Open source demands new buying strategies

Open source demands new buying strategies

There are no two ways about it: open source is everywhere. You'll be hard-pressed to find a single IT shop today that doesn't take advantage of open source software, be it Linux, MySQL, Perl, or the Snort networking tool. Top-tier vendors such as IBM, Novell, Oracle and Sun are investing heavily in open source projects and community-based development. Even Microsoft is getting in on the game. But despite widespread and growing acceptance, making the case for open source in mission-critical enterprise IT environments isn't always easy.

To some, the idea of a major technology vendor open sourcing its software conjures up an image of an IT garage sale, where companies give away unsuccessful and poorly maintained products in the desperate hope that someone else will know what to do with them. After all, if a piece of software is good enough to use, then surely it's good enough to sell?

It's true that companies occasionally open source their software more as a way to generate buzz than as an honest attempt to garner community support, but it's a mistake to assume that motive. The business models around open source are maturing, and what began with a few early trailblazers is growing into a genuine revolution in thinking within the software industry. While it's natural and even advisable to maintain a healthy scepticism about open source today, within a few years' time the open source model may actually become the norm, rather than the exception.

This leaves IT managers in a quandary. As the old models and assumptions of software development begin to give way, so too must the traditional means by which IT shops evaluate and procure enterprise software. More and more, those decisions will require a new kind of savvy that reaches far beyond the budget sheet and into the software development ecosystem itself.

No free lunch

The first question to be addressed is how a company such as IBM or Oracle can afford to give away its software for free. The answer is simple: They don't, really - at least not when you look at the larger picture.

For many reasons, the traditional shrink-wrap software distribution model is a poor fit for enterprise software. As IT infrastructures grow larger and more complex, per-seat or per-CPU licensing schemes become increasingly hard to manage. Arcane pricing formulas lead to fee structures that don't accurately reflect the actual utility of the software, not to mention inspiring a variety of creative accounting techniques on the part of bewildered CFOs.

For these reasons, companies such as Sun have made the conscious decision to forsake the shrink-wrap model in favour of pure subscription pricing. The software itself is free. Customers pay for ongoing support, maintenance and integration assistance.

A sceptic might say this is just a different kind of Hollywood accounting. And it's true; in the long run, the omission of a specific licensing fee doesn't necessarily mean that customers will save any money. It's important to note, however, that a company that has made the leap to a subscription-based pricing structure is but one step away from the next stage of its evolution.

The subscription-support software model is the open source software model. All that remains is to open the code - and that's exactly what Sun, among others, is doing.

Companies including MySQL and Red Hat have built successful businesses by charging money for enterprise-level support for free software. As such ventures continue to flourish, proprietary software vendors must ask themselves whether the business benefit of keeping source code under lock and key really outweighs the other benefits offered by this new software paradigm.

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