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Using open-source technology in combination with on-demand applications is the way for corporate IT departments to save the money they are currently spending on high-cost licensed software, says Greg Gianforte, CEO of on-demand customer relationship management software vendor RightNow Technologies Inc.
Gianforte argues that the combination of the open-source components such as the Linux operating system, the MySQL relational database and the Apache application server is robust enough to support the IT infrastructures of on-demand software vendors as well as their largest customers.
RightNow runs its own CRM hosted application service on Linux and on MySQL, and Gianforte said he doesnt hesitate to recommend this platform to corporate IT executives as an alternative to running the Oracle database on proprietary mainframe or server platforms.
He contends that his company has been able to report revenue growth for 31 consecutive quarters and build a hosted CRM application service that has supported more than 1 billion customer interactions with 99.98 percent up-time at least in part because of the effectiveness of its open-source IT environment.
While RightNow is not an open-source software company in its own right, Gianforte said his company believes in the economic advantages it is gaining from the software licensing model and that its customers are reaping the benefits.
The main reason that customers turn to on-demand applications is because they dont want to bear the expense of installing licensed software that runs on their in-house IT infrastructure, Gianforte said.
On-demand vendors in turn are able to save substantial amounts of money because they are running their applications on low cost open-source operating systems and giving customers access to the applications over the Web.
Gianforte calls this approach “turning the water of open source into the wine of business value” because it allows vendors and customers to focus the value they get from the enhanced features of on-demand applications.
The money that the on-demand vendors save goes into building add-value functionality into the applications.
Customers are able to spend their money on the added application functionality that presumably provides business value in terms of increased efficiency in serving their own customers and in selling more goods and services, according to Gianforte.
However, Sheryl Kingstone, a CRM industry analyst at Yankee Group Research Inc., said Monday that Gianfortes ideas about using open source as the foundation of an enterprise CRM application is a bit simplistic.
“You can only do so much for free with open source,” she said.
“I would never recommend writing a CRM system from scratch using open-source components,” she said. That doesnt mean that it cant be done, she added. But to successfully assemble such a system, “you want to make sure that its all fully integrated and all maps properly.”
This will likely require components that are either custom-built or licensed from a third-party vendor to build an effective system, she noted. The results may deliver less cost savings than Gianforte predicts, she said.
Gianforte contends that open source “increasingly commoditizes” proprietary operating systems, databases and Web servers, which will give corporate IT departments even less incentive to continue working with these products.
He believes that this will gradually add momentum to the shift to both open-source software and on-demand applications.