When enterprises are selecting a technology to implement, one criteria is whether the technology and the company behind have a good chance to survive. So, what about commercial open source vendors such as SugarCRM or Alfresco? There are usually three exit scenarios for these vendors, going public, being acquired or folding. Let’s forget the third scenario for now. If commercial open source vendors go public (especially during these days) then that’s a good news and a sign for a strong track record. If a commercial open source company is being acquired then this is probably good news too. In most of the cases these companies are bought for the technology, not the customer base. So the risk, that the product is going to disappear is fairly small, most likely the technology is going to survive. Conclusion, picking a strong commercially oriented open source vendor is in most cases a good choice and probably more future proof than picking a traditional commercial product coming even from the largest vendors.

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For our German reading audience we have updated the “Open Source Catalogue” that was published last time in December 2008 as PDF. It can be downloaded on a new site that will host the German language catalogue going forward. The new version of the catalogue shows some 40 changed projects and also the latest additions already published on EOS Directory. For the time being we haven’t planned to published an English version as we assume that English speaking people are happy enough with the online site. Should there be other oppinions around then we are happy to hear them.

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There have been many debates on whether enterprises can lower their IT cost using Open Source. As we learned it depends on the situation and the case. Does this mean that the cost argument for Open Source is a lost case? Not at all! It’s just that the thought to start with the enterprise is missing the point.

In reality Open Source is has changed the IT industry. Not just the software product business but also the services business. Open Source has been instrumental in lowering IT cost on a macroeconomical level. Take these examples:

• SaaS (software as a service) is changing the way we do IT and has lowered the cost and time scale for setting up new applications and functionalities drastically.
• Cloud computing allows to run applications at a fraction of the cost compared to the past. Open Source plays a key role here.
• Most software producers today leverage Open Source components,Open Source software management tools, testing tools, collaboration tools, etc. to be able to produce new releases in less time and finally at a lower cost. Some of these gains are transfered to the buyer who can acquire software at lower prices.
• System integrators are profiting of a large range of tools, frameworks, technologies out of the Open Source portfolio. This allows them to be more productive and to have lower internal costs. Again,a big share of these improvements are resulting in lower project prices or daily rates.
• The competition between Open Source and proprietary commercial software products has forced the vendors to lower their prices and to even give away entry level products.
• The list could go on for quite some time.

Open Source has influenced and impacted all the “players” in the IT world, be it buyers/users, producers, integrators and other service providers. The real economical impact of Open Source probably can’t be estimated easily but certainly goes into the billions of USD and higher. There is of course also a bit of an offsetting factor to be considered, as some/many of the contributions to Open Source projects are paid by the same players mentioned before. But as always you could ask the question - what would these people have done otherwise?

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What’s the cumulated financial value of the today existing open source code base? It’s a big number, for sure. If you take published numbers and multiply them in a simple exercise, you might come close to the truth. Blackduck claims to have indexed a couple of billions of lines of code in its repository. Assuming they only index 70% (they mention 185′000 projects) and “a couple” is “5″ then we might end up with 7 to 10 billion lines of code. If we multiply this with the estimated value (or cost to develop) of one line of code (let’s take 15 USD for the exercise here), we end up with a total value of USD 100 to 150 billion. What is interesting here is that only a little piece of this is funded by Venture Capital (the 451 Chaos blog mentioned 2.95 billion USD total investment (and most of it goes into marketing and sales, rather than into product development) until today), so where is the rest coming from? I would assume that some of it comes from enterprises and large organizations, but this is probably max 20-30% of it. The bigger share actually comes from individuals and small companies, people either sharing what they have done with a social idea behind or planning to build or extend a business around it.

Another interesting question is whether these “investments” will go up or down during the tough times we are going through. I actually think they are likely to increase because of two reasons. First, there’s a lot of development capacity available in large companies, but little money to spend for buying software. Companies are trying to keep their staff busy, so it’s well possible that they invest in some piece of software and share it with others. Secondly small companies will suffer of less demand from their customers, they will have time available to invest into the future. As the open source approach has proven to be a good vehicle to publish and market software, many will take this route.

What does this mean for all of us? Well, yes, we can expect more good software coming from the Open Source world and the innovation will continue.

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