Welcome!

Eclipse Authors: Pat Romanski, Elizabeth White, Liz McMillan, David H Deans, JP Morgenthal

Related Topics: Open Source Cloud, Linux Containers, Eclipse, Agile Computing, Release Management , Apache

Open Source Cloud: Article

Making Commercial Open Source Software

Delight customers and profit

I recently blogged about making open source software, and the high level steps for how to think about the process. We started with the need for software to seed the discussion, the need for clear motivation as to why to publish as open source software, and then the structural requirements to build a community (license choice, collaboration platform or forge, and governance considerations). Contributions are the life blood of any community, so lastly we talked about the need to build an onramp to encourage users that will hopefully become contributors, and the additional onramp needed to make it easy to contribute.

Rory MacDonald (@technocreative) challenged in the comments that there are substantial commercial motivations for a company to develop open source projects that go beyond a desire for collaboration, and provided a number of examples.  I completely agree, and I'd like to build on these ideas.

Why as a company (rather than as an individual) would you want to "make" open source?

Again we have two types of making to consider:

  • A company can contribute to an open source project that already exists.
  • A company can create a new open source project (either by publishing existing software or creating new).

If we consider a company making contributions to an "outside" project then we should do so from the perspective that this is an advanced case of collaboration where the open source project is being used in a product or service the company offers to customers for sale. Think Red Hat and using Linux to deliver Red Hat Advanced Server.  Otherwise, contributing to a project that is used strictly in-house pretty much looks like the discussion in the previous post -- it's about engineering economics and shared innovation and living on a fork gets expensive over time unless it can be balanced against the costs of maintaining a business advantage through secrecy (e.g. the way Google used Linux in the early days).

Participating in an external open source licensed project is a case of expanding traditional corporate thinking of "build" versus "buy" to include "borrow" and "share".  It's about time-to-solution if a company uses the project in-house and about time-to-market if the project is used to develop a product or provide a service to customers for sale.  One needs to remember as a company using open source licensed software in a product or service that the company exists to solve a problem and create a marketplace around the solution.  This is all about Levitt's observations about solving customer problems ("needing a 1/4 inch hole") over selling products ("the drill").  Red Hat wasn't "selling a Linux distro" but rather providing a professionally maintained and supported low cost PC-based server replacement for expensive proprietary UNIX systems on expensive proprietary hardware.

The interesting problems when using an externally developed open source project as a company are in understanding the flow of ownership of the intellectual property with respect to the software.  There are a couple of predominant concerns:

  • What legal risks are possible that need to be managed against a company's risk profile.  This should not be taken lightly.  Companies are more interesting legal targets than individuals.  Even if a company is using the software internally rather than in a product or service, there is still a risk profile to consider.  It's not that the risk is greater than purchasing a proprietary software solution from a vendor but one needs to feel comfortable that the externally run open source licensed project has appropriate IP management safeguards in place.
  • What intellectual property is being contributed to whom. Again, companies are often uncomfortable contributing their own hard won R&D investment to others (even partners) without crisply understanding the return.

As a company each of these legal concerns comes with additional legal responsibilities.  Open source software foundations provide solutions to these problems by providing neutral non-profit space in which companies can collaborate together, and backing the space with proper IP management practices. The Apache Software Foundation, the Eclipse Foundation, the Linux Foundation (né OSDL) and the Outercurve Foundation were all created to manage the risk around these software IP problems.

The discussion becomes interesting when a company considers creating its own open source licensed projects.  Rory's examples speak to benefits.  Let's start with the motivation again.  People are often very good at understanding their "gut" motivation for doing something.  The larger a company becomes the more thought and documentation needs to go into such decisions, especially once a company goes public.

If the project to be published under an open source license is "infrastructure" for the company, then the motivations are all based on shared innovation and distributed engineering economics. This is what we see with data centre-centric projects created by the likes of Amazon, Yahoo, Google, Twitter, Netflix, or the Facebook Open Hardware Initiative.  The company starting the project is sharing work in which they have invested time and energy in the hopes that others will join the project, use it in new ways thereby hardening the software and contributing at the very least bug reports, but also hopefully extending and evolving it.

When this is the motivation, all the discussion in the previous article comes into play around making open source.  Essentially, one needs:

  • Useful software as a base around which to build a community.
  • Motivation to share, credible expertise in the problem to be solved, and an understanding of the software structure to anchor the open source community.
  • The project needs to have the structural issues of license, forge, and governance decided, even if governance becomes an evolving discussion in a growing community.
  • The community needs to build a solid onramp to encourage use, and a second onramp for users to become contributors.  The sooner this happens in a project's life, the faster it can build a community.

