Open core products: Are they worth the trade-off?

Combining open source and closed-source attributes, open core approaches risk lockin but can provide useful functionality

puzzle solution / key / unlocking success

Open source projects, companies and business models have been with us for more than two decades now. There are business success stories around Linux, Hadoop, PostgreSQL, Apache Camel, and others that deliver fully open source products.

While the build environments and parameters may or may not be available to build the same certified binaries, the source code is available for users to pick up and use on their own if they so choose.

Enterprise IT may go on their own either for initial deployments if total-cost-of-ownership analysis is not favorable for the product subscription or to migrate to in the case if dissatisfied with vendor quality and/or service. This is the so-called “.org challenge” to open source companies to deliver enough ongoing value to counter the self-support urge of customers and potential customers.

Open core: A value delivery and monetization strategy

One approach to add value to open source is to deliver software products using an open core model. According to Wikipedia, “Open core is a business model for the monetization of commercially produced open source software. Coined by Andrew Lampitt in 2008, the open core model primarily involves offering a 'core' or feature-limited version of a software product as free and open-source software, while offering 'commercial' versions or add-ons as proprietary software.”

Usually, an open core product builds upon a popular open source project such as many of the Apache or other projects for cloud infrastructure, application development, integration, or database projects. The company focuses its proprietary value-add on areas the project falls short on for more productive enterprise consumption such as user interfaces/experiences for non-technical people or easy-to-use administrator/management consoles. Some companies will contribute some of this work to the open source communities after a time, others will keep their work closed.

Open core-based products purport to offer a value proposition of lower total cost of ownership, speedier development, and/or greater productivity of IT management/administration. This value proposition is driven by the quality of the implementation of closed source features and especially the usability improvements of the total product built on an open source core.

Many open source communities provide good to outstanding developer tools, application programming interfaces (APIs), frameworks and hard-core command-line administrative tools — essentially A developers and admins building frameworks, tools and platforms for other A-level developers and admins.

However, many fall short in ease of use (both user experience and documentation) or productivity for the more typical corporate developer or admin and especially for non-technical users such as citizen developers and integrators as well as business analysts and users.

It is for these audiences that vendors hire people with specific skills to augment the core open source projects to deliver this enhanced value proposition. Of course, these augmentations may also be delivered in open source and not kept closed, and some are delivered into the existing or new adjunct communities.

Open core: A lockin strategy

Many open core products are built around a popular open source project that provides the foundational APIs. The companies offering these open core products usually focus on the user interface aspects for audiences not typically represented in open source communities as we have seen. This sets up a marketing thrust that states that the open core products do not lock enterprises in since the key APIs are based on open source. This is true as far as these APIs go; if you just use the open APIs, you are not locked in.

But then what’s the point of going with a more complex and expensive open core product to begin with? Once an IT project or deployment uses the closed-source tools and user interfaces, the enterprise is locked in to the degree it has invested in skills, processes, and methodologies that depend on those closed source tools and UIs. Additionally, many open source projects APIs are extended with more advanced or specialty features the open source community did not get to or perhaps does not have the skills to deliver. These represent lockin points as well.

Subscription pricing models are more open than upfront license fee models. The large upfront investment required by license fee models represents a lockin point due to sunk costs. Open core products may have either models or sometimes both (on-premises license fee versus public cloud subscription).

The bottom line is that open core products are based on open source and may convey some of the value of open source at the open source component, tool, and API level. But once IT goes beyond that and used closed value-add features, the same type of lockin that is present with traditional closed-source products applies for the use of those features.

When is open core worth going with?

Most companies seeking open source solutions are looking for the whole package, including freedom of choice of support options, deployment, and the ability to move to a self-support or other product offering. Pure open source subscriptions deliver these values.

However, there may be certain use case or skill profiles where going with an open core offering is more productive and/or cost effective. The key to determine this is to understand the productivity improvements delivered by the closed components over their open counterparts.

This will be driven in great part by who and what skill level the users of said components possess. Factor in the difference between license fees and subscription net present value costs, if any. Understand the open core product vendor viability. Also, understand the costs of migrating to the pure open source solution if such a course of action is required.

With this understanding, enterprise IT decision makers can make a fully informed choice amongst various completely proprietary, open core, and open source options.

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