open source business models

Jul 10 2013

Open Business Models

When I started writing this I wrote "Last week Opscode came" obviously now that is "A couple of months ago Opscode came with a bunch of announcements ... one of them being that they are also going to support the Open Source Chef .. rather than only their own platform.

I'd love to see more companies formally do this .. Over the past couple of years I've had numerous situations where organizations where happy to pay for support to an commercial backer of Open Source software... but they were not interested in , software updates, fancy dashboards , unneeded features.

Let alone being limited by some of the features of the Enterprise product (what do you mean there's no vlan support in Xen ? We've been using that for ages (anno 2008)

Even right now I`m talking with a customer that is interested in getting commercial support for an open source project but he feels that by choosing the Enterprise version of the
software he will be limiting his options...

We've had this kind of situations with MySQL, Xen, Knowledgetree and others ..

The sad story is that with the growth of Open Source adoption, lots of companies are finding their commercial talents in the pool of people that used to work for the proprietary vendors, the kind of sales people that don't get Open Source (aside from some exceptions) and are still trying to hardsell a product based on specsheets and feature roadmaps, where most quality open source software are build by people to solve problems , hence those new sales people keep doing their old job selling products while not listening to their actual customer needs.

I've seen this escalate up to the point where people that are willing to support the Open Source project by paying a vendor for support don't do so because it's not the right form for them eventually leading to even less revenue for the said vendor.

Yes I know that supporting a multitude of distributions , libary combinations and architectures is a complex thing to do, and a lot of the proprietary vendors ruined the market by inventing something like certified platforms on which they
supported their software.

But if you as an open source software company are really interested in improving your product why wouldn't you take money from a customer that wants to pay for bugs to be fixed or features to be implemented in your product.
You've already realized that the software industry is different from 10 years ago and that Open Source is here to stay .. yet you are still thinking in the sales model with products and specsheets of that era.

Oct 13 2009

Open Source, Open Core, Open ScoreCards

There is this constant discussion about Open Core vs Open Source vs Proprietary Software , Fauxpen Source, Open Source Business models etc.. you probably know all the usual suspects involved, first up lets agree that nobody will ever agree on what's best, (off course it's pure open source.. ) , but one of the important aspects is to know what values are important for you and your customers

Simon Phipps thinks we should build a scorecard that lists the different values we attach to a certain level of openness

He'd like a rating to questions such as , Is the license OSI-approved? , Is the copyright under diverse control? ,Is the community governance open?, Are external interfaces and formats standards compliant? , Does your community operate under a patent peace arrangement? Are trademarks community controlled? etc ..

Do we need one ? Matt Aslett , whom I finally met last week in London , thinks not as it will has the knife will cut on both sides, but then also thinks yes as it might clear up confusion to outsiders.

The comments on his post however is where the real discussion starts, the one where the Open Core fanboy tells about HIS customers not caring, and the Open Source zealots comment that the open core customers don't care as they already settle for the best of worst world (ok ok , I added that myselve :))

We are old and smart enough to decide ourselve .. aren't we ? Fact is that plenty of us already use this kind of scorecards for themselves, We prefer Open Source over Open Core , but still Open Core over proprietary software, we look at the community, we look at the source , we look at who's contributing and who's using. Sometimes we value a vibrant user community over a vibrant contributing community , sometimes we don't like projects with only contributions from 1 company .. we do that exercize daily

On the other hand, as Matthew Aslett states, the outsiders probably don't know yet, and as someone else in the discussion said, some customers are just stupid ..

Different Open Core vendors have different approaches, we should use our own brains to see the difference between Marketing Driven company squashing out buggy but open code and community driven company looking for a business model. If you, such as Sander claims constantly are trying to outsmart your community , don't you think your customers will realize that ?

An aftertought If Simon Phipps gets his wish granted, what do we do with the blogs etc, shouldn't Matt then change the subtitle of his blog to The business and politics of open core ? and his title to Open Core Executive to ? Or do we just call him the Richard Stallman of Open Core ?

Oct 01 2009

It's the solutions you build with it !

I`m gonna have to quote Tarus once again :

For years now I’ve been struggling to educate the market on the fact that the business around open source software is not about software. It’s about solutions.

Let me repeat that .. it's not about selling software ...

