Welcome!

Eclipse Authors: Sematext Blog, Marcin Warpechowski, Trevor Parsons, Michael Meiner, Carmen Gonzalez

Related Topics: Open Source, Linux, Eclipse, Web 2.0, Open Web, Apache

Open Source: 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
Advanced Persistent Threats (APTs) are increasing at an unprecedented rate. The threat landscape of today is drastically different than just a few years ago. Attacks are much more organized and sophisticated. They are harder to detect and even harder to anticipate. In the foreseeable future it's going to get a whole lot harder. Everything you know today will change. Keeping up with this changing landscape is already a daunting task. Your organization needs to use the latest tools, methods and expertise to guard against those threats. But will that be enough? In the foreseeable future attacks w...
As enterprises move to all-IP networks and cloud-based applications, communications service providers (CSPs) – facing increased competition from over-the-top providers delivering content via the Internet and independently of CSPs – must be able to offer seamless cloud-based communication and collaboration solutions that can scale for small, midsize, and large enterprises, as well as public sector organizations, in order to keep and grow market share. The latest version of Oracle Communications Unified Communications Suite gives CSPs the capability to do just that. In addition, its integration ...
Building low-cost wearable devices can enhance the quality of our lives. In his session at Internet of @ThingsExpo, Sai Yamanoor, Embedded Software Engineer at Altschool, provided an example of putting together a small keychain within a $50 budget that educates the user about the air quality in their surroundings. He also provided examples such as building a wearable device that provides transit or recreational information. He then reviewed the resources available to build wearable devices at home including open source hardware, the raw materials required and the options available to power s...
“The age of the Internet of Things is upon us,” stated Thomas Svensson, senior vice-president and general manager EMEA, ThingWorx, “and working with forward-thinking companies, such as Elisa, enables us to deploy our leading technology so that customers can profit from complete, end-to-end solutions.” ThingWorx, a PTC® (Nasdaq: PTC) business and Internet of Things (IoT) platform provider, announced on Monday that Elisa, Finnish provider of mobile and fixed broadband subscriptions, will deploy ThingWorx® platform technology to enable a new Elisa IoT service in Finland and Estonia.
Today’s enterprise is being driven by disruptive competitive and human capital requirements to provide enterprise application access through not only desktops, but also mobile devices. To retrofit existing programs across all these devices using traditional programming methods is very costly and time consuming – often prohibitively so. In his session at @ThingsExpo, Jesse Shiah, CEO, President, and Co-Founder of AgilePoint Inc., discussed how you can create applications that run on all mobile devices as well as laptops and desktops using a visual drag-and-drop application – and eForms-buildi...
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, shared some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder of TeleStax, a...

ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ --  IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's platform-as-a-service. The new platform enables developers to build ap...

