OK, so this title does not make a lot of sense … I’ll explain:
There’s a lot of hype around AJAX ( Asynchronous JavaScript and XML), which, in laymen’s terms is a set of technologies that allow web applications to have the look’n feel (and speed!) of desktop applications.

Traditional “web behavior” has been one of the main reasons for user reluctance against hosted Enterprise Applications, and innovative companies have come up with AJAX-style solutions for quite a while. Norway-based 24SevenOffice, a provider of hosted, modular All-In-One applications (ERP, CRM, email, calendar ..etc) has had an AJAX-like UI for a year and a half or so. Of course the term AJAX did not exist, so they had to explain at length the benefits of a faster, friendlier, easier-to-use Web Application.

It took a brand like Google, and the gliding-sliding oh-so-beautiful and fast Google Maps for AJAX to become a “household” name and one of the hot IT trends this year. Now longer do we need the long explanation, AJAX is chic du jour, all new web apps have it, and the major hosted Enterprise App’s also go the AJAX way: see NetSuite’s announcement. They claim to be first major business application with broad support of AJAX, but as stated above, they are a little late to the party… Late or not, it’s nice to see mainstream adoption and friendlier Web-apps finally.

For more technical info, as well as a good compilation of reference material, check out Rasmus’ 30 second tutorial. (via Jeff Nolan).

Tags: 24sevenoffice, AJAX, ASP, Enterprise Software, hosted software, netsuite, On-Demand, SaaS, Web Applications

(Updates at bottom)

“Enterprise software vendors who leverage open source, subscriptions and grid computing to meet customer needs will emerge as next-generation industry leaders. “ – says John Loiacono, EVP, Sun Microsystems.

Jeff Nolan recommends caution: “… open source and subscription licensing, two completely separate trends that often get lumped together, are not silver bullets for emerging companies.” His post is well worth reading, and I agree with most of his logic, which refers to the traditional Open Source “business model”, if there is such a thing (we’ll come back to this later):

• Open Code
• Broad Support Community
• Paid Sales & Marketing staff
• Paid core Engineering
• Product Available free
• Revenue from support / training / consulting… i.e. services

He then rightly concludes that this model is basically a service business, so investors should beware, when we peel the hype layer away, they don’t find the hypergrowth software business there.

Yes … but … this may just have been the “beta version” of an Open Source business model – if we can even say that. In fact we really shouldn’t: Open Source is not a business model, it’s a software production model (and philosophy), says Marten Mickos, CEO of MySQL (via Jeff Clavier). Absolutely.

The two examples Jeff uses, SugarCRM and Compiere could not be further away from each other – not only in terms of their product offering, but mostly their business model.

Compiere, for all I know is closer to that “beta model” of “trying-to-make-a-buck” on Open Source, or, if I may say, the idealistic, altruistic (?) Open Source company that makes ALL it’s products ( full ERP & CRM for the SMB sector) available for free, source code included. They even let Consulting/ Implementation Partners rebrand the product under their own name. They are the “nice guys” barely making a buck on support. (Sorry, Jorg, if I am mistaken.)

SugarCRM, on the other hand is not even a purely Open Source company, it’s a hybrid. (Hey, hybrids are popular nowadays ). “ It didn’t take me long to realize that there is a HUGE part missing in the open source version “ says Simon Romanski, director of information systems at Fulfillment America, quoted by ZDNet. The title says a lot: Commercial open source, a misnomer? Well, not a misnomer, but definitely commercial software: SugarCRM sells the Pro and Enterprise versions of their product, and also charges for the On-Demand version. Even the Open Source version can be “upgraded” by paying for extensions, e.g. the $39.99/user Outlook Plugin. Hm, I would not put my Sales Organization, no matter how small, on a CRM system without Contact synchronization. By the time we configure the basic needs of a small Sales Team, chances are pricing is on par with a truly commercial software company, e.g. 24SevenOffice .
So is SugarCRM using Open Source as a marketing gimmick, riding the fashion wave? I don’t think so. Nor do I think there is anything wrong with the business model… perhaps a little heavy on the hype, like the other guy selling software using the “No Software” slogan. SugarCRM is a successful hybrid that’s partly Open Source (development, support community, viral marketing) yet generates it’s revenue from selling software like any other company.

Only to prove Marten right.

Update (9/01): ZDNet’s SaaS blog has a good follow-on article on SugarCRM: “Outwitted by its own ecosystem”

Update 2 (9/01) The “Commercial Open Source” story reverberates; ZDNet’s Dan Farber follows on quoting Marc Fleury, CEO of JBOSS.

Update 3 (9/28): The Next Little Thing Isn’t Free by Sam Ramji

Update 4 (11/16) But is it really free? CIO Magazine

Hybrid Open Source Business Models by Zack Urlocker

Tags: 24sevenoffice, ASP, Compiere, crm, Enterprise Software, erp, MySQL, On-Demand, Open Source, SaaS, salesforce.com, SugarCRM