Enterprise software vendors that use open source business models may be few and far between, but they are out there. I recently spoke to Peter Schroer, president and founder of Aras, about his company's decision to open source its suite of product development and planning software.
According to Schroer, Aras isn't just an oddball among enterprise software vendors. It's an oddball in the open source world, too. "Our enterprise solutions happen to be built exclusively on Microsoft," he says.
You read that right. In late 2005, Aras made the decision to ditch cross-platform support and base its offerings on Windows, .Net, and SQL Server. With Microsoft's help, Aras worked to integrate its software with the latest Windows-based technologies, including SharePoint Server and Office 2007. Only recently did it make the decision to open its code.
Schroer says there's no contradiction between open source and the Microsoft software ecosystem. "Microsoft has a particular business model that works for them. But around that they're encouraging open source development," he explains. "I wouldn't necessarily say they embrace open source, but they certainly see the value in open source development going on on their stack."
In particular, Schroer says Aras has received lots of encouragement from Microsoft's Open Source Software Lab.
No surprise, then, that Aras is handling its transition to open source the Microsoft way. Rather than going with the Gnu GPL (General Public License) or another license from the free software world, it has chosen the Microsoft CL (Community License), which is more permissive of commercial code re-use. And when the source code for the Aras Innovator suite becomes available this week, it will be hosted on Microsoft's CodePlex.com.
In the near term, Schroer hopes that community development will yield improvements to Aras' Web-based UI, perhaps using technologies such as Adobe's Flex. A Windows desktop client and a plug-in for Outlook are already in the works.
But the most important benefit of the transition to open source, he says, is in the way it changes Aras' relationship to its customers. There is no "premium version" of the software and no features are crippled in the freely-downloadable product. "If we're going to go open source, we'd rather do it properly, and basically let [customers] have full access to the solutions," Schroer says. "Aras will make its money through consulting and support agreements ... . People pay us when we add value, not because they have to."
Previous versions of Aras Innovator came with a license management server that enforced strict per-user licensing. But after a while it became clear that this practice resulted in more burdens than benefits for customers. "It's complex to manage. What happens if [customers] merge with another company, or sell off a division?" Schroer asks. "You're constantly administering your licensing or your support costs."
Moving to a service and support model -- similar to Red Hat's -- simplifies pricing options for Aras' customers, Schroer says. Not only does it eliminate head counts and per-seat license audits and remove the need to buy licenses for infrequent users, but it also does away with up-front costs. Software procurement becomes a matter of a regular, predictable, fixed fee, rather than a major capital expenditure.
Equally significant is how this change has transformed the way Aras approaches its own business. With no software sales to worry about, maintaining an aggressive sales force is less important. Instead, Aras is concentrating on hiring technically proficient staffers to become its front line of customer support.
"Our value-add is to have a real live engineer answer the phone when you call," Schroer says. "He understands the product well, and he also understands the business processes. We're hiring people with domain expertise as well. So if your job is to outsource manufacturing to China and you need help doing that, here's the software and someone who can coach you."
An enterprise software company that spends more energy on software than on the hard sell. What proprietary vendor can say that?