It's about solutions

And obviously FLOSS is the Ideal platform to build value for your customers

Jun 02 2009

Told Ya sooo

By now everybody and their neigbour has realized that indeed Everything is a funky dns problem, Frank is giving talks about it at ZooCamp, and Serge figured out the hard way the downtime of was due to a dns problem :)

But I told you different things before ... and some of you listened others are still reinventing the wheel as we go ...

Matt A. points out that the OpenBravo folks realized that one should try to build on top of Open Source projects rather than modify core code ..

Wonder where he read that before :
Some projects are prepared for local contributions, they have a modular framework that allows you to build on top of the project while not having to touch the core of a project, Drupal and openQRM are great examples of those, but not all projects are that smart. Needless to say that when you have such a modular framework you really shouldn't be modifying the core part of the platform, unless you are fixing a real bug.

Over at the MySQLPerformance blog, Peter points out that Open source projects don't do big fat marketing campaigns and the community doesn't appreciate features being developed in a corner then being released with a big bang ... we prefer our releases Early and Often...

On Automating Software installations, a Tom Limoncelli about how we install software and debug setups, with a nice quote "Oh my god. Is that why nobody uses the GUI we spend millions to develop?".
Well Luke said it before .. If my computer can't install it .. the installer is broken

Stephen Walli has some good toughts on how Open Source vendors should setup their partner programs, indeed with their eyes wide open ..

I ranted on Open Source Vendors thinking they should still work with partners models and the channel the traditional way before

However I have to admit that over the last month I did talk to people that do understand our Love / Hate relation ship with the Open Source Vendors that want to partner with us .. and that some of the newer Open Source Vendors are actually attracted by our different way of tackling partnerships.

Oh well.. as Tarus says .. my 3 readers understand..

Sep 24 2008

Systems management, what will happen when the VCs want their money ?

Tarus is happy not to have VC's on his back. He doesn't want to be responsible for turning a 15 Milj investment into a 150 Milj cashout. Others chose to go that way.

Back when he wrote the article the chances were small that he already knew that Qlusters was going to be shut down with still sooo much money in the bank, but the VC's wanted it back.

So how do open source companies plan on making those tenfold roi reality.
Apart from selling out to a bigger company I think thats a very difficult task.
Especially when you keep in mind how to manage both the Open Source community and your customers. The figures he mentions that VC's require surely start pushing vendors into violating Fabrizio Capobianco rules.

Now the story changes when indeed you cn go to a model where you are selling a large scalable service to your customers, even with microsized payments it becomes a possibility, but that's a totally different business model from what e.g. the Open source systems management shops are doing .

So will the Zenoss, Hyperics or the Groundworks of this world survive the demands of their VC

Luckily these projects are Open Source, so when the company dissapears, the project can continue, and grow even better. Like openQRM did

May 13 2008

The Consequences of Being an Open Source Company

No Matt, my brain definitely wasn't idle.. I've been thinking about these problems for the better part of the last decade. And it seems like I`m not the only one who wants this discussion.

Dries told me that as a follow up to my previous post I should write a post with solutions to the problem. Difficult as I don't have the solutions yet.. If I had them .. well :)

Fact is that different types of opensource products might require different approaches Alfresco to my knowledge has little to no contributing community , Linux distributions tend to have a big one, if not just in the form of the different open source projects they pacakge. The MySQL community is more one of documentation, helping out and bugsquashing. So my ideas aren't valuable for everybody, which is maybe why Matt Asay can't understand me, he might be looking at only one side of the picture.

There are some little things that I can suggest however.

Open Source works because of people contributing to projects, Open Source companies should recognize that and figure out a way to return more business the partners that also contribute to their code , this way they can contribute both on commercial and financial level. If you keep sending business to non contributing partners at the loss of the ones that actually commit code, some people will be unhappy. Those contributing shops might not be bringing the big revenue for the vendors, but they sure are contributing.

The other part is in the support model, Matt somehow thinks I`m in the "everything must be free" camp. Wrong, I`m in the right price for the right product/service camp.
Which means that if I`m escalating a support issue of a customer of mine to a vendor, my time must also be paid for. However that's a difficult sale, my client already paid for his support contract , to the software vendor.

