Like most people I’ve been following the current economic news with a mixture of morbid entertainment and mild trepidation. I’m not likely to be out of a job soon (my employer and I are on very good terms), but inevitably my work is part of the global economy, so I can’t expect to be completely unaffected.
There are a few interesting lines of thought in the blogosphere that I thought I’d share with you. Open source and related business models weren’t really around in any great quantity during the last big recession, so what precisely will happen in this area is subject to some speculation.
A Boon?
On the one hand, there’s the argument that when money is tight, companies will be more likely to investigate less high-profile, cheaper alternatives to the usual IT purchasing they do, which actually means that open source software actually stands to do better. In the good times, it’s easy to justify buying the majority of your technology from one very large vendor (Oracle, Microsoft, IBM etc) because it’s ‘easy’ – everything has a better chance of working together out of the box, you can expect common terminlogy and tools, that kind of thing. However, when funds get tight, people inevitably start examining all these things in much greater detail than they did before, searching for a budget to cut. There is an argument that says that staff are the most costly resource, and therefore if a suite of technology is familiar and easy (but more expensive), those costs will be recovered in staff efficiencies. However, there’s a problem with this argument – even if you accept that expensive proprietary software is easier to use than open source software, which is not always the case, savings in staff efficiency are non-tangible, compared to licensing and annual support costs which are very much tangible. Cashflow is also a big deal in almost any company, and the open source model of ‘use now, pay later (maybe)’ is highly attractive. And, when it comes down to it and your CIO needs to cut the budget, I’m sure you’d rather he/she cut the license/support contract expenditure rather than your job. That also makes sense for companies too – when the recession ends re-skilling is a pain in the ass, it’s much better to hang on to your good staff and save money elsewhere.
So in fact open source projects and the companies that provide products and services around them may actually be one of the few winners in a downturn. That’s certainly the impression I’m getting from bigger open source companies, and in fact even I have seen a modest upturn in business in the last month. It’s too early to tell whether this is a trend or just a coincidence, but I can hope.
A Drought?
Another opinion is that as the economy gets tougher, and people start to lose their jobs, they will start becoming more ruthless about earning money, and will stop contributing so much for free to open source projects, and to other volunteer activities. This is the view put forward by Andrew Keen – that the culture of ‘free’ only works during a boom, and that that will affect numerous Web 2.0 companies, open source projects and user-contributed sites like Wikipedia.
Personally I think the trouble with Keen’s argument is that he fails to acknowledge the widely different types of ‘free’ contribution / project, and the wide array of motivators people have for being involved. I can definitely see that in a downturn, companies that have significant burn rates and are built on the ‘attract people by the million now, figure out how to pay for it later’ will finally have to undergo significant reality checks. I’m all for this – the days of companies like Facebook attracting stupendously highly capitalisations without having anything close to a viable business model should be finally over, and not a moment too soon. Twitter have announced that they’re going to ‘find’ a business model next year – right, good luck with that.
However, the viability of these money-pit Web 2.0 companies is a completely different matter to the more organic open source projects and companies out there. I’m sure those that have grown their communities gradually and sensibly, rather than on the back of some ‘get rich quick later’ scheme, will be entirely unaffected by an economic downturn, because the communities are made up of people who want to be there. Sure, there will be cases where a community member is there only because of their current job / project, and the demise of that may cause them to cease being involved, but I’m confident that’s not a huge number of people. And besides, those leaving because of economic conditions may well be compensated for by the people that lose their jobs using open source involvement as a good way to network, keep their skills sharp, and to build a portfolio / reference work which they can use when obtaining their next employment.
Overall, although a recession is never a good thing, I think open source and related businesses are in a position to come out of it stronger, rather than weaker. Open source is no longer a pipe-dream – I remember having an argument with my (then) boss in 2000 about the viability of running some core functions on Linux instead of spending money on more Windows servers (with the inherent upgrade requirements, licenses etc); his opinion at the time was that Linux and open source were always going to be amateur and not ready for prime-time, and that the only sensible option was to buy into more Microsoft tech. He thought I was crazy to suggest that something non-proprietary might be viable for business – I challenged him that in 5 years he’d be proven wrong, and I kinda wonder whether he ever acknowledged that I had a point. There are many real, viable options in open source, and even Microsoft acknowledges this now, despite years of ranting and FUD about it from their blustering executives. When we come out of this recession, I think the scales will have tipped even further towards open source as a core component in the IT strategy of many companies.
October 23rd, 2008 at 4:32 pm
Steve, what widely used open source software competes with commercial software? For me, the only great success I can see is Firefox. Ubuntu is always sparking my interest, but I can’t make a switch while preferring to play windows only games and visual studio, unless I spend time figuring out wine and learning another IDE. I’ll admit that I don’t get out and try new software much; I generally find something that works and use it, unless its too much hassle. I’m partially curious, but also not really convinced we’re at a stage where open source can confidently compete with commercial products.
October 23rd, 2008 at 4:49 pm
You’re concentrating on the desktop, where there’s been very little traction. However, one example there is Eclipse, which IMO is a better IDE than Visual Studio for certain languages. But generally the desktop is not the place to look for open source adoption.
For open source successes so far, you need to look at the enterprise, where open source is doing very well indeed. As I’ve said before, Linux has a mile to go on the desktop still, but not so on the server.
There are a multitude of enterprise areas where open source is doing very well; here’s a few headliners: content management (Alfresco), ERP (Compiere), CRM (SugarCRM), SOA (MuleSource), Groupware (Zimbra).
