CIOs Should Meet Open Source Half Way

The fourth annual Open Source Think Tank event, held earlier this month in Napa Valley, brought together some of the best ideas and thinking in open source software. While listening to the CIO panel, I stitched together a number of conversations I’ve had during the past few months – and realized the most vanguard CIOs (and IT organizations) recognize the real advantages of the open source software model and integrate these solutions into their businesses.

The CIO panelists emphasized that open source commonly suffers from misperceptions that prevent serious consideration of the products. The solution they offered is for open source vendors to spend more time and money courting them, much like the aged, proprietary companies with whom open source vendors, now more than ever, compete. While I agree with (and appreciate) their feedback, I disagree with their proposed remedy. And, here’s why.

About one month earlier, I received a call from the CIO of a multi-billion dollar technology company who nicely summarized the predicament facing all IT organizations. While lamenting the 80% of his budget dedicated to maintaining legacy systems, he was struggling to find ways to reduce costs and increase innovation. To make matters worse, he just received his annual maintenance bill from his long-time (proprietary) BI mega-vendor and the amount increased from 20% to 22% of his original license price, adding meaningfully to his “80% problem.” Subsequently, he offered his summary:

“I’ve come to realize that the traditional software industry pricing and packaging model is fundamentally broken. I spend huge sums on license fees, services and support in advance of even knowing if the complicated software is going to provide the return I’ve been promised. I bear all the risk.”

The transparency, greater simplicity and enormous cost-savings of open source software solves his business problem. CIOs and open source vendors have a complementary relationship because IT team’s can wade into the technology at their own pace, learn about a product‘s capabilities and even put it into use, before any money is spent on license, services or support. In this sense, the return on the prospective use of the open source product is known before any investment occurs (not including the time and energy of the internal IT team) – which fundamentally rights the upside down model we’ve become accustomed to during the past 40 years.

So, I’ll assert that commercial open source vendors are the most closely aligned with the IT organization and it’s time for CIOs to take proactive steps to learn more about open source alternatives. This is where I disagree with the suggestion of the CIO panel at the Think Tank event. If open source software companies ramp up sales and marketing to behave like the dated, proprietary vendors, the significantly higher costs would reduce some of the advantage we pass along to customers. Instead, I urge CIOs and IT staffers to make it their job to learn more about open source software and reach out to those vendors who are best aligned to help them reduce their 80% maintenance cost problem and finally get back to innovating, much like the CIO that contacted me.

Brian Gentile
Chief Executive Officer
Jaspersoft

First U.S. Government CIO Offers Hope through Efficiency and Transparency

Late last week, President Obama announced the appointment of the United States Federal Government’s first-ever Chief Information Officer, Vivek Kundra. Mr. Kundra’s experiences and accomplishments align very well with the needs of this role. I am most impressed with Kundra’s ability to drive focus within his IT teams which has lead to both cost savings and new innovation. Specifically, he has a record of implementing clever processes for IT Governance, improving transparency and accessibility while driving efficiency. InfoWorld reported on Kundra’s appointment and emphasized these very abilities:

"’It's tough in tight budgets to find the innovative path,’ Kundra notes, which is why he was so focused on gaining stock-market-like efficiencies in weeding out wasteful projects and identifying strong ones. Thanks to the savings already established from this approach, he was able to set up an R&D lab to test new ideas.”

Mr. Kundra has an historic opportunity to help set the agenda not only for Information Technology within the U.S. government, but throughout the public sector and even in private enterprise. As he constructs his game plan in this new role, I’ll offer Mr. Kundra three ideas to literally transform our government’s approach to IT:

1. Tackle the “80% maintenance cost” problem head-on by creating the most efficient IT infrastructure in the world. Do this by using the array of proven technologies that can measurably eliminate costs, especially cloud-based computing services and open source software. Avoiding the status quo (aged, proprietary software and hardware models) will help free up funding for the next two points.
2. Drive innovation by making the most vital applications more accessible and available through an increasingly consumer-like user experience. [Note: Kundra has specific experience here, impressively]. This could encourage a whole new generation of IT personnel who will want to work for the government.
3. Support your President’s agenda by using information technology to re-create the government of the people, by the people and for the people. Social services, contracts and procurement, and public safety are all great places to start. Most interestingly, the entire process of creating law can be made transparent and accessible through wiki’s, blogs, forums, and the collaborative construct of a Government “Forge”. Call it “OneWorldForge” and use it to re-establish the United States as the upstart democracy that once again changes the world.

