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Millions of dollars in open source software business

Sachin Dabir
, 20 Feb 2015
Sachin_Ashnik

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20-Feb-2015

Millions of dollars in open source software business, what does it mean to the customers?

It is a time of Chinese New year and we would like to wish all our readers a very happy Spring Festival.

In this festival and many more around the world, there is a tradition of giving gifts to employees, family members and friends. From the developments that have been happening in the open source world I feel that this festival has been around throughout the last year. Though not exactly as giving gifts but through investments in and valuation of open source software companies is creating an atmosphere of festivity.

Just look at the transactions in last 3 months:

Pentaho : Hitachi Data Systems Announces Intent to Acquire Pentaho

EnterpriseDB : EnterpriseDB Partners with New Investor Team to Fund Aggressive Growth Strategy

Hortonworks : Hortonworks Surges in Trading After $100 Million IPO

MongoDB : MongoDB raises $80 Million to accelerate growth.

Revolution Analytics:  Microsoft to acquire Revolution Analytics

If we go slightly back in 2014, we have announcements from more open source software companies :

Cloudera : Cloudera raises $900 million, plots expansion

Alfresco : Alfresco Raises A Fresh $45M

Jaspersoft :  Tibco software acquires Jaspersoft

These companies with their open source software are giving big competition to the traditional, proprietary software companies. Many large enterprises have deployed these software to run their business critical functions. So what does this trend mean to Enterprises, CIOs and developers?

Predictability and enterprise grade software :
The first thing that comes to my mind is that open source software companies now would have money in hand to strengthen their ability to support enterprises. Very often CIOs have given the feedback that while software per-se is of very high quality, the enterprise class support system, release cycle, product roadmap, integration with third party tools needs more attention. While every company wants to address these areas, very often open source software companies tend to be very engineering centric organisations – focussing on quality of products – which is right thing to do. But to gain larger footprint and become a serious player in enterprise space it needs to make it overall offering very predictable.

More customers, better product :
Another area that open source software companies don’t give enough attention to is sales and partner network. They rely on the community and word-of-mouth to go to market. While it serves the purpose in initial days to get early customers, to expand its reach these companies need to invest in its sales, marketing and distribution network. Which brings more customers in its fold and in turn helps to strengthen the product itself. I believe we would see more on the ground presence and better distribution network of these opens source software companies in coming years.

Better ISV eco system :
Having support of ISV eco system is vital for both – for company itself and for the customers as well. For the customers it means integration issues are taken care of and customer can deploy both the softwares with peace of mind. For the company, it means better reach and growing its footprint rapidly. But we all know, developing ISV systems needs deep investments and it takes longer time to get the returns back. Developing an ISV eco system is a strategic investment which needs to be nurtured for 2 to 3 years before you see its impact.

More money in hand for these open source software companies – by way of additional investments or though parent company’s deep pockets – would mean they would be able to address these issues to a large extent, though priorities would vary from company to company. But it certainly mean open source software business would be able to match many of characteristics of enterprise software companies that CIOs were asking for.

Interesting times are ahead.

– Sachin Dabir, CEO | Ashnik

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20-Feb-2015