Open Source Weblog

I had the opportunity to meet up with Steven Grandchamp, president and CEO of OpenLogic, this morning, who noted that the company’s customers can be separated into two groups: “they are either trying to save money or open up technical innovation,” he said.

[UPDATE - To clarify, I should point out Steven was referring to the employee within a customer responsible for signing up to OpenLogic, if they're trying to save money they're typically on the business side, if they're focused on technical innovation, they are typically on the technical side. I didn't word that sentance very well.]

The latter group are doing so by encouraging their developers to build on top of existing open source software projects, enabling them to innovate on top of proven software. As Grandchamp noted, this has more long-term value that lowering costs.

“When we get inside a company we’re allowed to do things because it lowers costs, but the people who love what we do want to get more done,” he added.

The comments echoed those made to me by Bernard Dallé, Index Ventures general partner, about why the company is convinced open source is a better investment than proprietary software.

“Having open source development and distribution makes a lot of sense for any start-up in the software business,” he said, pointing out that in Index’s opinion, the open source model leads to better quality assurance, more frequent releases, the involvement of community development, and the ability for customers to try before they buy.

It all adds up, as far as Dalle is concerned, to a more efficient development model for software.

Investment firms are all about minimizing risk and maximizing profit, so it is little surprise that they should be interested in a vendor building a business on top of existing and freely available proven software.

The situation is little different for an IT manager or CIO looking to increase value while reducing cost, however. At the development stage it makes complete sense to build on top of what is readily available and challenge developers to innovate and differentiate at a higher level.

In this context it is interesting to note the determination of some proprietary vendors to attempt to restrict the debate about open source software to total cost of ownership.

For many businesses this is a key metric, and rightly so, but the key drivers for all IT departments are cutting costs and increasing value. TCO deals with the first but not necessarily the second.

What does the software do to raise the bar in terms of increasing the business value of your systems and software? What does it do in terms of enabling your developers to focus on revenue-generating or industry specific functionality? What does it do in terms of increasing the skills of, and empowering, your workforce?

As well as TCO, there should also be a focus on TIO.

For more on the total innovation opportunity of open source see also:

Putting a value on the total innovation opportunity of open source
Balancing open source risk and the total innovation opportunity
EnterpriseDB – the open source total innovation opportunity in action
Unisys aims to ride the wave of open source TIO
Open source TCO and the total innovation opportunity
TCO versus TIO: a simple diagram
Ingres’s Roger Burkhardt on the innovation opportunity of open source