source is now a boom area, as evident by open source customer relationship management (CRM) provider SugarCRM. With over $45 million in VC backing behind them, they are one example of how these two worlds, which at first seem fundamentally opposed, can live together.

“When we founded the Sugar project in 2004, we were completely working for free. We asked our wives for six months,” says co-founder and CEO John Roberts (pictured).

“Obviously, you can’t work for free forever. And we wanted to be very clear with our community in the project that we were a full time operation and we weren’t a part time project with part time people.”

Sugar’s model of providing its entry-level program, Sugar Open Source, for free as OSS while offering fee-paying premium versions of the same service has been a runaway success. Because of the lower development cost, including massive savings on marketing (OSS by its very nature is viral-like), these premium services can be offered at a lower price than its proprietary competitors.

Model 2.0?

As a method, it looks to make a lot sense. In his recent article Free! Why $0.00 is the Future of Business, Chris Anderson, Editor-in-Chief of US technology magazine Wired, outlined how fundamental changes are being made to models throughout the world of business. The tradition of giving one percent of goods away as samples in order to sell 99 percent of the product has been inverted, he says. 99 percent is now handed out free in order to sell the remaining one percent.

The examples he gives, from Radiohead offering album downloads for free to increase ticket sales to Yahoo announcing that Yahoo Mail, its free webmail service, will provide unlimited storage as a platform for advertising, are gaining footholds rapidly and look to be here to stay.

“Basic economics,” says Anderson “tells us that in a competitive market, price falls to the marginal cost. There’s never been a more competitive market than the Internet, and every day the marginal cost of digital information comes closer to nothing.”

Competitive it may be but, ironically enough, it’s founded on a climate of collaboration and compromise. Surely that’s something we should all be aiming for?

“One of the things that the military forces are discovering is that sometimes the top-down approach does not achieve the objectives,” says Tiemann.

“You take off the helmet, you take off the goggles, you engage people directly and suddenly that authentic engagement makes it possible for a solution to hold on both sides.”

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