Many people have asked the question whether an Enterprise operated only using Open Source software is possible. Well, today, certainly this is possible and many of these companies do exist. It’s not really the question whether the right Open Source software exists, it’s more the question whether the decision makers and users are ready to adapt to it. Of course, changing from MS Excel to OpenOffice Calc takes time and doesn’t happen effortless. And this is enough for many people to decide to not do it. Same with ERP or CRM. As we know Open Source ERP or CRP is not on the same functional and scalability level as SAP or Oracle/Siebel. But do companies really need that level of perfection? Couldn’t complexity be reduced by focusing on smaller units and creating intelligent interfaces for consolidation and reporting instead of trying to model all the complexity in one tool? Most applications areas offer a lot of software choice, including Open Source alternatives. Focusing on Open Source asks often for braver decisions and more know how allocated internally. This is often difficult to justify in front of the top management, the board or even the shareholders. But, interestingly, even government often hasn’t the guts to move ahead with Open Source and it’s mostly because of the unwillingness to adapt!

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Looking back on the Open Source year 2009 there are some clear trends and patterns that can be highlighted:

Governmental push and push back
We have seen US administration pushing Open Source in health care and we observed the Swiss government preferring Microsoft without even looking at (Open Source) alternatives.

Rise of new Open Source services players
Lucid Imagination has been formed around Lucene, Acquia continues to grow on the basis of Drupal. Thousands of new services players have been created around the world, some with, many without VC backing. Most of them are happy with their healthy pipelines despite the financial crisis and the recession.

Consolidation within Open Source has continued
Terracotta has acquired EHcache, SpringSource taken over multiple companies, many smaller niche technologies got eaten up. A lot of what is happening is not even transparent.

Commercial vendors have continued to acquire Open Source companies
There is a big appetite for Open Source in commercial companies, i.e. VMWare bought SpringSource, Oracle is taking over Sun (partially an Open Source vendor), to just name two well visible acquisitions.

The jury is still out on whether Open Source companies actually can make big money
Recent management changes, for example at SugarCRM, indicate that the climate is getting hotter even within the companies widely seen as successful. But outside of RedHat and a few companies that got cquired for good money, there’s still no proof that all that VC money will pay off. Which doesn’t mean that many of these companies are not making money. And, while the business case may not add up for the VCs, it certainly does for the Open Source user/buyer. According to most surveys they are happy with the cost savings and the won flexibility thanks to Open Source.

Open Source Business Applications continue to increase in importance
Pentaho just took the lead on EOS Directory, Open Source Business Intelligence is seen as a hot niche by Gartner, Open Source ECM and CRM are able to beat established commercial technologies. The number of reference cases is growing rapidly. But not just large enterprises are selecting Open Source, also the SME world is more and more convinced that Open Source is an alternative to established but often inflexible and expensive commercial offerings.

Linux has continued to increase its presence
Linux wins the consumer hearts through mobile phones and netbooks and continues to run on victory lane on the server side.

The battle on the client is won piece by piece
According to Statcounter Firefox 3.5 has a bigger market share than Internet Explorer 7. OpenOffice.org continues to grow, Chrome OS and Android are becoming real contenders together with Ubuntu to make endusers switch.

Open Source events are suffering from decreasing interest
Be it ApacheCon or many other Open Source focused conference, the interest of both the community as well as the enterprise buyer has decreased. This may have caused partially by lack of budget but mostly because of the growing experience and adoption of Open Source technologies.

Open Source projects continue to bring innovation to the IT landscape
Google presented Wave, Chrome OS, new ideas for better browsing rather come from Mozilla than Microsoft, Alfresco has been quicker in adopting CMIS than most commercial players, cross category integration is implemented faster within Open Source projects than outside.

Did we miss something? Don’t hesitate to add to the list!

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 Many people have wondered whether running a company using Open Source software is possible. The answer is “yes we can”. Does it make sense though? Well, it depends.

There are good alternatives for almost every important commercial software available today. Are they able to beat the commercial proprietary software? Maybe yes, maybe no. Are they good enough? Most of the time, yes. But of course it depends on the actual requirements.

Let’s take an example that is often discussed. Can you replace SAP with Open Source software? For some companies this is possible. If only finance and HR is used from SAP there may be a good alternative in Open Source. If the company is small in comparison one of the Open Source solutions may do the job. But there’s no Open Source package that can compete with the depth of functionality offered by the whole SAP product range. Many companies don’t need this depth though, even if they don’t know. They might have a more cost efficient solution by taking different technologies for finance, HR and operation/planning type topics. It may even mean to develop some of the software and doing some of the integration needed. What can a company win, when going the ERP assembly route? Freedom, self-management, independence, control, efficiency, etc. It’s worthwhile to think about this before following the competition and just picking SAP because it’s the “standard”.

So, while it takes guts and good long term thinking to make a choice against industry leading packages like SAP, other areas are much easier to pick an Open Source alternative. It’s a nobrainer to select an Open Source CMS technology or to develop using Eclipse. So, the recommendation is, to look at the alternatives before making rapid decisions against Open Source.

And, to come back to the initial question. Yes, the Open Source software only supported/enabled company is possible, but few exist and commercial proprietary can make sense when it does what is needed.

For further ideas look at the table below.

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I just looked at the 30 June 2009 statistics of SourceForge.

