While open source software is a fairly well understood in concept, I am always surprised how little it is understood in practice. At a round table of young product companies last month, there were a lot of raised eyebrows and questions when I explained our open source way of working.
Jordan Hubbard, co-creator of FreeBSD and open source veteran, spoke on this topic at this year’s ERPNext Conference, and he basically said this, open source business is all about people. Since the product is free, you sell services around the product, which is your people. This is mostly true for the very large majority of businesses that have mushroomed around open source projects, providing installation, hosting, customization, maintenance and other services around the product.
But there is now a new variable in the equation, SAAS (or Software-as-a-Service). It has been already accepted that SAAS is the way software is sold today. Listed companies like SalesForce, Xero, Zendesk, Workday, NetSuite, Hubspot, Shopify are testimony to the success of SAAS products and the billions of dollars that get spent on SAAS products each year. What does the future hold?
As on-premise is slowly moving into SAAS, I believe that SAAS itself will move into open source. Since the unevenly spread future is already here, there are companies already successfully doing open source + SAAS like WordPress, Ghost CMS, Magento, ERPNext (disclaimer: that’s us).
Open source + SAAS makes a great combination.
Benefits to the user:
- Open source products allow virtually unlimited possibilities to deeply integrate the product.
- There is a lot more risk in a closed platform, like price increase and slow pace of development.
- There is no vendor lock-in
Benefits to the publisher:
- Not everyone wants to host their own infrastructure, this opens up opportunity to build a SAAS platform
- Provides word-of-mouth marketing
- Vibrant community attracts more users
- Community contributes by providing feedback, support, features, fixes, integration, testing, documentation
- A lot more incentive to write good code and documentation
- Much easier to find and on-board new developers to your team
Going open source is not easy. Business are built on the premise of transactions, and in open source, you have to be very open to giving and communicating without expecting immediate results. But once you cross a certain threshold, community participation can be extremely rewarding.
I am not advocating you open source your product today, but as Wikipedia has shown us, its only a matter of time before someone builds a mature open source product that might replace you.
Then there is no going back.