I offer my congratulations to Vivek Kundra and wish him much success in this important new role.

Brian Gentile
Chief Executive Officer
Jaspersoft

Building on the Success of Open Core, guest post by Matt Aslett

My thanks to Matt Aslett from The 451 Group for guest blogging here at The Open Book on BI. Matt has been an active participant in the debate on open core, and has agreed to share his last words on the topic here today. The views and opinions expressed are his own.

Building on the success of Open Core

Thanks to Brian Gentile for the chance to guest post on the debate surrounding open source business models. Brian recently joined that debate, writing that the Open Core model offers the best model for community and commercial success.

I absolutely agree that Open Core is a successful strategy. In the report, Open Source is Not a Business Model, we noted that it is now the most popular commercial open source licensing strategy, used by 23.7% of the 114 vendors we assessed and 40.4% of those that were using a commercial licensing strategy to generate revenue from open source.

However, I also recently questioned whether the Open Core model is sustainable in the long-term (I'm thinking 5-10 years).

This is partially based on my belief that we will see a shift away from vendor dominated open source projects (such as MySQL and JasperSoft) to vendor-dominated open source communities (such as Eclipse and Symbian) during this period, but also because there are other potential problems that arise with the Open Core model.

Rather than re-hash those issues here I thought it would be better to use this guest-post opportunity to suggest some strategies that could be used to ensure a sustainable implementation of the Open Core model.

Many of these are being implemented by the various Open Core vendors - including JasperSoft - and with that in mind - along with the final caveat that unlike Brian I am the chicken in this debate (involved but not committed) - these are the issues that I think are critical to a successful Open-Core model:

Truth in advertising
Be absolutely transparent about licensing. Potential customers don't like feeling confused or misled and it is vital that the marketing makes it clear that the community version is open source and the enterprise edition is not. Personally, I believe that Open Core vendors could and should be referred to as "open source vendors" but that is something of a hypothetical construct. What is clear is that if the product in question does not use an OSI-approved license it is not open source, and should not be referred to as open source.

Don't promise what you can't deliver
On a related note, open core vendors must avoid overselling the benefits of open source. Be an advocate for open source, but never forget that the revenue generating products and features are not open source. Tarus Balog of the OpenNMS Group recently highlighted the theoretical contradiction at the heart of the Open-Core model in the context of the request from open source vendors, including some open core advocates, for open source to be included in President Obama's economic stimulus plans. If you ask the government to mandate open source, don't be surprised if it insists on the source code to your proprietary functionality. Similarly in our Cost Conscious report, we found that 73% of end users surveyed expected to generate cost savings from deploying open source software through reducing the cost of software licenses. Clearly some of them are going to be disappointed if they need to be deploying software licenses to get the functionality they require.

The new UK government policy on open source software also makes the distinction between the treatment of open source licensed products and the exit, rebid and rebuild costs associated with proprietary software. Yes, there are licensing mechanisms that can be used to ensure Open-Core products can be used as part of pro-open source adoption policies, but Open-Core vendors must make sure they are not selling customers a vision of open source while delivering the proprietary licenses they are supposedly trying to avoid.

