Archives for November 2005

(updated)
No, I don’t speak Swedish … but it’s cute:-) More on it later… The recent controversy around Shai Agassi’s remarks about Open Source prompted Marten Mickos, CEO of MySQL to come forward with his own prospective.

But first things first, what was the controversy? “SAP Slams Open Source” – quoted CIO Today. SAP’s very own Jeff Nolan found himself in a rather invonvenient situation (at least initially) of having to distance himself from Shai’s perceived message: “I wasn’t at the Churchill Club event so I can’t comment on the context of Shai’s comments, but I do not agree with them if they are as represented in this article.”

In his speech at the Churchill Club Shai supposedly strongly came out against Open Source and equated it to “IP Socialism”. Hm…having grown up in a communist country I certainly don’t like the way it sounds… although if we look at what he actually said in the second half of this very statement, it actually makes sense: “IP socialism is worst thing that can happen to any IP-based society…If there is no way to defend IP, then there is no reason to invest in IP. “ Remember, this comes from the guy that invests over $1B in R&D. Jeff later listened to the full podcast of the session and realized the quotes were taken out of context. See more details and a link to Shai’s own blog at ZDNet.

My two cents: the traditional Enterprise Software model (mega $ licence fees, complex and costly implementations, expensive maintainence, questionable ROI) is not sustainable. Enterprise Software companies and their whole ecosystem (Implementation partners, 3–rd party plug-ins, etc) are experiencing Pricing and Innovation pressure not just from Open Source, but the increasingly adopted On-Demand model. One can’t really expect a SAP / Oracle ..etc Executive to be truly, entirely happy about the changes being forced upon them. That said, they can try to be obstructionists, or realize the world is changing with or without them – might as well go for the ride, take the challenge / opportunity to invent new business models and survive/thrive in the New World.

Marten makes the point that SAP is the latter group: “ SAP is the first and most significant ERP vendor to publicly, officially and in actuality embrace open source. SAP was the first enterprise ERP vendor to ship on Linux. SAP has an investment in Zend, the PHP company, and a strategic partnership with MySQL. By its actions, SAP is one of the great supporters of open source.”
On legacy software companies in general: “ At the end of the day, deeds count more than words. If you support open source, you will be supported by the millions in the open source community who are working hard to shape the future of the software industry. “

I fully agree with Marten’s views … but there’s one area where I’d take a step further: “ Perhaps open source can commoditize the infrastructure components and make applications more affordable.” Not just infrastructure, IMHO. Applications are next.
SugarCRM is a pioneer in commoditizing the application (CRM) market … yet they got outwitted themselves by their own ecosystem. The trend is unstoppable, even outside Open Source. A closed-source, on-demand company, 24SevenOffice offers its innnovative, fully integrated Web-based SMB suite for about a third of NetSuite’s prices, in fact they undercut Open-Source SugarCRM themselves, when comparing the On-demand version of their product.

As for the incoming tidal wave of Open Source Applications: CRM is just the beginning, the low-hanging fruit… there are literally hundreds of business-grade Open Source applications, ranging from accounting, manufacturing, purchasing, all the way to complete ERP-like solutions, or industry-specific point solutions, like patient management for health care, restaurant management .. etc. One of the reasons why they are not used widely is that they are “trapped in the land of the Nerds” (out-of-context quote by Joe Kraus of JotSpot at the recent SDForum Collaboration SIG event, but I just could not resist using it). Really. Most Open Source apps are difficult to implement, one has to be a real techie to navigate through the maze.

This is where companies like SQLFusion can help small businesses: by providing an easy way to create their web-presence, then offering a pipeline of pre-packaged Open Source applications that can be installed, used, kept up-to-date by a single click of the mouse they bring open source apps within reach of millions who otherwise would not have the expertise to use them. (disclaimer: I am affiliated with SQLFusion)

Update (11/16) Other points of view:

IP Socialism

SAP talks smack about open source

Bigamous contrition and open source faux pas

And now SAP looooves open source?

Big Brother

Update 2 (11/19) I’ve received inquiries about the title – it is explained in Marten’s article I linked to. Btw, it looks like Scandinavian style is in fashion.

Update 3 (11/29) Water into Wine: Monetizing Open Source via On Demand – great article by Rightnow CEO Greg Gianforte, obviously describing his company, but also a perfect fit to SQLFusion’s business model described in the last paragraph about. I love it, thanks, Greg! 🙂

Update 4 (5/10) The Stalwart woke up, blew the dust off of a half-a-year-old speech by Shai Agassi, and starts the Open Source as IP Socialism debate again. (hat tip: Jeff Nolan) Nothing new, why today? Anyway, perfect timing, anyone interested in the subject should come to the Who Pays For Software? New and Old Business Models event tomorrow, where Open Source will definitely be in the focus of a star-panel.