Companies Gain by Swapping Software

Best Buy and other Midwestern companies have begun to exchange applications they've written. But is swapping software good for everyone?

No security alarms went off when ring maker Jostens recently lifted Best Buys homegrown application integration software. Thats because Minneapolis-based Jostens wasnt stealing from Best Buy. It was sharing—through a "corporate community" called Avalanche Corporate Technology Cooperative.

Avalanche hit its first anniversary in March and so far has 12 members. Thats enough to be useful to the dozen companies that joined, but not big enough to be a serious threat to software providers.

Nonetheless, banding together has allowed its mostly Midwestern members to save time and money by using each others software and donating technology for the good of the group.

Jay Hansen, CEO of Avalanche, describes the co-op as a sort of "plumbing" swap meet. Whatever you call it—community source software, shared source software or a gated software community—Avalanche is betting that the future of "open" source code for the enterprise will consist of like-minded companies forming, ironically, closed communities. By sharing code only with partners, they hope to avoid the lack of control and tedious review processes of truly open source code, where any programmer can tweak code.

"CIOs like the idea of collaborating," says Jostens chief information officer Andrew Black, a founding member and original sponsor of the co-op. "Theres more to do out there than we have time to do by ourselves. If youre going to do Linux application servers and select a company, why not partner?"

Black says that spending less time on everyday applications allows his company to save its energy for "competitive advantage applications."

On the software taken from Best Buy, Jostens expects to save $150,000 in up-front licensing fees on the first phase of integration and $30,000 a year thereafter in maintenance. Black says the company doesnt expect to save any money on installing the software or its ongoing development.

And if all goes well, Jostens will more than recoup its annual $30,000 membership fee. In addition to simply exchanging software, Avalanche members can partner on research, standards documents and software development.

Jostens is enhancing Best Buys framework for integrating applications, a suite of standards and software used to connect different information systems. The Java-based framework will support two dozen software adapters to allow Jostens disparate Oracle database, mainframe sales-force software and manufacturing systems to work together.

The downside? Software and development tools borrowed from another company may be too customized.

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