So my suggestion, back when RedHat came to the Bemelux, was to have different types of support contracts, a customer could get a direct contract with a vendor where no integrator could log the calls. Then with another contract type if the a partner actually logs a call for his customer he must get some kind of kickback for that...
One of the advantages there are that more first line calls can be tackled by local partners, partners that might know their customers better.. but they still have a backup if they can't solve the problem. Therefore less investments are to be made in a support organization by the vendor.

And last but not least , don't tell your partners what they can't do. They should be listening to their customers, if their customers choose for the open source version it's the customers choice, and the partner should be able to help his customer, the last thing you need to do is punish them for listening to their customers needs rather than the vendors. This is how the proprietary world works.

Oh and Matt, next time you are in Belgium, let's do another round of Buytaert vs Asay :)
Maybe we come up with some better ideas than the above ones.

May 06 2008

Doesn't Matt Asay want Open Source integrators to earn a living ?

Or, why the Inuits won't partner on selling Ice from Alfresco unless they change their strategy.

I usually agree with lot of the things Matt Asay writes but today in Closing an open-source deal trough your systems integrator , he thinks the way to work with partners in an opensource environment is to force them to sell the commercial solutions of your products.
He also thinks you should block them from starting an implementation before the end customer has signed a purchase order.

Whew.. this must be the most stupid idea he had since he started his opensource career. The sad part is that I haven't seen a commercially backer of an opensource project dealing correctly with its contributing partners. He isn't solving the problem , he is creating a bigger one :(

Integrators and consultants are often the bigger contributors to a project because they are integrating new features for their customers, You know, their local , we speak your language , customers. So now Matt wants to force them not to sell services around GPL software anymore but sell the commercial versions ?

As lots of commercial opensource versions do not allow you to make changes to the code if you don't want to loose support your hands are tied again. And yes I have been in this situation before multiple times, a situation where , a commercially backed opensource project, required a couple of small changes to fit with a customer, because of these changes the commercial vendor would drop support , so the customer decided not to buy the license. Should a local integrator capable of helping such customer loose that deal because of a partnership ? Off course not .. It's perfectly understandable that a software vendor can't support every different patch. Shouldn't an integrator have the freedom to assist a customer in making these choices, and give him valuable advise ?

Forcing the integrator to sell the commercial version brings them back to the proprietary software vendor situation , where they couldn't solve issues either.

Mind this is a Category "C" user ,(an organization that has more money than time), which should be an easy win for the commercial opensource vendors.

Then there is the issue of Paying twice where a customer both pays for the time the integrator spends on solving his issue and the support contract. I`m stil looking for a solution for this one.

In the past we invested in different partnerships , some requiring certification, with different Open source vendors before, never got a dime back from these investments.

While our shop was a small but specialist expert knowledge center most deals that those other vendors had in our area went to the incompetent boxmovers that did volume, often totally screwing up the actual implementation. Whether we had contributed to the project, or in the case of Linux distributions were probably equally skilled to support the environment as the vendor itself didn't matter.
We didn't sell enough boxes , so we never got any deals back. Our business is advising people on how to implement open source , implement it for them and support them. We are working with both type A,B and C customers. But the commercial opensource vendors want to force us to go back to the old proprietary boxmoving model, sell licenses, don't sell solutions, Oh and No you can't fix that .. you'll have to wait for the next commercial release or lose support.

So how many of the opensource benefits should the customer give up ?

No Matt, this time your idea stinks,

This way skilled consultants that care about open source and contribute to the community are being punished for doing so, whereas they should actually be getting business back from the vendors, so they can earn money and contribute more on your product you force them to waste more time on the sales side. While the people that just move boxes, don't care if its an open source application or a proprietary package gain more. For them its just business as usual .. selling boxen.

It just doesn't make sense

This concept is just bad for opensource in general, motivated people will stop contributing to products they implement, as they see that their efforts aren't appreciated by the vendors.

Apr 18 2008

Let your betatesters pay !

Slashdot totally misinterpreted Jeremy's post about MySQL starting to build features first for their customers. As a business model , this sounds like a good way to get revenue , customers want certain features that are valuable to them , so why not let them pay for it .

The question however is how your development cycle works. Often this method of keeping code first for your paying customers , and when "the feature has been paid for" give it to the opensource community , is the wrong one.

