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Open Source Business Apps- Making Money Sense
Posted On September 23, 2007 by Madhu AP filed under Miscellaneous
“No business application can be tailor-made for you. You need to cut, prune and add to fit yourself”. The above theory is fueling a number of businesses to open source their applications.
Consider the Italian company Partecs – http://www.partecs.com. It has set up developer shops based out of Pune and Bangalore. The company is building an enterprise class application that allows organizations, which are multicultural, multilingual and multi-locational, interact with each other easily. And they are open sourcing it. The product has taken the organization many man-years and many more Euros to build, but the company is giving it away. Why are they doing so?
Partecs, quoting their own web site, is developing solutions and services to solve all the internal informational and communication needs of large transnational member-based political organizations, such as international institutions, transnational parties, unions and professional associations. It is also suitable for national political organizations, "civil society" organizations, religious groups and grassroots social movements, as well as civic participation programs of local governmental institutions.
The platform is built on the Open Source CMS system Plone based on Python and the company has its roots in Open Source philosophy.
Pradeep K. Gowda, tech manager at Partecs, explains, “We have strong Open Source roots and believe that it is the right way to approach our business. Through innovative licensing – The Partecs Public License, based on GNU GPL and Affero GPL licenses, we extend the free availability of software code to PC users, typical of copy-left FLOSS licenses, to all email or web-based users (i.e. this is a necessity in order to apply the FLOSS copy-left principle for server-based systems).”
Afferfo License is essentially an Open Source license, which is time bound. That is, it does not let you copy and distribute software during the first year and after the first year it runs on GNU GPL.
Partecs Public License does not let you to re-distribute it for people outside your company in the first year. But if you have technical expertise in-house, you can modify the software for your internal use. And also, after one year, the company can opt to Apply Partecs licence again (gaining 12-month period) or relese as Affero/GNU GPL.
Moreover, Gowda points out that the target audiences of their solutions are European political and social organizations, who are pro Open Source and Free Software.
Partecs also feels that being Open Source automatically attracts a number of users and developers who will further enhance the product. With more people peering over your code, you are bound to have better code written.
Banking
If you discount the real time technology based industries such as aviation, defence or nuclear power, some of the most critical applications are those that run in banks. Hence, you would not imagine that a bank would use Open Source applications. However, there are already several banks that run Open Sourced banking applications.
Satheesh G. Nair, who had earlier founded True Blue Technologies, is taking one of the biggest gambles that defies many people’s business logic. He is acquiring a team that has developed a banking application deployed in more than a dozen banks and plans to Open Source the application. He does not call it a gamble, but a well calculated measured business risk with returns that are assured.
“I do not think anyone is really bothered on what platform his bank runs the applications. They will be more bothered about how the money will grow and how safe it will be,” says Nair. “When I am convinced that my application will be as secure as any of the other banking application, I guess I can convince my customers,” he adds.
Nair is not unfazed by the fact that he is giving equal opportunity to another player to download his code and then compete with his company. “What you are implying may be true if I developed a small application that can be just downloaded from the Internet and can be used just by anybody. I will perhaps not even think about open sourcing such an application,” he explains. “However, banking requires a tremendous amount of domain expertise, which my team has. Even if some bank or a system integrator thinks of using it themselves, they need to fall back on someone with domain experience to implement the solution,” he says.
Nair calculates that he can make money even if one out of three banks that deploy his software comes to him for support. “Open Source is the biggest marketing tool for a software company today. If I try competing with an Infosys or I-flex, I will perhaps never succeed. But I have already started getting calls even before hosting the product on the Internet or even announcing it publicly,” he adds.
According to Nair, more than small desktop-based applications, the power of Open Source and Free Software can be utilized by enterprises, small and big. “Forget banking. Consider any other business application, such as ERP or CRM or for that matter an RDBMS system. Apart from the licensing costs, there exists a cost of customization, a cost for training, a cost for implementation and other license-based costs, all of which can be prohibitive when you go in for a solution from SAP,” he says. “Once you own the code, then you can customize it the way you like. You are also never tied to a vendor,” he adds.
Satheesh G. Nair’s new company is called Open to all Systems, based in Bangalore, and he plans to focus not only on banking applications but also on applications such as multimedia gaming.
Nair also strongly stresses on one major aspect, pricing. “If you are trying to sell an Open Source solution based on costs of implementation, you will never succeed in satisfying all the customer’s needs. An Open Source solution gives returns over a longer period of time, because it is much more easier for you to adapt to it,” he stresses.
Linux and Open Source is no more a science experiment
“Gone are the days when Linux and Open Source was a huge experiment,” K. Radhakrishna, whose Radha Consultants is trying to sell Linux-based systems to small shops. He is providing a GNU-Linux based solution with customized GNUCash with a two-day training, inclusive of installation and training for just Rs. 1999. He is willing to give an AMC at additional costs and also bundle other accounting solutions. He has managed to get eight customers in the past three months in Chennai and he says his accounting practice is even better.
Slashdotting is the biggest advertisement
According to the blog of Kevin Dangoor, creator of the much-hyped Pythonic web framework, a mention of his project on slashdot.org increased traffic to his web site manifold. Therein lies the beauty of Open Source. While most commercial software vendors spend hard dollars for good PR, Open Source has evangelists and patrons, whom you have never met, saw or even requested for help.