We certainly live in interesting technological times. And no more interesting than the current competing IoT standards for connectivity. Various standards bodies, approaches, and ecosystems are vying for mindshare and positioning for a competitive edge. It is clear that when the dust settles, we will have new protocols, evolved protocols, that will change the way we interact with devices and infrastructure. We will also have evolved web protocols, like HTTP/2, that will be changing the very core of our infrastructures. At the same time, we have old approaches made new again like micro-services...
The Internet of Things is a misnomer. That implies that everything is on the Internet, and that simply should not be - especially for things that are blurring the line between medical devices that stimulate like a pacemaker and quantified self-sensors like a pedometer or pulse tracker. The mesh of things that we manage must be segmented into zones of trust for sensing data, transmitting data, receiving command and control administrative changes, and peer-to-peer mesh messaging. In his session at @ThingsExpo, Ryan Bagnulo, Solution Architect / Software Engineer at SOA Software, focused on desi...
Disruptive macro trends in technology are impacting and dramatically changing the "art of the possible" relative to supply chain management practices through the innovative use of IoT, cloud, machine learning and Big Data to enable connected ecosystems of engagement. Enterprise informatics can now move beyond point solutions that merely monitor the past and implement integrated enterprise fabrics that enable end-to-end supply chain visibility to improve customer service delivery and optimize supplier management. Learn about enterprise architecture strategies for designing connected systems tha...
SYS-CON Events announced today that CodeFutures, a leading supplier of database performance tools, has been named a “Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. CodeFutures is an independent software vendor focused on providing tools that deliver database performance tools that increase productivity during database development and increase database performance and scalability during production.
"For over 25 years we have been working with a lot of enterprise customers and we have seen how companies create applications. And now that we have moved to cloud computing, mobile, social and the Internet of Things, we see that the market needs a new way of creating applications," stated Jesse Shiah, CEO, President and Co-Founder of AgilePoint Inc., in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Recurring revenue models are great for driving new business in every market sector, but they are complex and need to be effectively managed to maximize profits. How you handle the range of options for pricing, co-terming and proration will ultimately determine the fate of your bottom line. In his session at 15th Cloud Expo, Brendan O'Brien, Co-founder at Aria Systems, session examined: How time impacts recurring revenue How to effectively handle customer plan changes The range of pricing and packaging options to consider
Things are being built upon cloud foundations to transform organizations. This CEO Power Panel at 15th Cloud Expo, moderated by Roger Strukhoff, Cloud Expo and @ThingsExpo conference chair, addressed the big issues involving these technologies and, more important, the results they will achieve. Rodney Rogers, chairman and CEO of Virtustream; Brendan O'Brien, co-founder of Aria Systems, Bart Copeland, president and CEO of ActiveState Software; Jim Cowie, chief scientist at Dyn; Dave Wagstaff, VP and chief architect at BSQUARE Corporation; Seth Proctor, CTO of NuoDB, Inc.; and Andris Gailitis, C...
The Industrial Internet revolution is now underway, enabled by connected machines and billions of devices that communicate and collaborate. The massive amounts of Big Data requiring real-time analysis is flooding legacy IT systems and giving way to cloud environments that can handle the unpredictable workloads. Yet many barriers remain until we can fully realize the opportunities and benefits from the convergence of machines and devices with Big Data and the cloud, including interoperability, data security and privacy.
Code Halos - aka "digital fingerprints" - are the key organizing principle to understand a) how dumb things become smart and b) how to monetize this dynamic. In his session at @ThingsExpo, Robert Brown, AVP, Center for the Future of Work at Cognizant Technology Solutions, outlined research, analysis and recommendations from his recently published book on this phenomena on the way leading edge organizations like GE and Disney are unlocking the Internet of Things opportunity and what steps your organization should be taking to position itself for the next platform of digital competition.
In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect at GE, and Ibrahim Gokcen, who leads GE's advanced IoT analytics, focused on the Internet of Things / Industrial Internet and how to make it operational for business end-users. Learn about the challenges posed by machine and sensor data and how to marry it with enterprise data. They also discussed the tips and tricks to provide the Industrial Internet as an end-user consumable service using Big Data Analytics and Industrial Cloud.
SYS-CON Media announced that Splunk, a provider of the leading software platform for real-time Operational Intelligence, has launched an ad campaign on Big Data Journal. Splunk software and cloud services enable organizations to search, monitor, analyze and visualize machine-generated big data coming from websites, applications, servers, networks, sensors and mobile devices. The ads focus on delivering ROI - how improved uptime delivered $6M in annual ROI, improving customer operations by mining large volumes of unstructured data, and how data tracking delivers uptime when it matters most.
SYS-CON Events announced today that ActiveState, the leading independent Cloud Foundry and Docker-based PaaS provider, has been named “Silver Sponsor” of SYS-CON's DevOps Summit New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. ActiveState believes that enterprises gain a competitive advantage when they are able to quickly create, deploy and efficiently manage software solutions that immediately create business value, but they face many challenges that prevent them from doing so. The Company is uniquely positioned to help address these challenges thro...
SYS-CON Media announced that Cisco, a worldwide leader in IT that helps companies seize the opportunities of tomorrow, has launched a new ad campaign in Cloud Computing Journal. The ad campaign, a webcast titled 'Is Your Data Center Ready for the Application Economy?', focuses on the latest data center networking technologies, including SDN or ACI, and how customers are using SDN and ACI in their organizations to achieve business agility. The Cisco webcast is available on-demand.