Open Source as a Survival Strategy

Recently, I had a meeting with a technology worker and we were discussing the state of the enterprise testing tools market. We remarked on how many of the major players, such as Mercury Interactive, had been acquired by large companies such as Hewlett-Packard. We also discussed the tough road that the few small independent testing tool vendors faced going forward, as they were now competing against giant technology vendors that could combine their acquired testing tools with broader software suites and solutions. To a large degree it seems as if these companies’ only hope for survival is to also get acquired. But there is another option that could be much more attractive: They could take their products and rerelease them as open-source solutions. In a software market like the one for testing tools, where prices are often very high and where open-source options are pretty limited, if open-sourced these vendors’ tools would quickly become very popular. And companies like Red Hat and MySQL have shown that an open-source company can be successful and profitable by providing support and services for its applications. Then the very next day after having this conversation I met with a software vendor that had actually done this very thing. Aras has for years been a provider of commercial PLM (product lifecycle management) solutions, a market in which deployment costs can easily reach six figures and one that is dominated by large vendors such as SAP and Oracle. Faced with these realities, Aras, whose solutions are completely based on the Microsoft platform, decided to release its core solution as open source. And while Aras execs admitted that there had been a lot of internal questions and doubts about switching to open source, the results so far have been very promising. As a vendor of open-source products in a high-priced commercial category, Aras has seen more interest and downloads of its solutions by customers, resulting in some lucrative support contracts. And since its products are now essentially free it has been able to reduce costs in many areas of the company, especially in sales. Of course, going open source may not be a solution for every company, but for many smaller vendors it could be the key to not only surviving but also thriving. And when a commercial product switches to open source it has certain advantages over other open-source solutions that are basically starting from scratch. Customers are familiar with the product from its commercial past and have a high level of confidence in its ability to meet enterprise-class needs. Also, while the reach of open-source products is continuing to spread, there are still many areas of enterprise IT that have limited or even no good open-source solutions available. Commercial products in these fields that switch to open source will quickly become a popular option for customers looking for cost efficiency. Of course this can be a scary decision for a software vendor, as it involves a massive change in the whole model on which the company is based. But when a software vendor faces the possibility of closing its doors forever, opening up might be the key to success.