Separation of church and state
The further removed the proprietary functionality is from the needs of community users the less likely it is that the community will develop their own alternatives and the easier it will be to manage the needs of both commercial and community users. If the vendor is hearing constant demands from the community for features in the enterprise version then the balance is wrong. It might sound like a great opportunity for up-sell but if the community users are never going to pay for the enterprise product then it just creates confusion and antagonism. When deciding on proprietary features vendors should create a list of features that is only ever going to solve the problems faced by enterprise customers. In the context of the law of Conservation of Attractive Profits, articulated by Clayton Christensen in The Innovator's Solution, it also makes sense for a vendor to focus its attention further up the value chain than the stage it is actively commoditizing with the open source community version.

Care in the community
Brian is right to say that "Community and Commercial customers form a necessary and symbiotic virtuous circle" and that "done properly, the resulting broad use yields benefit and value to both the Community and Commercial customers." Doing it properly means looking after and understanding the community. Among other things a vendor needs to:

• Hire a proven, experienced and respected community manager to liaise between the company and the community
• Create a forge - if you don't know who your community is and what they are doing with the software you cannot hope to understand why an individual or company is part of the community and respond to their wants and needs.
• Encourage partners to become part of the community, rather than part of commercial partnerships, to help improve the core code base and enable new commercial strategies.

Keep an eye on the bigger picture
Defining and creating understanding about licensing and revenue strategies is important but philosophical debates between open source vendors can appear from the outside like a fight between two bald men over a comb (and yes I am totally aware that I am guilty of propagating the current debate, I fully intend this will be my last word on the subject of Open Core for a while). Michael Tiemann recently claimed that the world wastes $1 trillion per year in "dead-loss writeoffs of failed proprietary software implementations" and maintained that open source software is the way to solve that problem. He also stated that "semi-proprietary strategies... are all too clever by half, because they all imagine winning the next battle in a war that's already been lost." Of course he might not be right, but $1 trillion makes it worth thinking about.

I realize that for many Open Core vendors I am preaching to the converted. Many of the same themes were discussed on a panel on open source at the recent Accel Symposium at Stanford, for example.

Open Core is definitely the most popular and successful model of commercial open source in use today, and I expect it to remain so for the next few years, but the conclusion of Sun's Zack Urlocker on that Accel open source panel is worth bearing in mind:

"There are many different ways to skin this cat. There isn't one single model for commercializing open source, and things will continue to evolve as the market expands. What worked in the past may not always apply in the future."

Matt Aslett
Analyst, enterprise software, The 451 Group
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Open Core Model Offers Best Opportunity for Community and Commercial Success

I am classically the pig at the ham and egg breakfast when it comes to the debate about the open core business model. The chicken at the breakfast is involved. The pig is committed. With that as my admitted bias, it's time for me to weigh in on the debate that has ensued around the open core business model.

“Open Core” was originally offered by Jaspersoft’s Andrew Lampitt as a new term to define the commercial open source software model that relies on a core, freely available (e.g., GPL) product architecture that is built openly with a community, all the copyrights for which are owned by the sponsoring vendor, and which includes premium features on top, wrapped entirely with a commercial license. T he 451’s Matt Aslett quickly used Andrew’s open core definition and relies on it within his most recent reports and articles. I would enhance Andrew’s definition by adding Jaspersoft’s current open core ideals: the core product is extended with commercially licensable add-ons (and those contributions come from Jaspersoft or its community), each extension comes with visible source code, community collaboration is encouraged (including feature “voting”) and we, as hosts of the community, actively monitor its health and vibrancy to ensure constant progress.

Roberto Galoppini properly infuses a heavy dose of being “community-driven” as key to any open source model. I agree and will expand below. Mat t Aslett recently re-stated his distinction between open core (he calls it “hybrid” in this recent post) and the embedded open source model. Matt believes the embedded model possesses long-term advantages and lower risks, which I think depends mostly on which open source product / project is embedded. And, a good bit of debate has ensued that seeks to label companies using the open core model as not substantially different than proprietary software companies. I believe this is nonsense as the distinctions between the open core software companies with which I’m familiar and traditional software companies are stark. To explain, I’ll cite my three primary reasons the open core approach provides the best opportunities for community and commercial success.

