Why In The World Would Big Companies Use Open Source?

A little over a month ago, I set out to find out just how popular open-source software has become within big business. These are companies that have the money to spend on the biggest, most complex packages that IBM, Oracle, and other enterprise software makers have to offer. They're also companies with armies of IT professionals highly proficient in writing and maintaining their own applications. Why in the world would they use open source? Actually, the question has become: why in the world wouldn't they use open source? Here's some of what I learned while I was researching InformationWeek's Sept. 26 cover story.Most large, multi-billion-dollar companies don't know how much open source they're actually using. It's introduced into the IT environment by developers looking to build the best applications in the shortest amount of time possible. "Developers have quite a bit of leeway when finding the best tools to get the job done," Jeremy Zawodny, a member of Yahoo's technology development team, told me when I asked him how it was possible for open source to penetrate highly organized and regulated IT environments.

Most companies don't have a budget, per se, for open source. Open source is often used to help launch side projects that otherwise would stay on the shelf because there isn't enough IT money to go around. Other times, open source is used to support critical applications quickly and cheaply, as Continental Airlines did with Ticket Reissue and Traveler Alert, but it's part of the larger solution and hard to quantify.

Open source is responsible for changing the character of large IT operations even more than it is changing the composition of these operations. There are still a lot of proprietary systems out there, and there will be for a long time. But open source's momentum is undeniable. Perhaps the greatest driver of open source adoption is that programmers like it, Nielsen Media Research VP of IT strategy Kamal Nasser told me. The open source community works in the collaborative fashion that lets programmers thrive. "It's a cultural issue; this is an environment that programmers seek out," he said. "Developers see open source as a natural extension of their own environment. It's easier for developers to get help when then need it. They don't like calling 800 numbers."

There seems to be a consensus among large companies that open-source is a superior model for avoiding per-CPU software licensing fees that quickly add up in the data center. "For companies like us that have a lot of large-number CPU machines, this is expensive," Nasser said. "Vendors will charge per CPU even if your server isn't dedicated to their product. As a result, we've been changing our entire hardware architecture to go from large multi-CPU servers to multiple, smaller-CPU severs." This will be more of a challenge for Nielsen in replacing the company's data warehouse servers, which have to run on larger multiprocessor machines.

There's an awful lot of the open-source JBoss application server and MySQL database being used by large companies. In fact, I really didn’t have to go any further than their client lists to find most of the companies I interviewed. I asked JBoss Inc. CEO Marc Fleury about this when I met him in New York the other day. He told me that, for large companies, open source provides a middle ground between developing and maintaining their own applications and paying a vendor to do this. One of the reasons open source has been successful, particularly in large businesses that have already made significant IT investments, is that companies can pick and choose the pieces they want to use, Fleury pointed out, adding, "A mark of the success of open source is that it's modular by design."

For smaller companies with fewer legacy IT investments, open source offers the ability to build an IT environment that more closely matches the company's needs. Plus, "you can't beat the pricing," Fleury said.

Fleury's comment about pricing is a bit controversial. Some of the IT managers I spoke with expressed concern that open source would indeed become expensive if companies came to rely too much on commercial vendors such as JBoss, MySQL AB, or Red Hat. The ace in the hole, of course, is that the underlying code is available for anyone to see and use, and that means that there will be no shortage of open-source service providers to challenge the current crop of they get too big for their own good.

Big companies don't want to get pinched by intellectual-property lawsuits over open source. Fleury told me a factor that can't be overlooked when dealing with big customers is the need to protect those companies from any intellectual-property challenges to your software. That's why JBoss, Red Hat, Novell, and others offer indemnification as part of their services. Essentially JBoss will replace any code found to be in violation of intellectual-property rights, Fleury said. "This is a sticking point for CIOs," he added. "If we did not have indemnification, a lot of the big customers we have wouldn't have signed with us." Incidentally, JBoss's biggest customer to date is France's version of the IRS: the French Directorate-General of Taxes. It's a 7 million euro services contract (roughly $8.6 million U.S.). Not bad for a guy who got his company off the ground by writing a training curriculum for his software while living with his in-laws in Atlanta after funding woes chased him from Silicon Valley.

Stay tuned as I check out how the other half lives. My next open-source project, due out next month, will examine the role open source plays supporting startup and emerging companies. Unlike their deep-pocketed corporate counterparts, these small-but-growing businesses are turning to open source to breathe life into ideas that otherwise might not have seen the light of day. In several cases, open source is providing the tools that today's entrepreneurs need to put their ideas out on the Web, where they can be discovered and, hopefully, funded. You may not have heard of several of the companies I'm speaking with, but chances are you will someday.