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