Daily Archives: March 24, 2007

Buy vs Build, Is Open Source The Third Alternative?

I recently saw an advertisement when doing some research on open source software. The ad said something like

IT Solutions Using Open Source Software
– Learn about IT solutions assembled with open source
– a third alternative to “build versus buy.”

These days everyone is using the open source word and it kind of seems to lose it’s original spirit. For large and small companies, startups and venture capitalists, open source is now nothing but a marketing tactic.

Is open source really a third alternative? What is the real cost of implementing a software solution? When most of the large software companies make most of their revenue from support compared to license fee, what does that tell us? Any smart CIO should be knowing that the real cost of a software solution is not merely the cost of building/buying it but the cost of supporting it.

Infact, it’s this realization that is partly making most smaller companies, who are otherwise at a disadvantage of competing with larger players, to offer the software as an open source version with the appropriate license that prevents others to do anything they want and distribute unless they give it back. The hope is that, people will download the solution as it’s free, try it out and perhaps even start using it, and start paying for the support.

Since IT organizations don’t need to bother about distributing it, they perhaps can make any modifications they feel like and use it in house. So, the GPL-like clause is perhaps not a cause for concern for the IT departments. But if there is someone in the IT department that’s trying to make changes to the open source software, it’s no different than “building” it. May be not from scratch. But in that case, is there really a need for a 3rd party consulting company to provide those open source IT solutions? One interesting thing with the GPL-like clause is, what happens if someone develops extensions, but don’t distribute it freely but provides them only for those organizations that want to buy such extensions? In that case, the IT organizations are still “buying” it.

With Venture Capital pouring into open source software, and highly political corporate veterans, who never knew what GPL means without consulting the corporate lawyers, are also jumping into the open source bandwagon. One of the strengths of open sources is that people like to contribute because it’s open and anyone can study the code. But most successful open source software really is what can be termed as Systems software. Like a Operating System, a Web Server or a Programming Language. But these days the open source mantra is extending to the enterprise applications. Which college kid would have the desire to write a manufacturing application or a CRM application? Especially when they know that there are a bunch of people behind those so called open source enterprise applications backed by venture funding and the ones that are really making a living out of those apps.

Also, the complexity of enterprise applications doesn’t come from just the technology but also the functionality. Start a small application with 10 tables, one person can handle it. Say it grew to 100 tables, soon adding any new feature, however small it may be, starts taking much much more time. Enterprise software is fundamentally complex not necessarily because of technology or the lack of it, but there are several ways of doing business, writing code, modeling the data and the flows. And as one tries to make more and more of the various enterprise roles/departments to work seamlessly together it gets tougher and tougher to manage it. It doesn’t scale linearly. Think of it as solving a 20 piece jigsaw puzzle vs 5000 piece jigsaw puzzle. They don’t scale either in resources or the time and effort. Same with building enterprise software that works harmoniously. People blame architectures several times. But good and flexible architectures can only help so much.

Ofcourse, using the new web 2.0 tools like wikipedia type of documentation for collaborating and capturing all the vast amounts of knowledge (and wisdom) in the brains of all the great people who originally contributed to the software does help to some extent. But that’s something every vendor, be it the one offering closed source or open source will do it.

There is no free lunch. This fundamental economic principle remains unchanged even in the new economy or the regular economy. What open source really has done, is doing and will do is to keep the software prices more transparent or put a reality check. In the absence of an open source database, a closed source vendor can charge whatever it wants, so is for a middle-tier web server or a end user application. In the world of open source, there is no place for politically motivated/manipulative management.


Filed under open source