Open source roundtable: Javier Soltero

Hyperic CEO sees deep attention to developing business models as the key to open source's ultimate success

Javier Soltero, CEO of open source IT management software vendor Hyperic, has garnered significant wisdom transforming open source projects into enterprise products and expresses keen interest in the need to match worthwhile open source undertakings with the appropriate business model.

InfoWorld spoke with Soltero about these and other open source issues as part of its roundtable on the state of open source. Here's how Soltero sees the open source movement evolving.

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Javier Soltero

CEO
Hyperic

InfoWorld: What do you see as the more pressing challenges and opportunities for open source given the current tech climate?

Soltero:The biggest challenge for open source companies remains finding a scalable way of generating revenue while maintaining the openness and community focus that makes their business possible. Today's economic climate will put even more pressure on business models that are not sustainable because not enough value is being delivered to customers to motivate them to pay. The opportunity, of course, lies with the fact that open source companies have a much more cost-effective way to engage with their customers and prospects. This gives companies assurance that, in the face of slower growth, they are investing time engaging with prospects who are already using their products and are hopefully members of their communities. The economic model of traditional enterprise software companies, which do more "top-down" selling, is much more capital-intensive and inefficient than the "sell to users" model that is the foundation of commercial open source.

IW: Where do you see open source heading in the next five years, especially with regard to development, community, and market opportunities?

Soltero:I've always believed that open source will soon become the "price for entry" for any emerging software vendor and an increasingly attractive alternative for mature vendors with the guts to embrace it. The reason for this is based on the "historical baggage" of how commercial software vendors have treated their customers in the past. Expensive, up-front costs coupled with business models where the vendor held most of the cards and could bank on a good salesman to close the deal. Customers are educated into the art of procuring software and are demanding a process that starts and ends with them in control. Open source affords this by allowing those customers to evaluate and consume software under their own terms and engage with the vendor around the points of value that are clear to them. This trend depends on the creation of a community of users -- who can otherwise be regarded as empowered prospects -- who participate in the use, development, and refinement of a product.

In less than 5 years, in fact, starting even in 2008, vendors will not be able to bank their futures solely on them being "open source" and instead will have to use the benefits described above to drive the same degree of innovation that powered the first 25 years of the commercial software industry.

IW: Does widespread adoption and commercialization of open source software create new challenges or pressures for open source projects?

Soltero:Commercialization creates added pressures, especially for projects that are separate from the companies that provide commercial offerings around an otherwise free project. Frankly, the idea that commercial interests become involved in an OSS [open source software] project causes an allergic reaction to a lot of people. The reaction is mostly based on the idea that the commercial interests will overwhelm the decision-making process of the project. Realistically, without some amount of accountability, which comes best in the form of commercial interests, open source projects run the risk of becoming largely academic exercises that don't ship in time and have poor usability. How this accountability is applied into the project is the key factor in whether or not the commercialization will mean more success for the project or not.

Increased adoption of a project fuels the need for some level of governance and direction from the project. There's an interesting scenario in communities where tons of adoption bring way too many potentially conflicting interests, and without a proper governance structure, the project struggles because it cannot reconcile and prioritize the diverse requirements being thrown at it.

Both of these cases really don't apply to companies like ours [Hyperic] where the IP [intellectual property], the project, and the company are managed by the same entity. The community is open and works just like any other OSS project. The company is better able to balance the needs to fund and promote the community with the needs to deliver value to its customers.

IW: What are the next steps needed for open source as a software production methodology to reach the next level?

Soltero:We need a better understanding of the economics behind the various business models used by open source companies. At this point, no company except Red Hat has been able to demonstrate the type of large-scale economic viability that is necessary for a software company to be able to innovate at scale while using open source. Many are trying, but we're not there yet. The reason this is important is it acts as the proof behind how a company can fund the development of product(s) that are delivered in an open source model and still stick around to realize the benefits. It's not a one-size-fits-all approach, so I would not expect there to be a single recipe that everyone can follow. However, I do believe that the whole equation needs to be considered in order for this to work -- low customer acquisition cost + continuous feedback and contribution from the community + subscription value + scaled R&D. The R&D benefits are the most difficult to realize for a company like ours [Hyperic] because the audience for the product is not composed of software developers and the software is inherently complex. It's a little like operating systems such as Linux ... lots of people use them, very few know how to build them.

IW: Open source now enjoys a rich and complex history, which is largely the result of trial and error over the years. What would you say have been the open source community's greatest missteps, or lessons learned?

Soltero:I'd argue the biggest lesson has been and will remain the "desktop issue." People jumped on Linux as a potential desktop replacement very early on, and the debate continues to this day. Meanwhile, the operating system and the associated infrastructure tools such as Apache, PHP, etc., continue to enjoy explosive growth and disruption on the server side. I know there are many who believe that Windows and even Mac OS X are bad because they're not open source. That might be true, but one cannot argue that the user experience for both of these operating systems blows away anything you'd get out of Linux (at least today). The lesson here is that open source can deliver more immediate, tangible benefits in certain areas than in others, and the market is smart enough to figure that out. We'll get a good Linux desktop one day, I just don't see it happening any time soon, and I don't know that that's the right priority given where desktop computing is headed.

IW: If you could wave your wand and create the perfect software "universe," what would it look like?

Soltero:It would be a place where end-user empowerment and profits -- dollars or otherwise -- for developers of software are in complete harmonious balance. End-users get to choose and adopt the software they want to use on terms that fit their needs, while the developers of the software get to realize a return of some sort from the investment they put in to develop the software. From the end-users' perspective, the terms they might want might include flexibility, price (free), participation, and transparency (plus many more, I'm sure). They also might include reliability, accountability, and continuity (things they'd likely have to pay for). The developers (large or small; funded or unfunded) would get some return for the time and effort invested in developing the software. The return could come in the form of money -- or at a minimum, contribution, feedback, and direction.

The reason why I consider this my perfect software universe is that this balance is not right in either open source or proprietary companies. Proprietary companies shift too much of the profit towards themselves without appropriately empowering the user. This leverage translates to the high margins that these companies get today, but it's not sustainable. On the OSS end, end-users too often consider OSS products as free and neither participate with nor fund the provider of the software. They too often don't consider the fact that software production is hard and costly (in time, dollars, and human capital) and that without some form of return for the developer the software won't be around for long.

IW: There has been a fair amount of controversy, competition, and dissent within the various open source communities. Does this lack of agreement damage the long-term goals of open source, or would you like to see more of this?

Soltero:Lack of agreement within an specific community is part of the process of arriving at a better result. However, the way disagreement is handled can suck a ton of energy from a project and create situations where things just don't get done. It also gives adopters of open source software a reason to doubt whether using the software is the right idea. Thankfully, there's a lot more experience in the art of governance of open source projects by both companies and individuals. This means that while there's always some amount of friction in every project (and it happens in closed-source projects, too, people just don't see it!), the end goal of the community is the same and the project charges ahead.

Roundtable home page: The state of open source

Other roundtable participants
Matt Asay
Vice president of business development, Alfresco
Andy Astor
CEO of EnterpriseDB
Chris DiBona
Open source programs manager, Google
Bruce Perens
Creator of the Open Source Definition and co-founder of the Open Source Initiative
Sam Ramji
Senior director of platform technology strategy, Microsoft
Eric S. Raymond
Programmer, author, and open source software advocate
Dave Rosenberg
CEO and co-founder, Mulesource
Mark Spencer
Founder and CTO, Digium
Robert Sutor
Vice president of open source and standards, IBM
Zack Urlocker
Vice president of products, MySQL

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