The additional consideration to encourage corporate participation and contribution needs to be software ownership, legal risk, and IP management around the contributions.  This is where considering using existing open source software foundations comes into play.  Corporations are far more likely to contribute their software to a neutral non-profit for mutual benefit.

But as Rory points out, there are business motivations for creating open source projects as well.  A company's executives want to "increase business" but does that mean increase leads in the sales pipeline?  Or build a community of evangelists that firmly anchor the company's products and services while providing proof points and expertise to potential new leads.

Using free and open source software in a commercial setting doesn't change the nature of running a business. One needs to clearly understand that customers buy solutions to problems and what problem the company is solving. Geoffrey Moore demonstrated some time ago that companies offering the best "whole" solution win, i.e. a core product or service and all its complementing products and services around a more complete ecosystem. This has a lot to do with shaping a "complete" solution to account for the subtle differences that customers perceive they have around the problem space.  Successful companies essentially offer a portfolio of products and services and as long as the sum of the costs of delivering the portfolio is less than the sum of the revenues (spend less than you earn), the company is profitable. Taking a portfolio approach allows a company to play with their pricing models and differentiate themselves for customers against similar competitors.

Open source software can play a number of roles in such a portfolio approach.  A company can:

  • Sell support, upgrades, customization, training and "stability" to a product that is otherwise provided as an open source project. The best example is probably Red Hat "selling Linux" when it doesn't own the core IP.  The "product" isn't the software.  JBoss tried several of these approaches before their Red Hat acquisition.
  • Sell a core product (licensed as proprietary or open source) while encouraging an ecosystem of complements from partners around open source licensed projects.
  • Allow customers to try the "product" in its simplest form as a set of unsupported unwarranted binaries for "free", i.e. downloading the community/developer editions, to self-qualify themselves in the sales pipeline.  (This was very much how MySQL built both its businesses.)

These items all speak to the delivery of the product and the pipeline.  A company can also develop a community of users of the open source project that act as a source of expertise and experience for potential customers.

A community of developers and users is an essential piece of the whole solution. Some companies develop large successful communities without ever publishing their product software. IBM, Microsoft, Oracle, and SAP have all done this to great success. This is why community building is so important for your company and why community development is an essential ingredient in your solution pitch to customers. User and developer communities (regardless of open source):

  • Anchor customers both in an engaged relationship as well as from a technology perspective.
  • Create knowledge, expertise and experience necessary to provide a complete solution for the technology pitch to the customer.  These proof points are invaluable when potential customers are self-qualifying themselves and testing the strength of a solution's community.
  • Create advocates and evangelists to spread awareness about a solution.
  • Create enormous inertia in the status quo around a technology.

These variations all rely on remembering a couple of related "rules":

  • An open source licensed project is not a complete product solution for most people.
  • Project community users and developers are not solution customers.  Community members tend to have time to spend on a solution but no money while customers have money and are looking for time-to-solution and certain guarantees.

Creating an open source project can be as simple as publishing software using an open source license, and this gives customers insight into the workings of a solution.  But if you ignore community building activities, you're losing all the benefits that come from an engaged base of customers and users of your technology.

Clearly understanding the benefits of using open source licensed software for delivering time-to-market, providing a rich complement ecosystem, and enabling communities to anchor the ecosystem in place allows a company to set its motivations correctly.  One can discuss the investment in effort as a way to understand the motivation.  We can contrast the publication of the software as open source and the effort required to develop the community against the evolution of the commercial product in terms of investment and value returned.

This also allows a company to understand the problems with half measures.  Companies sometimes treat "open source" licensing as marketing pixie dust, instead of rightly understanding its place in the solution portfolio or the need to build genuine community that will lead to solving customer problems, and ultimately delighting said customers which can be measured in profitability.  They try to limit access and only approach community half-heartedly because ultimately they're unsure of the benefits.  Fully appreciating the benefits allows a company to fully engage with both community and customers to solve problems.

Rory also mentioned the use of open source projects to undermine a competitor's margins.  This is a level of competitive play by large complex companies in well-established markets that warrants its own blog post.  We save it for another day, and instead stay focused on the commercial positives of making open source software.

More Stories By Stephen Walli

Stephen Walli has worked in the IT industry since 1980 as both customer and vendor. He is presently the technical director for the Outercurve Foundation.

Prior to this, he consulted on software business development and open source strategy, often working with partners like Initmarketing and InteropSystems. He organized the agenda, speakers and sponsors for the inaugural Beijing Open Source Software Forum as part of the 2007 Software Innovation Summit in Beijing. The development of the Chinese software market is an area of deep interest for him. He is a board director at eBox, and an advisor at Bitrock, Continuent, Ohloh (acquired by SourceForge in 2009), and TargetSource (each of which represents unique opportunities in the FOSS world). He was also the open-source-strategist-in-residence for Open Tuesday in Finland.

