Enterprise System Spectator blog: ERP and enterprise system vendor evaluation, selection, and implementation.

The Enterprise System Spectator

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.
Post a Comment

Links to this post:


Powered by Blogger

(c) 2002-2016, Frank Scavo.

Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.

About the Enterprise System Spectator.

Frank Scavo Send tips, rumors, gossip, and feedback to Frank Scavo, at .

I'm interested in hearing about best practices, lessons learned, horror stories, and case studies of success or failure.

Selecting a new enterprise system can be a difficult decision. My consulting firm, Strativa, offers assistance that is independent and unbiased. For information on how we can help your organization make and carry out these decisions, write to me.

My IT research firm, Computer Economics provides metrics for IT management, such as IT spending and staffing benchmarks, ROI/TCO studies, outsourcing statistics, and more.

Go to latest postings

Search the Spectator!
Join over 1,700 subscribers on the Spectator email list!
Max. 1-2 times/month.
Easy one-click to unsubscribe anytime.

Follow me on Twitter
My RSS feed RSS News Feed

Computer Economics
ERP Support Staffing Ratios
Outsourcing Statistics
IT Spending and Staffing Benchmarks
IT Staffing Ratios
IT Management Best Practices
Worldwide Technology Trends
IT Salary Report

Get these headlines on your site, free!


2014 Best Independent ERP Blog - Winner

2013 Best ERP Writer - Winner

Alltop. We're kind of a big deal.
Constant Contact 2010 All Star Technobabble Top 100 Analyst Blogs

Key References
Strativa: Business strategy consulting, strategic planning
Strativa: IT strategy consulting
Strativa: Business process improvement, process mapping, consultants
Strativa: IT due diligence
Strativa: ERP software selection consulting and vendor evaluation
Strativa: CRM software selection consulting and vendor evaluation
Strativa: Project management consulting, change management
StreetWolf: Digital creative studio specializing in web, mobile and social applications
Enterprise IT News: diginomica

Spectator Archives
May 2002
June 2002
July 2002
August 2002
September 2002
October 2002
November 2002
December 2002
January 2003
February 2003
March 2003
April 2003
May 2003
June 2003
July 2003
August 2003
September 2003
October 2003
November 2003
December 2003
January 2004
February 2004
March 2004
April 2004
May 2004
June 2004
July 2004
August 2004
September 2004
October 2004
November 2004
December 2004
January 2005
February 2005
March 2005
April 2005
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008
February 2008
March 2008
April 2008
May 2008
June 2008
July 2008
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010
April 2010
June 2010
July 2010
August 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011
April 2011
May 2011
July 2011
August 2011
September 2011
October 2011
November 2011
December 2011
January 2012
February 2012
March 2012
April 2012
May 2012
June 2012
July 2012
September 2012
October 2012
December 2012
January 2013
February 2013
March 2013
May 2013
June 2013
July 2013
September 2013
October 2013
December 2013
January 2014
February 2014
March 2014
April 2014
May 2014
June 2014
July 2014
August 2014
September 2014
October 2014
November 2014
December 2014
February 2015
March 2015
April 2015
May 2015
June 2015
July 2015
September 2015
October 2015
November 2015
February 2016
May 2016
June 2016
July 2016
August 2016
September 2016
October 2016
Latest postings