1. Community involvement in the core code is encouraged, while community “extensions” are not only plausible, but probable. The product “core” is built collaboratively with the Community and a non-restrictive license (e.g., GPL) ensures a variety of appropriate uses. A successful open core model should deliver a core (free) code base that is both substantial in its capabilities and successful in its Community.
2. Commercially-available extensions, a superset of the core and ideally with visible source code access, are provided, thus creating the value and assurance commercial customers often require to sign a commercial license. These extensions are made far more valuable because of the community-focused core code base acting as the underlying foundation.
3. The Community needs a healthy and growing group of Commercial customers to both legitimize the open source code base and ensure necessary financial success so the on-going advancement of the products / projects are assured. And, Commercial customers need the Community for the breadth of ideas and energy they represent, which helps the complete code base advance more rapidly and with higher quality than it ever could otherwise. Thus, the Community and Commercial customers form a necessary and symbiotic virtuous circle.

In this debate, some have claimed the only true and legitimate open source model is to provide identical community and commercial editions of the source code. The argument is that relying exclusively on services and support revenue will sufficiently sustain and that creating commercial extensions renders an open source company no different than a proprietary software company. Minimally, this argument misses a valuable history lesson. Most major software categories where open source has positively disrupted have required successful commercial open source companies to eventually use a model similar to open core, in order to continue growing. Think JBoss, Linux (Red Hat Enterprise Linux, Novell/openSUSE), SugarCRM, Hyperic, Talend, and of course, Jaspersoft. Done properly, the resulting broad use yields benefit and value to both the Community and Commercial customers. Accordingly, we at Jaspersoft take our community responsibilities as seriously as any commercial contract.

The pure open source model will continue to democratize software development and yield some commercial success. But to truly disrupt software categories where proprietary vendors dominate (and to deliver large new leaps in customer value), the open core model currently stands alone in its opportunity to deliver community progress and commercial success.

Brian Gentile
Chief Executive Officer
Jaspersoft

U.S. Government Should Consider Open Source

What good could an open letter to the President of the United States do, you ask? Perhaps, it could do a lot. Our new president has already demonstrated keen interest in technology and efficiency (the now infamous “secure BlackBerry” in his possession is one piece of evidence). In fact, President Obama is citing the U.S. healthcare delivery system as an industry in dire need of efficiency through improved technology and automation. He recognizes that the U.S. Government can play a keen role in creating the long-awaited electronic patient record. Amazing, isn’t it, that your car’s service records are far more organized and accessible than your vital medical information?

Led by the Collaborative Software Initiative, an open letter to the new Commander-in-Chief went live on Tuesday, February 10. I signed this letter, along with a wide number of fellow open source CEOs and executives, including colleagues at Alfresco, Ingres, Hyperic, Talend, Compiere, MuleSource, OpenLogic, Unisys, and just recently, Red Hat. My hat’s off to Stuart Cohen and David Christiansen at the Collaborative Software Initiative for spearheading this dialog with Mr. Obama. The tenets of the letter are well aligned with the advice I offered our next president in my early November blog post.

Because I encourage far more efficient use of my tax dollars, I want our Government to consider open source software products in every category they are available. I agree with many of those who have engaged in a dialog about this letter since its posting, especially Mr. Christiansen when he said: “I don't want to mandate everything the government does should be open source.. I think software should stand on its own merits, but I honestly believe that one of its merits should be the sourcing of the software, the way it's built and who owns the technology."

I’m proud of the traction Jaspersoft has made in helping government customers spend less and get more. Here’s to hoping this open letter is heartily considered, in the Oval Office and throughout our nation’s government.

Brian Gentile
Chief Executive Officer
Jaspersoft

2009 BI Market Prediction #4: Consumerization of Information

I’ve saved the best for last in my four-week series of BI Market Predictions. This prediction introduces ideas and evidence that make the impact of my first three predictions (my last three posts) short-lived by comparison. Simply put, enterprise information systems will require a simpler, more consumer-oriented approach to appeal to the younger generation of up-and-coming workers, a concept I call the "consumerization of information.”