Stephen was Vice-president, Open Source Development Strategy at Optaros, Inc. through its initial 19 months. Prior to that he was a business development manager in the Windows Platform team at Microsoft working on community development, standards, and intellectual property concerns.

@ThingsExpo Stories
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at @ThingsExpo, James Kirkland, Red Hat's Chief Archi...
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abilit...
Organizations planning enterprise data center consolidation and modernization projects are faced with a challenging, costly reality. Requirements to deploy modern, cloud-native applications simultaneously with traditional client/server applications are almost impossible to achieve with hardware-centric enterprise infrastructure. Compute and network infrastructure are fast moving down a software-defined path, but storage has been a laggard. Until now.
Digital Transformation is much more than a buzzword. The radical shift to digital mechanisms for almost every process is evident across all industries and verticals. This is often especially true in financial services, where the legacy environment is many times unable to keep up with the rapidly shifting demands of the consumer. The constant pressure to provide complete, omnichannel delivery of customer-facing solutions to meet both regulatory and customer demands is putting enormous pressure on...
The best way to leverage your CloudEXPO | DXWorldEXPO presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering CloudEXPO | DXWorldEXPO will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at CloudEXPO. Product announcements during our show provide your company with the most reach through our targeted audienc...
JETRO showcased Japan Digital Transformation Pavilion at SYS-CON's 21st International Cloud Expo® at the Santa Clara Convention Center in Santa Clara, CA. The Japan External Trade Organization (JETRO) is a non-profit organization that provides business support services to companies expanding to Japan. With the support of JETRO's dedicated staff, clients can incorporate their business; receive visa, immigration, and HR support; find dedicated office space; identify local government subsidies; get...
@DevOpsSummit at Cloud Expo, taking place November 12-13 in New York City, NY, is co-located with 22nd international CloudEXPO | first international DXWorldEXPO and will feature technical sessions from a rock star conference faculty and the leading industry players in the world.
DXWorldEXPO LLC announced today that ICC-USA, a computer systems integrator and server manufacturing company focused on developing products and product appliances, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City. ICC is a computer systems integrator and server manufacturing company focused on developing products and product appliances to meet a wide range of ...
DXWorldEXPO LLC announced today that the upcoming DXWorldEXPO | CloudEXPO New York event will feature 10 companies from Poland to participate at the "Poland Digital Transformation Pavilion" on November 12-13, 2018.
22nd International Cloud Expo, taking place June 5-7, 2018, at the Javits Center in New York City, NY, and co-located with the 1st DXWorld Expo will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud ...
In his keynote at 19th Cloud Expo, Sheng Liang, co-founder and CEO of Rancher Labs, discussed the technological advances and new business opportunities created by the rapid adoption of containers. With the success of Amazon Web Services (AWS) and various open source technologies used to build private clouds, cloud computing has become an essential component of IT strategy. However, users continue to face challenges in implementing clouds, as older technologies evolve and newer ones like Docker c...
Business professionals no longer wonder if they'll migrate to the cloud; it's now a matter of when. The cloud environment has proved to be a major force in transitioning to an agile business model that enables quick decisions and fast implementation that solidify customer relationships. And when the cloud is combined with the power of cognitive computing, it drives innovation and transformation that achieves astounding competitive advantage.
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...
Michael Maximilien, better known as max or Dr. Max, is a computer scientist with IBM. At IBM Research Triangle Park, he was a principal engineer for the worldwide industry point-of-sale standard: JavaPOS. At IBM Research, some highlights include pioneering research on semantic Web services, mashups, and cloud computing, and platform-as-a-service. He joined the IBM Cloud Labs in 2014 and works closely with Pivotal Inc., to help make the Cloud Found the best PaaS.
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
DXWorldEXPO LLC announced today that All in Mobile, a mobile app development company from Poland, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. All In Mobile is a mobile app development company from Poland. Since 2014, they maintain passion for developing mobile applications for enterprises and startups worldwide.
We are seeing a major migration of enterprises applications to the cloud. As cloud and business use of real time applications accelerate, legacy networks are no longer able to architecturally support cloud adoption and deliver the performance and security required by highly distributed enterprises. These outdated solutions have become more costly and complicated to implement, install, manage, and maintain.SD-WAN offers unlimited capabilities for accessing the benefits of the cloud and Internet. ...
Headquartered in Plainsboro, NJ, Synametrics Technologies has provided IT professionals and computer systems developers since 1997. Based on the success of their initial product offerings (WinSQL and DeltaCopy), the company continues to create and hone innovative products that help its customers get more from their computer applications, databases and infrastructure. To date, over one million users around the world have chosen Synametrics solutions to help power their accelerated business or per...
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.