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Friday, June 09, 2006

Why organizations choose open source software

Si Chen gave a presentation at the Enterprise Open Source Conference in New York this week on, Why Enterprises Are Adopting Open Source Applications. Chen and his firm, Open Source Strategies, are one of the driving forces behind the open source ERP application Open For Business (or, Open4Biz, or OFBiz), so he's well qualified to talk on this subject.

He's also posted his entire presentation transcript along with the slides on his blog. It should be required reading for anyone wondering what open source is really all about.

Chen starts by listing three companies that have adopted Open4Biz and why they went the route of open source:
  • Ameniti Travel Clubs, a subsidiary of UAL Corp and a sister company of United Airlines. They chose open source because it is easy to modify and allows them to move quickly with new business opportunities.

  • Snaidero Engineering and Trading, a subsidiary of the Snaidero Group, Italy's number one kitchen cabinet manufacturer. They liked the freedom to customize open source and implement it in many sites around the world without having to pay additional license fees every time they redeployed it.

  • British Telecom, one of the largest telecom firms in the world, which is implementing the Open4Biz application to support catalog management and online ordering for mobile products and services. Chen says, that British Telecom "will be serving all 18+ million residential and commercial customers in the United Kingdom with this system. As such, it is a very large deployment: they are scaling it out to support up to 16,000 simultaneous visitors using a cluster of 72 CPU's."
Concerning why British Telecom chose open source, Chen says,
When we asked British Telecom why they are going the open source route, we got a very interesting answer. The commercial solutions they looked at were expensive, given their volume and growth rate. It would have been several millions British pounds a year. More importantly, the commercial solutions would have still required a lot of coding and development. So it's like spending a lot of money to buy one of those mail order toys, only to get a box full of little plastic parts that you have to paint, glue, and assemble. Not much fun.

Conversely, with open source, they found that it had a reasonably good fit for their requirements. It still needed work, but they thought it was a good strating point because of a "well thought out data model," and it was "easy to change." Best of all, it was free, so the low cost helped as well.
The second part of Chen's presentation focuses more generally on the reasons that organizations choose open source over commercial software. Here he has a balanced view. His basic premise is that commercial software is the best choice when user requirements are generally the same across many organizations, there is little need for customization, and commercial software is not costly.

Conversely, however, when the organizations requirements are unique and there is the need to modify the software and the cost of commercial software is prohibitive, then open source is a good choice.

Although Chen doesn't put it this way, the point I got from this is that open source really shouldn't be viewed as an alternative to commercial software--it is an alternative to in-house custom development. Where companies today are spending much energy and effort to custom develop applications to support unique requirements, they really should be investigating whether there is an open source product that can be used as a starting point. The open source approach gives a head start to the development team and it also has the potential to leverage other development efforts of other organizations that are investing in the same open source product.

Chen has several other good points, which I won't elaborate on here. He talks about how service oriented architectures and the trend toward software as a service are catalysts for open source. He also talks about the current software vendor consolidation trend as reducing the choices in commercial software and thus strengthening the alternative of open choice.

I met Si Chen for coffee late last year and was impressed at the time with his vision for the potential of open source to change how business applications are developed and supported. Now, nine months later, he's still convincing.

Read his whole presentation on his blog.

Related posts
Key advantage of open source is NOT cost savings
Open source: turning software sales and marketing upside down
Buzzword alert: "open source"

by Frank Scavo, 6/09/2006 05:29:00 PM | permalink | e-mail this!

 Reader Comments:

The testimony of British Telecoms must be used sparingly and never as a rule of thumb sales talk.

Chen's 2nd part about when to go and when NOT to go Open Source is the better rule of thumb. It really boils down to, "It all depends".

Even for in house customs development, as you imagined, there are still a myriad of factors. Are there skillsets gaps?
Whats your time to market vis a vis the matured offerings be they open or otherwise.
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