OpenLogic On Enterprise Open Source: A View From Inside

Curious about patterns in corporate use of open source, I chatted up VP of Marketing Kim Weins for OpenLogic, creators of the OSS Discovery tool and a leading maker of open source enterprise integration and support tools. My rationale: they've seen how it works from the inside, so they ought to know.

One major question I had for Kim was something I've been asked a few times myself by people still on the outside of the open source phenomenon. How is it that adopting open source, especially from a commercial vendor, leads to cost savings? What's specifically cheaper on the seller's side?

Kim put it this way: "If you look at how the open source development is done, by making it open and community-based, then you have not only the developers but customers contributing code and fixes. When I worked at PeopleSoft, the customers couldn't help us fix anything; it had to be done a hundred percent in-house. With open source, the users, the customers, other developers, other community members, are helping to make the product better and reduce the cost structure for the vendors.

"Also, the businesses themselves have a different business mode and a different business structure. These companies realize from the beginning that they need to be leaner and meaner. The cost structures of their sales and marketing efforts are also different -- you don't have to pay as many expensive salespeople to sell equally expensive software to very large companies. Instead, you download the software, you use it for free, and if you want support [or professional-level features, depending on the package], then you pay for it." (She also pointed out that sometimes the procurement process within a company makes it very difficult for them to even obtain an expensive package on a trial basis.)

I need to point out that the term "customers" doesn't simply mean a guy sitting in front of his computer, but people who often have just has much expertise with software as the people who wrote the program. It's in the same vein as Jim Zemlin's use of the term "Linux users" when talking about his recent invite-only events -- it's not guys like us, so to speak, but major clients in the Fortune 1000.

One anecdotal example Kim gave me was a Fortune 250 company, a health-care concern. (Sadly, they wouldn't give their name.) "They've been a customer of ours for a year and a half, and they have been trying to make some headway with open source. Prior to working with us, they didn't really have an open source policy. They wanted to put in place some governance and controls, but also enable more active uptake and use of open source in general. They called us because they wanted to add some projects to their library which they didn't have yet, and one of them was a business process management package.

"One of their own development teams needed some tools in this space, and had found a commercial solution. When he got the bill for that solution, he went to the VP to get his sign-off on it, and it was something like one to two million dollars -- just to cover their initial implementation. And that was on an annual basis. If they had completed the implementation, they would have been looking at something like ten million dollars, annually. The VP looked at it and said, 'Isn't there anything else we can do?'" (Short answer: yes.)

"So the team went back and looked for open source solutions, and found one relatively quickly. One of their engineers prototyped, in the space of about forty-eight hours, about one and a half of the four applications they needed with this new solution. They called us because they're now looking at switching over entirely from that commercial solution."

That sounded to my ears like they had people in-house who were already open source savvy, which turned out to be pretty typically the case. "Most companies today have some number of people -- often in whatever group deals with enterprise architecture -- who have as part of their charter looking at how to use open source in their organization. This includes support, governance, but also vetting and determining what should be part of their standard stack, and promoting or championing open source options within the organization.

"Consequently, support comes in two ways: one, they either go to their developers and get support directly from them (this is how most people start); two, they use commercial open source vendors. And commercial support for open source is a lot cheaper than the same support for proprietary applications" (for all the reasons described above).

This led to some discussion of how commercial vendors of open source could become their own worst enemies. "As the industry matures, open source vendors have to be careful not to turn themselves into just another commercial venture. They need to maintain that flexibility and that cost benefit they can provide over commercial proprietary solutions. And sometimes smaller customers are better at matching what they charge to the value the customers get."