05 --open-source-business-models-and-strategies

Open Source Business Models and Strategies

Karel Janecka, Karel CharvatDepartment of Mathematics, Faculty of applied Sciences

University of West Bohemia

Pilsen, Czech Republic

[email protected]

Help Service Remote Sensing

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Software distribution strategies

• There a number of different open-source business models which can be put in action according to the exact scenario they have to serve.

• The only common thing among them is that they do not require the user to be charged for the traditional software license fees. The variety of these models depends on a number of different factors.

Open Source platform for end-users STRENGTHS

• It can be deployed for free (no fees, no maintenance cost) without restrictions and therefore might be available almost instantly, compared to common procurement procedures

• Usually open code (source) allows legal changes to fit user’s requirements

• Also, open source developments usually cater for end-user requirements and develop mainly to address these requirements instead of following some arbitrary requirements by others (such as copy protection features requested by content industry)

Open Source platform for end-users WEAKNESS

• The Software is usually not certified in any way, and therefore it might not be allowed to deploy and use it in many environments

• Support on voluntary basis alone may be insufficient• Limited development possibilities due to required expert

knowledge• The development is sometimes without strategic control or

management• As a result of previous, it is hard to guide the process towards

EU strategy or basically towards our expectations or needs• The product is for free, but the support costs can be hard to

calculate and be quite high

Open Source platform for end-users Oportunity

• Openness of source solutions offers usually wider cooperation and place to create new business opportunities

• There are already a few examples of successful stories (Linux OS is used at the municipal authority Domažlice (CZ), Munich (DE), commercial success of companies such as jBoss, myEclipse, mySQL…)

Open Source platform for end-users THREATS

• Particular not sufficient guarantee of the technical support and continued development

• Sometimes the linkage to another solutions is missing• Some commercial companies don’t allow to implement

the open solution into their software framework• There can be an compatibility issue regarding the file

formats (e.g. MS Office/OpenOffice.org)• As already mentioned above, the staff must be more

skilled

Commercial/Closed Source platform for end-users STRENGTHS

• There is usually a clear technological integration (such as with MS Office into the Windows OS)

• Worldwide support available, often from multiple service providers

• Competitive offer for each „family“ of products which makes the price lower

• Training provided according to the end user needs, again available from multiple service providers

Commercial/Closed Source platform for end-users WEAKNESS

• High purchase cost• Expensive training• High cost for additional features, specially for some local

(extra ordinal) additions• Customer may be unable to enforce his own demand on

some specific feature in widely used software• Sometimes it is impossible to arrange direct cooperation

between software developer and end user – in this case the only way is to hire external integrating company, which used to be very expensive

Commercial/Closed Source platform for end-users Oportunity

• References are usually excellent• Covers all the sectors – private and public as well• Solutions that suits to so called „boxed“ software• New revenue models such as renting software are

possible with closed source software as well.

Commercial/Closed Source platform for end-users THREATS

• Quality of Support varies greatly and always comes at a cost

• linkage to the solutions of another companies is often lacking for political reasons

• Hard and expensive implementation of different solutions or extensions

• The development can be also stopped for many reasons

Open Source for commercial business developments STRENGTHS

• There is no need to pay for the software nor for support• Redistribution of OSS is possible, under many licenses • Own products can be distributed with the OSS fully

integrated• A company can influence the development by providing

resources to an open source project or simply address the programmer with specific remarks

• There is a chance to take a part in the development process, even if only helping with the translation or so similar

Open Source for commercial business developments WEAKNESS

• For many businesses, high costs incur since their users have difficulties to switch to the open source platform, especially concerning the operating systems and its administration

• As a result of the previous point, there are still commercial OS prevailing on the workstations. There can be difficulties with communication with the environment especially what’s regarding the exchange formats.

• For some customers, the notion of using open source software is unacceptable because of perceived security issues

• It is practically not possible to get revenue by selling licenses

Open Source for commercial business developments Oportunity

• The end user the company wants to address can be engaged into the development directly and leave their own „footprint“

• Depending on the license(s), it is possible for businesses to just cut off the relevant part of the code and starts their own products on this

• If the project is interesting, many external developers, translators and contributors will join it for free as well as the community of testers, who contribute to the quality of the final product

• Program can become a de facto standard itself just as with closed source solutions

Open Source for commercial business developments THREATS

• The development is stopped without anybody willing to continue

• The development goes into directions which are contra productive for the company’s products

• There is still a threat in the form of software patents

• Even if the documentation is good and complete in a certain phase, there is no guarantee that it is kept up to date

• There is always the risk that revenue is taken by a competitor who uses the OSS and documentation for his own profit

• Depending on the license model, a forking in the development can lead to incompatible derived products and a market-split.

Our recommendation for end users

• Not use Open Source directly but with services of local service organisation

Thank you for your attention!

Karel Janecka, Karel CharvatDepartment of Mathematics, Faculty of applied Sciences

University of West Bohemia

Pilsen, Czech Republic

[email protected]

Help Service Remote Sensing

[email protected]