Open Source Blog

GroundWork made a concerted effort to encourage SMBs to adopt its systems and network monitoring technologies in 2006, but while the GroundWork Monitor Small Business remains available, executives now believe that the GroundWork Monitor Open Source package better suits their needs.

According to the company’s VP of product management and marketing, Tony Barbagallo, the change of direction follows an increase in the functionality offered via the free download.

“One of the key differences was that the open source version lacked integrated performance management,” he said. “It did up/down management, but not performance over time. [GroundWork Monitor] Open Source 5.1 puts the free version on a par with some of the more prominent versions out there,” he said of the open source systems management landscape.

“What we found from a functionality standpoint is that it made more sense to include it in the open source product. Where we are trying to go, IT management, those things don’t make a lot of sense for a small business.”

Increasing the functionality of the open source package is part of a concerted effort by the company to gain traction in the market with the hope that it can later convert download customers into subscribers of GroundWork Professional, which costs $16,000 per year and features additional proprietary functionality.

The strategy appears to be working, at least in terms of increasing the number of GroundWork Monitor Open Source downloads from SourceForge. The project was downloaded 4,000 times in December, compared to 11,640 times in May.

Barbagallo said it is also starting to have an impact on GroundWork’s sales leads, noting that last year 100% of the company’s sales came from direct or channel-led sales. Today that figure is closer to 50%, he said, with the rest being led by downloads. With those download users that are likely to convert to paying subscribers taking between three-to-six months to do so, GroundWork is expecting to add significantly to its 225 customers before the end of the year.

Download-led deals are typically smaller, but while direct and channel-led sales still account for 75% of the company’s revenue, GroundWork should also be building on its revenue figure for 2006, which was just above $5m.

The company has also boosted its focus on the channel in order to expand its business, particularly in Europe, where it opened offices in the UK and Germany in September 2006. “We now have close to 20 partners in Europe,” said Barbagallo, noting that the company generated one third of its revenue from the channel in the first quarter.

“We couldn’t live without regional partners with domain expertise, but we’re also interested in seeing if it will extend to the OEM model,” he said. Alongside North American and Japanese reseller deals, the company also announced a worldwide OEM agreement with Unisys in late 2006.

The deal sees Unisys including GroundWork Monitor Professional network and systems monitoring software within the Oasis framework and is typical of the sort of deals GroundWork is lining up.

He said other potential OEM targets include networking equipment suppliers, as well as blade and appliance server vendors. While he admitted that increasing the partner channel might see GroundWork lose some services revenue, he said the goal for 2007 is gaining traction in the market.