Consider the Italian company Partecs – http://www.partecs.com. It has set up developer shops based out of Pune and Bangalore. The company is building an enterprise class application that allows organizations, which are multicultural, multilingual and multi-locational, interact with each other easily. And they are open sourcing it. The product has taken the organization many man-years and many more Euros to build, but the company is giving it away. Why are they doing so?
Partecs, quoting their own web site, is developing solutions and services to solve all the internal informational and communication needs of large transnational member-based political organizations, such as international institutions, transnational parties, unions and professional associations. It is also suitable for national political organizations, "civil society" organizations, religious groups and grassroots social movements, as well as civic participation programs of local governmental institutions.
The platform is built on the Open Source CMS system Plone based on Python and the company has its roots in Open Source philosophy.
Pradeep K. Gowda, tech manager at Partecs, explains, “We have strong Open Source roots and believe that it is the right way to approach our business. Through innovative licensing – The Partecs Public License, based on GNU GPL and Affero GPL licenses, we extend the free availability of software code to PC users, typical of copy-left FLOSS licenses, to all email or web-based users (i.e. this is a necessity in order to apply the FLOSS copy-left principle for server-based systems).”
Afferfo License is essentially an Open Source license, which is time bound. That is, it does not let you copy and distribute software during the first year and after the first year it runs on GNU GPL.
Partecs Public License does not let you to re-distribute it for people outside your company in the first year. But if you have technical expertise in-house, you can modify the software for your internal use. And also, after one year, the company can opt to Apply Partecs licence again (gaining 12-month period) or relese as Affero/GNU GPL.
Moreover, Gowda points out that the target audiences of their solutions are European political and social organizations, who are pro Open Source and Free Software.
Partecs also feels that being Open Source automatically attracts a number of users and developers who will further enhance the product. With more people peering over your code, you are bound to have better code written.
Banking
If you discount the real time technology based industries such as aviation, defence or nuclear power, some of the most critical applications are those that run in banks. Hence, you would not imagine that a bank would use Open Source applications. However, there are already several banks that run Open Sourced banking applications.
Satheesh G. Nair, who had earlier founded True Blue Technologies, is taking one of the biggest gambles that defies many people’s business logic. He is acquiring a team that has developed a banking application deployed in more than a dozen banks and plans to Open Source the application. He does not call it a gamble, but a well calculated measured business risk with returns that are assured.
“I do not think anyone is really bothered on what platform his bank runs the applications. They will be more bothered about how the money will grow and how safe it will be,” says Nair. “When I am convinced that my application will be as secure as any of the other banking application, I guess I can convince my customers,” he adds.
Nair is not unfazed by the fact that he is giving equal opportunity to another player to download his code and then compete with his company. “What you are implying may be true if I developed a small application that can be just downloaded from the Internet and can be used just by anybody. I will perhaps not even think about open sourcing such an application,” he explains. “However, banking requires a tremendous amount of domain expertise, which my team has. Even if some bank or a system integrator thinks of using it themselves, they need to fall back on someone with domain experience to implement the solution,” he says.
Nair calculates that he can make money even if one out of three banks that deploy his software comes to him for support. “Open Source is the biggest marketing tool for a software company today. If I try competing with an Infosys or I-flex, I will perhaps never succeed. But I have already started getting calls even before hosting the product on the Internet or even announcing it publicly,” he adds.
According to Nair, more than small desktop-based applications, the power of Open Source and Free Software can be utilized by enterprises, small and big. “Forget banking. Consider any other business application, such as ERP or CRM or for that matter an RDBMS system. Apart from the licensing costs, there exists a cost of customization, a cost for training, a cost for implementation and other license-based costs, all of which can be prohibitive when you go in for a solution from SAP,” he says. “Once you own the code, then you can customize it the way you like. You are also never tied to a vendor,” he adds.
Satheesh G. Nair’s new company is called Open to all Systems, based in Bangalore, and he plans to focus not only on banking applications but also on applications such as multimedia gaming.
Nair also strongly stresses on one major aspect, pricing. “If you are trying to sell an Open Source solution based on costs of implementation, you will never succeed in satisfying all the customer’s needs. An Open Source solution gives returns over a longer period of time, because it is much more easier for you to adapt to it,” he stresses.
Linux and Open Source is no more a science experiment
“Gone are the days when Linux and Open Source was a huge experiment,” K. Radhakrishna, whose Radha Consultants is trying to sell Linux-based systems to small shops. He is providing a GNU-Linux based solution with customized GNUCash with a two-day training, inclusive of installation and training for just Rs. 1999. He is willing to give an AMC at additional costs and also bundle other accounting solutions. He has managed to get eight customers in the past three months in Chennai and he says his accounting practice is even better.
Slashdotting is the biggest advertisement
According to the blog of Kevin Dangoor, creator of the much-hyped Pythonic web framework, a mention of his project on slashdot.org increased traffic to his web site manifold. Therein lies the beauty of Open Source. While most commercial software vendors spend hard dollars for good PR, Open Source has evangelists and patrons, whom you have never met, saw or even requested for help.