The facts are clear: the evolving workforce and its expectations for software, which will drastically transform software development and usage, especially in the enterprise software market, is underway. The consumerization of information is based on a very real workforce demographic shift that becomes even more pronounced starting in 2009. As the aging workforce in the largest economies continues to retire (in the U.S., it’s the baby boomer generation) and more young workers enter and climb higher, we’ll see a widening gap (I call it the “expectation gap”) between the expected behavior of enterprise applications and their actual behavior.

Younger workers have grown up with computers and, by and large, the Internet. They’ve never NOT been connected. Therefore, their expectations for how software systems should behave are vastly different from an older worker who has grown into computers and software during the course of his career. My favorite example is a personal one. One evening, while helping my 14-year old daughter complete her science homework, which meant graphing her results data, printing, and pasting on to a poster, I experienced first-hand this prediction. She and I were both frustrated trying to label an Excel chart properly. Rather than persevere, my daughter went to Google, searched for “free graphs,” brought up a very simple web page (web service) that allowed her to enter her data and click “Graph It!” It produced a perfect pie chart, which she copied, pasted and printed. She was done in seconds.

Therefore, those software vendors that design products that work according to the new web principles will fare well with this younger generation of workers. Those software vendors that do not will become less relevant. While the effects of the consumerization of information will have a big impact on BI tools in 2009, they’ll compound each year thereafter – as more baby boomers retire and more Gen X and Gen Y workers replace them. And, although my example here focuses on the United States, this same demographic phenomenon will play out similarly in most of the major economies over the course of the next decade.

I’m often asked to predict which software vendors will gain advantage as a result of the consumerization of information and which will fall aside. So, I’ll turn this question to you . . . who do you believe stands to gain and lose as the workforce landscape shifts?


Brian Gentile
Chief Executive Officer
Jaspersoft

2009 BI Market Prediction #3: The Besieged CIO

This third prediction follows my last two blog posts, which described BI vendor consolidation and technology shifts as the first two predictions for 2009.

My premise for prediction number three is that the Besieged CIO will come under increasing strategy and cost pressure - and continue to look for capable, low cost alternatives wherever they might exist. I call him or her the besieged CIO because the pressure to continue doing more with less, in this top IT role, never ceases. The CEO is applying constant pressure to drive the company to innovate and create top-line growth. The CIO’s budget, however, isn’t growing proportionately and it is a constant challenge to maintain existing IT systems with what amounts to fewer funds so that more resources can be directed to new technology initiatives (to fuel the CEO’s agenda).

So, what’s a CIO to do? Answer: find capable, lower-cost alternatives in all technology categories. This is where I believe new development and delivery models will become even more popular, which benefits open source and software-as-a-service vendors because, in most cases, the up-front and on-going costs are just lower (especially in the case of open source). This phenomenon will continue to expand the high-growth space of virtualization as well as the latest hype area: cloud computing.

Supporting my prediction, very recent survey work by analyst firm Gartner proves that this will be a tough year for CIOs. Among other findings, Gartner’s research shows expected flat IT budgets, the need to restructure to meet the difficult economic conditions, and an on-going #1 technology priority placed on business intelligence. Gartner states that CIOs expect to “invest in business intelligence applications and information consolidation in order to raise enterprise visibility and transparency, particularly around sales and operational performance. These investments are expected to pay extra dividends by responding to new regulatory and financial reporting requirements.”

Lower cost and simpler-to-use BI solutions that enable widespread use of dashboards, interactive reports, and deeper analytics will be the tonic and salve that enable the besieged CIO to make it through these tough times. I’m proud to know that Jaspersoft will be doing its part by delivering the world’s best (and lowest cost) business intelligence products and services.

Brian Gentile
Chief Executive Officer
Jaspersoft