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Wednesday, April 27, 2005

Open Source Software: What's Next?

This is a big question; I am going to take a stab at it. It’s no secret that open source has conquered the lower layers of the stack namely the operating system layer with Linux, the App/Web server layer with Apache and JBoss, and of course the DB tier with MySQL and PostgreSQL. Some proprietary vendors have embraced open source to their advantage and sometimes used it to hurt their competitors (like IBM’s commitment to Linux to hurt Microsoft or SAP’s support for MySQL to annoy Oracle) while other vendors have a very hard time finding a new source of revenue such as BEA.

It doesn’t take a genius to figure out that open source’s next crusade will take place. The first obvious area is enterprise applications and some people believe strongly that the second one is IT management. Open source software usually thrives where systems take forever to implement and require big upfront software licensing fees charged by large proprietary vendors making it inaccessible to SMBs. I believe that CRM, ERP and PBX are definitely in this category. In that order there are strong open source projects that are trying to claim market shares namely SugarCRM, Compiere and Asterisk. I could have added the popular Nagios project for the IT management space which extended and supported by companies like GroundWork. Obviously, today these companies are no match for Oracle, SAP, IBM, Microsoft or Cisco but they are gaining ground every day and their popularity is a clear indication of where OSS is going next.

I also believe that the penetration of open source in the enterprise application world might be even faster than its penetration in the underlying layers simply because there is a big market opportunity for services and the open source community will be much more enthusiastic about developing enterprise applications to solve real world (sales automation, HR, billing, supply chain, health records…) problems for themselves and their clients than developing operating systems which can be boring at times.

An interesting debate would be: How can large proprietary vendors continue to make money and grow? My modest and personal answer is that, among other things, they have to invest heavily in R&D to always stay ahead of the curve and change their licensing model. IT buyers are much more educated, they are willing to spend money as long as there is a demonstrable and durable ROI. Salesforce.com is a good example; they offer more functionality than SugarCRM and they don’t charge licensing fees upfront. It’s an affordable monthly fee that customers pay as they go. By the time Siebel realized they had to offer a subscription-based offering, Salesforce.com was already public. It was too late.

This is a topic I would really love to get your opinion on, please post your comments. Do you believe open source is going to be big in the applications space five years from now? How do you see large proprietary vendors make a difference? Do they have to change their licensing model? Do they have to use their domain expertise to deliver services as their software revenues shrink?

13 Comments:

  • I think a good case can be made that monolithic applications will disappear altogether.

    Accept Geoffrey Moore's premises in Orchestrating the Stack for a while and think through what is likely to happen.

    In his speech he looks at the Stack from Hardware up through Applications and then goes through where each of the 7 major players in the Industry is positioned. He then argues what the likely Gameplan might be for each of the players. (Well worth listening to if you haven't already done so)

    The central idea is that everyone will try and make their stronghold in the stack the all important 'System of Records” around which the other elements depends, while at the same time relegate the other elements to low profit commodities.

    Add it all up and you will probably agree that the most likely outcome is that they will all succeed in the latter and fail in the former. The entire stack will be commoditized, after all they are 6 against 1 in each element of the stack.

    Now what does this likely commoditization of the whole Stack mean. Switch gear for a second and listen to Clay Shirky's talk about Ontology is Overrated and we might get an inkling of where we are heading.

    Shirky argues that imposing a structure / ontology on something that is large, ill-defined, dynamic with predominantly non-expert users, is wrong as it is not only costly in its own right but you lose a lot since you are optimizing for something that is rarely germane to the problem at hand. Example: Library catalogs are optimized for the physical storage of books rather than the Ideas embedded in the books. Yahoo's original 14 top level categories was a throw back to same thinking despite not being constrained by the physical world. Google realized this and freed the ideas to organize themselves using links, replacing Browse with Search, thereby shifting the “power” from the ontologists to the user. (It's a very refreshing and interesting speech)

    In many ways any major application is akin to an ontology of sorts with same set of problems. Optimized for something else and forcing a harmful worldview on the “naive” users.

    Additionally Web Services in its many forms are not too different from URLs, so if we combine the two we will maybe see a Googleized future replacing traditional Applications.

    The “Search” could be ad-hoc constructions of webservices enabled views and actionable elements with a central engine allowing this to happen. The central engine will do the necessary manipulation on the services to allow this.

    I could expand on this but it is already a bit long for a Comment.

    By Blogger Bjorn Stadil, at 12:07 AM  

  • Great comment Bjorn, not sure what your conclusion/point is?

    Thanks.

    By Blogger Omar Tazi, at 1:03 PM  

  • Maybe I got a little ahead of myself. In the last half of my comment I was trying to offer answer to the question: Now the whole stack is commoditized then what?

    If this happens a lot of IT Development will be mixing, matching and remixing of Web Services.
    (Is anyone you know of working on a WebServices Container, like a Browser for WS?)
    We will see a rush to standardization of these services UDDI Redux type stuff, like Infravio is doing.

    The “need” for classification etc will be self evident until a new Google comes along and realizes that if we cleverly can capture what other services each one is cooperating with and what the “strengh” of that cooperation is we might not need that classification We can "Search" instead.

    By Blogger Bjorn Stadil, at 8:23 PM  

  • Much clearer now, you are basically a believer in software being built, sold/offered, discovered and used as a service. Many large vendors are certainly moving in that direction such as SAP which making a huge push with Netweaver and ESA.
    SAP is a big believer in Web services and SOA. They would like to expose their great business modules (ERP, Finance, CRM...) as reusable services.
    Thanks Bjorn for sharing your view of the next wave.

    By Blogger Omar Tazi, at 9:48 PM  

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    By Anonymous Anonymous, at 9:15 PM  

  • Next is and should be easy for all OS & apps.

    Like Bjorn pointed out, everything is going to Web and it is the right thing too.

    Simplification of every application and universal accessibility of every single application.

    The challenges of FOSS community will be more pronounced in the coming days with increased challenges to online security and data management.

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