The current landscape of the enterprise information systems sector is one with a vast selection of software vendors armed with a seemingly endless number of proprietary software applications. In the typical business model, the users of these applications are charged large sums of money for licenses to run the programs, and at times, even larger sums of money for maintenance contracts. For many, the proprietary software model works well. We have seen exponential growth in companies like Microsoft, Oracle, and SAP to name a few.
Their enterprise software application divisions are hugely profitable and their support networks mean that long after a system is designed, configured, analyzed, tested and released, the vendors (and consultants) have been well compensated. And for good reason: the software is often times difficult to implement, extremely complicated, and typically needs proper configuration to meet the needs of most large-scale enterprises.
Note: This is in contrast to the standard application service provider (ASP) model, which can also be called SaaS or Software as a Service. In looking to the future, I believe the real evolution of software lies in cloud computing, and more information can be found here.
But—a new look into the current trend among enterprise–is the introduction and adoption of open source technology.
With the arrival of this new era of computing—and some would argue that open source was around well before the internet age—many companies are now moving away from the standard model to one that is less expensive, and arguably more secure.
Before we can discuss the movement, we must define the term “open source.” Typically, it is described as “computer software for which the human-readable source code is made available under a copyright license [or arrangement such as the public domain] that meets the Open Source Definition. This permits users to use, change, and improve the software, and to redistribute it in modified or unmodified form. It is very often developed in a public, collaborative manner.”
As this definition highlights, the primary advantages of the movement is that users, or as they are commonly referred to—members of the community—can improve, alter, and redistribute the software as needed, and typically, at no or low cost.
Open source is becoming an attractive option to enterprises.
For this very reason, open source software is becoming more attractive to large and small businesses alike because of its ability to cut costs. Additionally, initial licensing fees are no longer included in corporate budgets, companies can customize the software as much as they want with the primary expenses incurred from the IT specialists needed to modify the code, and maintenance can be left to in house IT or outsourced to one of the many vendors that have been started specifically to serve this growing need. In fact, a report by the Standish Group has stated that a loss of $60b annually in the IT proprietary software market is caused by open source technology, and realistically that figure will continue to grow in the years ahead.
“It is the ultimate in disruptive technology, and while to it is only 6% of estimated trillion dollars IT budgeted annually, it represents a real loss of $60 billion in annual revenues to software companies,” said Jim Johnson, Chairman, The Standish Group International, Boston, MA.
While this seems like a small amount compared to the huge sums of money spent annually in enterprise software applications, open source is certainly gaining ground among top businesses worldwide. The New Straights Times believes “open source, according to its proponents, is being adopted across major verticals such as public, technical, educational, financial, and services sectors and even among small and medium enterprises.” Firms such as Facebook, currently use open source platforms such as MySQL to serve their large scale database needs.
“We’re one of the largest MySQL Web sites in production,” says [Owen] Van Natta [Chief Operating Officer], adding that the popular open-source database software, “has been a revolution for young entrepreneurs” because it frees them from paying hefty license fees for commercial database products.”
While this might seem like a small victory for the open source movement from an otherwise powerful player on the Internet stage, the nature of open source means that as the technology is refined, as it grows and changes from user input and the community of developers, so too will the success of the firms that employ these tools. Really, the beauty of open source, is that “these communities will see several layers of participation (developers, evangelists, user experience professionals, etc.) which all have some vested interest in seeing the product succeed. And in some cases, the community is able to galvanize an effort that changes an entire industry (such as what Firefox has been able to do for web browser development).” Facebook’s implementation of MySQL is one small win for the open source movement.
The advantages of Open Source
Open source has arguable advantages against the proprietary software many companies are looking to replace. As mentioned earlier, vendor support and advanced security protection are chief among the list. In this sense, collaboration is key. When more programmers have the ability to look at source code, the stronger and more secure a software application will become.
When an entire group of programmers have at “it”, the end result is a much more secure environment to operate in. In this instance, many minds are greater than a few. Security is increased as known issues become exposed, discussed, and the source code changed, and when using a mature code that has passed the community vetting process, one can assume it is stronger than an early version of a company’s proprietary code. (Think: Windows Vista v. Linux).
“The steady march of Linux into evermore central areas of enterprise IT has been visible in the US for about seven or eight years, and has accelerated in the past two.” Before this increase in demand, Linux could be described as primarily used for web-servers, and “non-essential” business applications. Vendors like HP, AIX, and Solaris, were primarily relied upon. Recently, open source has been an attractive option for many businesses for use in their data centers.
Also, the increased number of knowledgeable coders allows the implementing company to be selective with who will provide support for their system. In the MySQL example above, this allows innovation to transfer from the corporation who manages the software, to the end user and developer. Google then becomes an “enabler” and “guardian” of the technology, and grows its base exponentially.
Growing risks of open source.
Of course, when one argues the advantages of a technology, one must also take into account the growing risks involved in adopting open source software. In the current market, proprietary software makers are acquiring open source software vendors, which hurts innovation, and potentially removes financing from developing the technology toward proprietary systems. (See Oracle’s acquisition of Sun Microsystem the maker of MySQL and how that effects the open source database community.) It creates a type of “vendor lock-in” that is just as problematic as the systems that most early adopters are trying to avoid.
Once this happens, the community of developers is potentially removed from the equation of what makes open source so attractive to many companies, and the system defaults back to the standard proprietary software model. This could hurt many of the companies that have adopted the technology under the open source code, and cause reluctant and expensive changes to systems already designed and in place before the vendor lock-in became apparent.
Also, having a source code readily available to the general public can pose its own unique risks for companies that implement these systems. If the code is not well vetted by a strong community of developers, then a firm risks open security holes that could cause more harm to the bottom line and nullify any cost savings.
The Future is Now
Most companies will begin to implement open source software in the future. It has a very strong community following, and the dust is really just starting to settle in the markets of enterprise and large firms. As companies focus on cost-cutting and begin to realize the savings of zero licensing fees, they will be more likely to implement and pay the initial costs of switching their legacy systems over to open source. Money will be much better spent on customization and configuration of the software, as well as, on support of that software. Of course, this doesn’t take into account the need for ERP systems that are much more robust than an open source system could provide, but who knows where open source trend will take us in the years to come.
As long as there are viable alternatives to the proprietary software that is typically being used for standard enterprise systems, firms will begin to look at the cost effective nature of moving to open source, and will ultimately make the change.
{ 1 comment }
Love the name!!
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