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Open source thrives in downturn
By Oliver Marks
Dcember 3, 2008

Collaboration initiatives are all about streamlining business processes, and the interfaces between legacy closed systems and open source stacks are an increasingly common place to find business collaboration environments.

According to research firm Gartner, open source software is present in 85% of enterprises and the remainder expect to deploy it in the next year.

While the large closed vendors struggle to steer their supertankers through increasingly unsettled waters, open source looks all the more attractive to budget constrained businesses looking to maximize their cost effectiveness.

Faster time to market with lower total cost of ownership and greater transparency into the engineering process are balanced by governance challenges, and to a lesser extent issues with conflicting terms and conditions and/or licensing confusion, according to Gartner.

Matt Asay, VP of business dev at open source company Alfresco, the open source Enterprise Content Management (ECM) set up by the original founders of Documentum, has a terrific blog on CNET and quoted some CMP media research in his ‘Where the channel is investing in 2009‘ post yesterday:

• Economic uncertainty is pushing companies to prove technology before buying it, which skews toward open source, which is all about trying before buying;

• There are fewer trusted options. Many vendors meet or exceed requirements, so buyers want to spend with brands they trust. (Note: Ironically, the “try before you buy” mentality will not always mesh well with this requirement, due to conflicting licensing models);

• End customers are planning smaller initial projects, with incremental add-ons. (Advantage: open source and SaaS, since both allow vendors to start small and grow organically);

• Forty-eight percent of end customers are looking to streamline business processes, rather than endure pure cost cuts. Basically, they want to spend money more efficiently, rather than simply cutting heads

• Seventy-five percent of end customers are buying some version of managed services, but the definition of “managed services” is quite broad;

Matt really knows his stuff around licensing, running the annual Open Source Business Conference, and his channel post is well worth a longer look.

I had lunch today with Ismael Ghalimi, CEO of Intalio. His open source Business Process Management System (BPMS) company is exploding with new business, going from 12 to 500 clients in the last 24 months despite having a sales force of zero. With 64 employees in 13 locations Intalio is a truly international company (Ismael has flown a quarter million miles so far this year to meet with some of his new customers) and they are planning on making 8-12 acquisitions in the next 12-18 months to further expand their platform offering.

The confluence of challenging conditions in the business world has resulted in open source being taken very seriously indeed by those mapping out strategy and tactics in enterprises, as Gartner’s report demonstrates. While it is virtually impossible to decouple the enterprise class systems which are the IT spine of companies while running the business (like trying to rebuild an aircraft while in flight as a friend put it), I believe we are going to increasingly see such systems constrained and compartmentalized and in some cases with little new investment.

The global scope of a company like Intalio is pretty amazing with both customers and employees spread out across both hemispheres. In many ways open source is the purest form of international capitalism, and the stakes are high for Intalio to establish itself as the de facto Business Process Execution Language (BPEL) engine in the best of breed technology stack. The world market is literally at stake for those able to achieve the economies of scale open source enables.

Alfresco’s Matt Asay believes money will be spent more strategically, and therefore more efficiently, in the 2009 open source world, and the relative safety of established open source vendors or partners will be attractive to buyers, who will be balancing cost effectiveness in terms of time and money against upgrades of legacy infrastructure.

Gartner again: IT leaders deploy open source for customer service business process, enterprise integration, finance and administration, and business analytics, sales and marketing, customer analytics, field service, enterprise resource planning and customer relationship management.

It’s going to be interesting to see what kind of momentum open source picks up during what will be a grueling recovery from the recession over the coming years.




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