Commercial Open Source Software

Open Source Conference: “Open Source Enterprise”, my speech at QuiFree

Within the context of the “Festival della Creatività” on October 26 and 27 took place in Florence the first edition of QuiFree.it, a two day event on free knowledge and open source.

QuiFree.it had a dense agenda, including regional and national political representatives, international speakers like Barbara Held from the European Open Source Observatory, Rishab Gosh from the United Nation University, Pekka Himanen, Derrick De Kerckhove and many others.

The Open Source conference, held on a hot Saturday afternoon, brought together many representatives of the Italian Open Source community. Among others: lawyer Carlo Piana gave a speech on Free Software Myths, Gianugo Rabellino talked about Open Development and Andrea Valboni spoke about Microsoft’s open source strategy.

“Open Source Enterprise” was the title of my speech, given as Secretary of FIDA Inform, the National Federation of the Associations of Information Management Professionals.

After mentioning some public and tv ads sponsored by the Italian Government, I reported some findings from the EC-funded project tOSSad – Towards Open Source Software Adoption and Dissemination. The project, aiming at improving the outcomes of the F/OSS communities, proposed to use mass media and branding of Open Source products to address identified weakness. The weaknesses of the F/OSS solutions perceived by the experts in the IT throughout Europe namely were:

• Lack of Awareness
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• Lack of Training
  .
• Lack of Entrepreneurial Culture
  .
• Unwillingness to Change
  .
• Lack of Connectivity

Lack of awareness cluster, composed by answers which have identified problems in public knowledge about F/OSS solutions, included categories of answers like: “public is uninformed about OSS solutions”, “no public interest and no marketing”, “low penetration of IST and Open Source in SMEs in the region”.

The solutions proposed by the experts, ranging from “awareness campaigns about social and economical benefits” and “using mass media for advertising (by large F/OSS based companies)”, to
addressing the younger generation, for example “involve schools and universities to promote F/OSS solutions”.

Awareness campaigns might well be an enabling factor to empower the open source industry, as agreed by Fabrizio Capobianco and Alex Fletcher and James McGovern. Considering that the audience was supposed to be composed by local public interest groups, I took the chance to remember that the Italian Budget law assigned funds [30 millions of euros] to sustain innovation by local public administrations.

It’s totally new! We’re making possible a marketplace where IT goods and services are exchanged more effectively, where public administrations’ needs and firms’ competencies and skills on open source platforms might meet [Beatrice Magnolfi, undersecretary State for Public Administration Reform and Innovation].

Getting back to Open Source Enterprise, I mentioned Gartner’s findings. Open-source products accounted for a 13 percent share of the $92.7 billion software market in 2006 and predictions set the percent share to 27 in 2011, when revenue is expected to be $169.2 billion. But look also at Saugatuck Technology, as reported by Matt, telling proprietary vendors how to survive the open-source threat. The Open Source Market is ready for prime time. At least customers are.

As results from another Gartner Dataquest graph, the compound annual growth rate of open source software will more than quintuple that of proprietary software in the next five years. More important, the growth of the emerging phenomenon of Internal Open Source Development.

Customers are getting themselves organized, because small to large Italian firms can’t accomplish their needs. The Italian ICT market is a fragmented archipelago, made by lots of micro-companies where only 0,2% of ICT firms employ more than 250 employees. Small IT firms sometimes employ also gifted hackers, but they can’t manage to keep them busy doing just what they are really good at. Medium to large ICT companies offer a suite or two, often based on third parties open source products, and have no connection with open source communities.

As shown by an OpenLogic study, a quarter of interviewed customers using more than 100 Open Source products can boldly affirm that they saved more than 60% of their IT budget. While 44% of customers using about 1 open source product answered that is “too early to tell”. At the end of the day, open source is not a magic wound, and you need an open source policy and strategy to really take advantage of.

But the Italian open source market, likely not differently from many other European countries, has almost no open source product firms. VAR are having big trouble to sell off-the-shelf Linux distro, and to retain customers is not easy as soon as they get technologically autonomous. System Integrators and ISV, no matter how big they are, have no capacity to define and sell packaged services yet.

The absence of a wide enterprise grade commercial support opened new opportunities, allowing firms like BlackDuck, OpenLogic, Palamida, SpikeSource and SourceLabs to offer “horizontal” services not related to a single package. For example, firms offering intellectual assets protection take deliver assessment services for many if not all packages.

Their business model might be considered “horizontal”, as opposite to the classical (vertical) business model, where a firm offers every kind of services for a single package/distribution.These companies will play an important to role in the developing of an efficient and effective open source ecosystem. Nonetheless traditional forms of partner engagement might not work, and things like Open Source Franchising will definitely come to play, soon.

There are still just two ways to make money from OSS: “invent your own recipe” or being proficient at “cooking others’ recipes”. If you don’t like cooking, you’re out of the market.The result?

(big) Customers cooking their own lunch.

Technorati Tags: Commercial Open Source, QuiFree, Microsoft Open Source, Sun, CarloPiana, StefanoMaffulli , Blackduck, Palamida, OpenLogic, SpikeSource, SourceLabs, SavioRodrigues, AlexFletcher, JamesMcGovernor