1. PostBooks ERP, accounting, CRM by xTuple
2. Openbravo ERP
3. Zenoss Core - Enterprise IT Monitoring
4. Notepad++
5. ADempiere ERP Business Suite
6. phpMyAdmin
7. 7-Zip
8. OrangeHRM - Human Resource Management
9. webERP web-based ERP  Accounting
10. FreeMind

Five of the top ten projects are ERP solutions (I see HRM as an element of ERP in this context). That’s quite surprising given how many people doubt on whether Open Source ERP is really option.

Some of these projects have been around for quite a while, i.e. OpenBravo ERP or ADempiere ERP (a fork of Compiere). They are also on EOS Directory, together with WebERP, OpenERP, SQL Ledger, Compiere and some others. Depending on what needs of a small to medium sized company, these solutions can clearly be seen as an alternative to proprietary solutions such as SAP, Microsoft/Navision or Oracle.

PostBooks ERP was new to me on this list. According to the description of SourceForge it is a free open source ERP, accounting, CRM package for small to midsized businesses. The client runs on Linux, Mac, and Windows (built with open source Qt framework). The business logic resides in PostgreSQL database. International ERP, accounting, and CRM tools. It has been registered with SourceForge in May 2007 (two years ago) and has been downloaded about 250′000 times since. Maybe it’s a coming star. I would be interested to know whether anybody from our readers and users has come across it.

But, long story short. ERP is one of the areas where Open Source is not yet really a peer of the best commercial alternatives, there’s still work to be done. Go for it!

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Over the last couple of years Open Source has steadily developed and achieved a maturity that leaves no doubts on whether it can be used in an Enterprise. There’s practically no large company or organization out there that does not utilize Open Source technology as part of its IT portfolio. But is it possible to only use Open Source software?

Most companies probably could continue to exist and operate with a pure Open Source software environment. On the infrastructure side it’s very obvious. Open Source operating systems (i.e. Linux) are used broadly already today. Open Source databases (i.e. MySQL, PostgreSQL, Ingres, etc.) are clearly seen as an alternative to their proprietary competitors. Open Source programming languages (i.e. Java, PHP, Python, Ruby, etc.)  are established standards, Open Source application servers and portals compete head to head with legacy technologies, and so on. But even in the solution space Open Source is more and more a contender. Open Source Customer Relationship Management (CRM) has made an inroad in even the largest companies, Open Source Document and Content Management can be found in most evaluations done todayand Open Source Business Intelligence is closing the gap to proprietary alternatives quickly. So, are there any white spots? Maybe yes. Clearly Open Source ERP hasn’t been able to compete head to head with SAP and Oracle yet and there are many industry specific Open Source applications missing. And despite the availability of good solutions in the communication and desktop application space, Microsoft has been able to defend its position very well.

So again, has the Open Source only Enterprise arrived? It’s clearly a possibility, but probably not yet a reality. We really miss here some comprehensive case studies to proof the feasibility. If you are an Open Source only Enterprise, drop us a note, we’ll be happy to talk about. For all the others, have a look at EOS Directory to find out how you could leverage Open Source better.

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 There has been quite a bit of discussion in the scene on whether SMEs are the next big markets for Open Source to win. Matt Asay asked the question, what it takes that the vendors get it right and the 451 Group published reports (the graph is from one of them) on this same topic. Visualized in the graph SMEs seem to be mainly concerned about their own lack of expertise around Open Source, seem to be unaware of the possible options and may also be quite happy with what Microsoft of available free software are providing.

What is quite obvious is the fact that Open Source adoption in SMEs hasn’t reached (yet) the level of what Enterprises report today. Forrester published some of the reasons recently:

• 45% of SMEs are “very concerned” about security of open source compared to 9% in Enterprises
• 57% of SMEs perceive Open Source as complex and hard to adopt, while only 32% of Enterprises feel the same
• 68% of SMEs are worried about available service and support, while only 47% of Enterprises see the same problem

To fight these problems we have seen initatives coming from the industry making Open Source adoption easier. RedHat introduced RedHat Exchange to bundle infastructure and solution software. And Dell announced its “SME-in-a-box” initiative to combine hardware and Open Source software.

The SME world is not homogeneous. While very small SMEs probably have no IT staff and few people to use IT at all, the large SMEs can be seen more like small Enterprises having typically their own IT department and hundreds of users of IT.  The smaller you go the more pressing the issues mentioned before if you don’t look at IT companies.

An important fact is also the different economics you have to look at for small versus large companies. If you have very few users then the license cost that is typically user or volume based doesn’t count that much. However the installation, configuration, customization, operation, maintenance and support costs that are typically more complexity driven then user driven, can make a huge amount for small companies. If you pay 30k USD for the licenses for a small software system, but 250k USD for its installation and configuration, then you may rather take an initially more expensive commercially licensed solution that is tailored for your industry and doesn’t need a lot of customization rather than spending the money on services. This is specifically true if you follow common processes and basically need a standard ERP/CRM/etc. infrastructure. If of course a small company can become more competitive in the market place if it can adapt IT solutions and optimize processes and systems support to outperform the competition then Open Source may come well into play.

On top of what already has been said new IT trends will increase the attractivity of Open Source for SMEs. More and more software is served as service (SaaS), a lot of the solutions provided are Open Source. And with the rise of Cloud Computing and respective services yet another hurdle for SMEs is being removed. And if also commercial Open Source providers focus a bit more on SMEs and make their solutions easy to use and easy to install/maintain/operate then we will see a continuous rise in adoption numbers also in SMEs. The ecosystem with (local) Integrators and Support Providers is contantly growing to make buying and applying Open Source software for SMEs as simple as calling Microsoft or Oracle partners in the past.

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