The New York Stock Exchange runs on Red Hat, and survived the massive trading volumes in recent weeks just fine – compared to the London Stock Exchange which received flak after it suffered a 7 hour downtime recently, blamed on scalability issues – it runs on Windows / .Net
And that’s just the packaged solutions. Many of the big consultancy firms are increasingly deploying open source frameworks as part of their custom solutions, for example Accenture is a big user of Spring. In the enterprise, open source is cropping up everywhere. The trouble is that a lot of small to medium sized businesses aren’t aware of these options, because they’ve grown up from the desktop and so the ‘natural’ route is a windows server. You’ll find the very large enterprises adopting open source much more, because they have more breadth of experience and also potentially more savings to make because of the scale. They’re also more likely to be coming from established systems like mainframes or Unix and so a Linux server isn’t daunting (I came from a mainframe background originally). The products are out there, and getting used in production environments all the time now.
October 23rd, 2008 at 5:15 pm
While I agree with most of your points, but I dont agree on this:
“The trouble is that a lot of small to medium sized businesses aren’t aware of these options, because they’ve grown up from the desktop and so the ‘natural’ route is a windows server.”
I think you should also acknowledge of their different needs compared to the corporates or bigger clients:
1) they dont need something very scalable, or
2) they also don’t need some OS which can be left unattended for many months.
3) And they also dont have much resources to hire a specialist to install and maintain Linux and apps – admit it, Windows are so much more easier to maintain in this respect. Even a pointy haired boss can do it
4) For the web servers, they usually go for webhosting services, so they don’t need to actually host their own server.
And so many others.
October 23rd, 2008 at 5:37 pm
Yes, this is true – especially when technology isn’t a big part of their business. It does, however, potentially crimp their style when they do need to expand. In my experience, open source tends to scale very smoothly with the business – you can use most of it for free in a small environment (assuming you have some technical expertise in house) and grow at your own pace without hitting an arbitrary ceiling where your fees suddenly grow. You also get to retain control over the platform more, which is useful if you modify / adapt / extend your tech to give you a business advantage.
But, on the ease of use front, have you tried any of the Linux-based appliance servers recently? Those that come pre-configured with file space, web servers, email, backup hooks etc. They’re actually very good in my experience and need less babysitting than a Windows server, you basically just plug them in and go, and they’re pretty much self-maintaining. Good if all you need is a basic office server solution without the hassle. A lot of people seem to think Windows is the easiest to maintain for simple SMBs, but that’s not always the case.
October 23rd, 2008 at 5:42 pm
Here’s one for example: http://www.officeappliance.com/catalog/home/ . Pretty much everything you need for an office, mostly runs itself. Of course you could go cheaper if you bought a server and installed the software yourself, but this comes preconfigured with everything you need. Easy, cheap and open source. Quite a few companies do this kind of thing now, but they’re often under the radar of the kind of business that just buys a Windows server from Dell and then loads Exchange and a lot of other expensive software on it when they don’t need to.
October 24th, 2008 at 12:35 am
The economy has definetly softened but I still see thousands of jobs posted on employment sites.
http://www.linkedin.com (networking)
http://www.indeed.com (aggregated listings)
http://www.realmatch.com (matches you to jobs)
good luck to those searching for jobs.
October 24th, 2008 at 4:13 am
Maybe it is my style, but I have a belief of using technology which suits just current need – okay plus another 50% expansion of whatever. Until I can actually see the need in the near horizon, I wont invest my time on learning Linux (or hiring someone) and all the nitty-gritty details inside it
Yeah, I sound lazy but it has saved me time and money quite a lot of times…
Well, the plug and play kind of thing sounds good, although it has minuses as well. To be fair, Linux is getting better by the day, and doesn’t need much tinkering as it was previously. Ah, still remember the old good student days where I can afford to spend the whole night downloading slackware on 28.8kbps modem
October 24th, 2008 at 8:41 am
@syedhs: sure – you should use whatever works for you. I’m just saying that when people have to look at budgets more closely, they start to look at options that they previously discounted out of hand, and they may well find this ‘open source thing’ is nowhere near as hard as they might have heard, particularly on the server end. It’s nowhere near as difficult to manage as the FUD makes out. My business has run Linux servers for years now, even though I use Windows and OS X on the desktop, and I can honestly say that I’ve hardly ever had to touch them in the past 4 years. For my needs (file / print / mail / web serving, code repositories, build automation) they’ve been considerably cheaper to run than if I’d had to buy Windows servers, certainly in terms of the hardware requirements and licensing, but also I believe in maintenance time, although that’s somewhat speculative since I only have Windows servers at my previous place of work to compare to, which was a much larger environment. YMMV – but I think a lot of people assume it will be hard to run Linux servers without ever trying it, and those that don’t want to learn Linux have the option of buying an appliance server which requires almost no knowledge at all. When there’s less wiggle room in the budget, more people will actually *try* it, and I think many will be pleasantly surprised.
October 25th, 2008 at 3:19 am
syedhs I kind of find your opinion odd. I am a computer enthusiast and relish the opportunity to learn new computer related technologies. Giving other platforms a spin really does keep you abreast of what’s possible and helps you learn to approach those level of problems in different ways. Just like learning a new programming language helps you learn different ways to solve programming problems.
I can see where are coming from on the time perspective, while I have an opportunity to try a .NET app (I am Linux/Mac guy) I have not yet touched Vista.
October 29th, 2008 at 4:53 pm
Concerning your “stock exchange example” Steve: I heard lately that the German electronic stock exchange (XETRA) and the according index (DAX) are based on Java which kind of surpised me. Does that already count as “Open Source” for you?
October 29th, 2008 at 5:51 pm
I think Java is a great solution for large business apps. And yes, it actually is open source now – as are most of the core libraries that are used with it; Java’s open source community is massive and very mature.