Why Recession Is Causing Enterprises to Rethink Open-Source Strategy

SAN FRANCISCO—Open-source software and middleware, which is now populating every part of modern data centers, has always had to fight a reputation—deserved or undeserved—of being simply too "Wild West" for many enterprises.

Not so anymore, Alfresco's general manager for the Americas, Matt Asay, told a near full-house audience in his opening remarks at the sixth annual Open Source Business Conference here at the Palace Hotel.

Alfresco, started up in 2005 by Documentum co-founder John Newton and John Powell, former chief operating officer of Business Objects, provides an enterprise-ready open-source CMS (content management system).

"Two and a half years ago, I got a call from a large financial services firm," said Asay, who co-founded OSBC in 2004. "They said, 'Well, we're kicking the tires on Alfresco, we took the demo and we went through the processes.' Then they told me, 'You know, we're a conservative organization, and open source is just too risky for us. We can't do it.'

Resource Library:

"Well, a week ago Friday, I got a call back from the same guy, same company, and he said: 'You know, losing my job for buying big proprietary software is too risky. You guys are now in the drivers' seats; we need to buy open source,'" Asay said.

Asay said he's been hearing this more and more, and not just at his office. "I've been talking to companies from Pentaho to Jaspersoft to Akamai [Technologies] to you name it. I'm hearing the same things: Open source is now the less-risky investment," he said. "This is new reality No. 1."

The difference? "Part of that is cost," Asay said. "Open-source companies are seeing sales go up as the Dow [Jones index] goes down. And it's starting to accelerate."

The reason is, Asay said, is that "people woke up on Jan. 1—those that still had jobs—and said, 'You know what? I've got to do something. At 50 percent or 70 percent or some percent less budget, I still have to do my job. How am I going to do that?'"

Suddenly, open source makes a lot of sense, Asay said.

That's pretty much the current story of enterprise open-source software in a few paragraphs.

There are other reasons companies such as Novell (SUSE Linux, Ximian, Mono Project), Mozilla (Firefox browser), Red Hat (RHEL or Red Hat Enterprise Linux), Canonical (Ubuntu Linux), Ingres (Ingres database) and scores of others are doing well despite the sour economy. Enterprise-level open-source companies, including those mentioned here, have continued to invest in both in-house and outside community development, and the software gets better features and more reliability all the time.

"The second new reality is that we're past the 'purity' stage," Asay said. "We've spent ages trying to decide who was a real open-source company and who was not. The 451 Group and others have done a fair amount of research on this; we're just past it. Customers just want things that work. They don't want to be locked in; they just want software that works."

The third reality is that the open-source community needs to expand its development model to enterprise IT to truly get the benefits of open source, Asay said.

"It has to be more about the total user and the consumer population than just about the vendors," Asay said. "It has to includes the Citigroups, the Boise Cascades, the Sony Pictures and those other companies. Open source has to be an economic two-way street for us to truly benefit.

"Most of the world's software is not written by Microsoft, or MySQL or any of those companies. It's written by the users, and we have to find ways to bring them in [to the process]."

The OSBC continues through March 25.