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Open Source Software – Opportunities and Challenges

I participated in an Open Source seminar graced by some experts in the field and it helped me visualize the emerging opportunities in this field.

First, let us see how the field looks today. Open Source software projects started as community endeavors or by individuals who pioneered to solve problems on their own. The source code is shipped to the public and anyone who wanted to use it needs to adhere to simple licensing agreements. Best of all, the licenses are commercially free. The earlier companies took advantage of the licensing model and started selling subscription on a commercial basis. Linux is one of the earliest open source project commercially supported by companies like Redhat, SuSe etc. If you look at the landscape today, you will find many companies providing support for open source software packages and infrastructure tools.

Future Trend

Now let us analyze the future trends in open source. The emerging market is clearly towards Applications and Solutions built on open source platform. There are already a few players in this segment and many new entrants are coming in. As the acceptance and support for open source grows in the commercial segments, the demand for such applications will only go up. When we look at the software delivery model, there is a clear trend in providing software as a service. From the torch bearer, SalesForce.com to smaller players in the e-commerce industry, many companies have started delivering their software on demand. Being on a hosted platform help the end customers to reduce overheads, resources and switch between players without much issues. Couple open source with SAAS and you have potential dynamite. This combination would change how software is developed, delivered and consumed. I see endless possibilities here.

Let me try to paint this scenario. You can pick up some open source project to build a solution addressing a specific vertical and deliver it as an on demand service. All you need to do is to develop technical/domain expertise and support your customers who subscribe to your services. You save a lot of money for your customers by saving expensive commercial software licenses and a hardware/network platform. In addition, think of the huge maintenance cost because of ‘owning’ these assets.

Revenue model

Right now, the adoption rate of the open source model is very limited. Moreover, there are not many applications/solutions available in this space. Since the earnings for a new company entering into this field is limited only to the subscription, the revenue stream is not very attractive. The deal size may probably in the range of $10 to 50 k. Therefore the onus is on increasing the number of customers i.e. volume. If we are considering a SAAS delivery model here, scalability will not be an issue.

Challenges

When you talk to someone who have used open source within their enterprise or for development, you will come across the usual complaints. Bugs, Lack of proper support, Security issues and undefined product roadmap. They are the key issues in the open source software domain. Some of the successful vendors are trying to take out the uncertainties through commercial subscription model. The open source software needs to go a long way before getting the proper attention and respect in their customers mind.

Opportunities

I am of the kind who believes that there are many opportunities when you hear ‘problems’ or ‘issues’. It means potential opportunities for an entrepreneur. Most of the issues mentioned here are classical issues when the software industry was born. Some of the early software entrepreneurs took advantage of those challenges and turned them into successful ventures. In the global economy, collaboration, global markets, lean companies and geographically dispersed resources are a fact. In addition, open source projects have the ability to make use of these factors to their advantage.

In spite of the challenges and the growth pains faced by open source projects, it has all the potential to grow into a commercially viable, highly flexible approach to software development and delivery. For this very reason, it provides many opportunities for an entrepreneur to reap the rewards. It is a rewarding opportunity waiting to be conquered.

Useful Links

1) Source Forge (Open Source Projects)
2) Open Source (Open Source Standards)

Popular Open Source Products

1) JBoss (Application Server)
2) SugarCRM (CRM Software)
3) Pentaho (BI Platform)
4) Wikipedia (Online Wiki)
5) Linux (Operating System)
4) Apache (Web Server)
5) MySQL (Database)
6) PHP (Programming Language)
7) Eclipse (Development Environment)
8) Jakarta Tomcat (Application Server)
9) Bugzilla (Bug Tracking system)
10) Mule (Integration Tools)

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