What it comes down to is that you neglect the release early , release often and the peer review , many eyeballs see more bugs, fundamentals that made opensource projects big and stable. You are in effect stepping back to a proprietary model where you have to rush your deadlines because you have promised customers such and such feature, hence letting your customers do your beta testing.

It’s not like it’s the first time MySQL pulls this trick. They already did that when building a Carrier Grade edition for Cluster. That indeed also was a product where they had customers paying for unstable beta products.

The peer review process is one of the things that insanely attracted me in Open Source, the code that you get is not some piece of overrushed code where a developer made a dozen shortcuts because he had to make a deadline, but a piece of code that has been reviewed by many , discussed, and then eventually allowed into the project.

Releasing beta level code to customers and eventually to opensource means you miss out on a lot of the features a true opensource project has.

Often the reason why Open source minded organisations still chose for this approach is to get revenue to be able to hire more developers/ support peope and improve the product faster. But it's a vicious circle, because your product isn't up to the standards you are used to you need more people to support it.

However in the MySQL case , a mostly user community, lesser user development contributions, this could make sense.

Feb 25 2008

Teaching Sun the Open Source Dance

Over the past couple of days Sun has been getting a lot of feedback on it's behaviour with open source.

So there is Amanda McPherson trying to teach Sun that the L in LAMP really stands for Linux.

And then there was Roy T. Fielding quiting the Open Solaris community.
I'm still wondering why a company that once bought StarDivision because it was cheaper to buy the company than to pay licenses for similar functionality, keeps maintining their own kernel stack rather than contributing to one that is way more popular and as a much larger userbase.
Its not like they have a die hard community they will loose, it's not like they will loose customers over it. When Sun says that Linux is the new Solaris their customers will just follow.

Personally I stopped working with Solaris ages ago... when we ocasionally run into a customer that wants us to deploy things on Solaris we always have to spend extra time GNUifying the box, which is yet another pain.

Sun had to learn the hard way from the JAVA crowd that they do care about Licensing and a community only starts to build when they like what they see. and it's exactly that community that Solaris is still lacking.

Virtualbox also is in the same boat, they have a good user community, but they don't have a lot of contributers as they require contributors so use the MIT license and even sign some papers.

In a way MySQL used to be the same , altough lots changed during the last couple of years , but back a couple of years ago nobody outside of MySQL was contributing code, there was a gigantic user community, but not really a developer community.

The big difference here is in community.. not customer base, these people are actually using MySQL because they are freely choosing so. Not because their boss or corporate policy tells them to.
But MySQL learned, and is changing, it currently has also non employees contributing .. often ex employees but also other people , people that form a real community.

Today .. if you really want to cash out ... create an product open source it ,create a user community around it but don't allow contributors, my bet is Sun will buy you :)

I told it before.. I really really hope one day Sun will understand .. but from the past couple of acquisitions.. they seem to be taking the same path over and over again.

Dec 12 2007

On Open Source vs open source

Not even that long ago I discussed Innovation in Open Source projects ..

Let me refresh your memory...
Call me oldfashioned but I still think of most of the closed source shops as 9to5 developers that write code because their boss tells them. Their boss is being instructed by clueless marketing people that promise impossible features to customers with impossible deadlines. An Open Source developer writes code because he wants to fix something , because he needs a feature , not because someone tells him to do so. To there is much more passion to be found in the heart of an open source developer than in your average closed shop developer.

Now add Michael Dolan 's comments on Open Source projects lead and managed by a sole corporate with no actual community to my notes.

Then try to understand why Sun announces this , now I wonder .. what are they going to pay people for .. features that the corporate product management wants, or features the community wants ? There is money involved .. so who will be calling the shots ?
I hope they make the right choices .. I really do !

But I'm afraid Sun still doesn't understand how to play with the opensource crowd. They try .. but run into too much walls As Michael notes , you can hardly call Open Solaris a succesfull open source project as it still doesn't have a real community. I hope one day they will realise that , drop their commercially driven doomed to fail open projects and start contributing to some projects with a real community. It took them a while to figure out the right thing to do with Java .. I`m sure they'll learn and figure out this time also :)

Sun isn't the only one not to understand how the community works.. but it's one of the most public ones that needs our help.

So what have we learned so far ..
* Open Sourcing an end of life proprietary proprietary does not work
* Managing an Open Source in oldschool inhouse proprietary style doesn't work

And lots more ...