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.
Vice president of business development
Asay: On the one hand, in a recession we typically see a "flight to value." Alfresco includes veterans from Oracle, Documentum, Business Objects, and others. We've weathered these downturns before. Oracle, for example, has emerged stronger from each downturn because, at the time, it offered significant value for the money. The tables have turned now, and I suspect we'll see companies like MySQL cutting into the proprietary incumbents. Well-run open source projects -- community-sponsored and corporate-sponsored -- deliver superior technology at a lower cost. Hence, open source should actually gain ground on proprietary software in a recession.
That said, as IT budgets dry up, there will be much less inclination to bet on new projects. At least, not those that require significant capital investment. What we may end up seeing is a lot of dabbling in open source during the recession, preparing to ramp up payments into open source once the economy resumes growth.
Senior director of platform technology
Ramji: In terms of challenges, I think you have to start with the fact that most software today -- whether measured by usage or by lines of code -- is not open source, and is sold or written by commercial organizations using a proprietary model. For established companies, the shift to open source is not just about understanding what the strategy should be -- it’s about “programmatizing” open source in an organization when the primary revenue model is around traditional.
It’s also important to distinguish between commercial and community software. The maturity models for assessing community software are not well-established yet, which results in some confusion about what projects are ready to adopt at what level of importance or mission-criticality. This is an unsolved issue and represents an opportunity for the next wave of software companies or consulting organizations.