2013 is breakout year for commercial open source

Why such bullish prognostication?

Bottom line: commercial open source is simply a better model and is at its inflection point for growth. Open source is good for the global marketplace, innovation and the companies who back the projects. This is a winning "trifecta" — one now broadly recognized in education, business and governments worldwide.

Global Marketplace and FOSS

Global markets now have access to leading edge products and can embrace those that are either free and open source (FOSS) or commercial open source with the backing of a stable company. The proliferation of legally free versions of business software around the world is a game-changer for both developing economies and the software industry.

The FOSS xTuple PostBooks®, for example, competes with expensive enterprise resource planning software (ERP) with deployment costs in the hundreds of thousands of dollars. These legacy ERP vendors have sliding-scale pricing to offset some of the economic differences around the world, but in the past, the only choice of global manufacturing and other businesses in need of ERP was spreadsheets or pirating software.

The problem for businesses using spreadsheets is their competitors — competitors who are using ERP software are more efficient, which has a serious economic impact. A fundamental misunderstanding on software pirating: they want legal software but also need the efficiencies of more capitalized ventures.

Enter a provider such as xTuple with its free PostBooks®; the appreciative comments from around the world speak volumes as to the benefits, shared in the public forums and user review sites. PostBooks® — with a million-plus downloads around the world — will continue to proliferate to all corners of the globe, providing tremendous business productivity benefits.

The complementary side of xTuple and other open source software vendors is the provision of commercially supported version(s). xTuple's flagship software falls into this category and having PostBooks® at the core is a huge advantage. With every new release, there are millions of people worldwide who not only run the software and test it but have access to the underlying source code — an enormous benefit for the stability of xTuple, the company and the products.

Why am I bullish on commercial open source?

Commercial open source means better quality, more rapid innovation, and free or low-cost. Historically, security, bugs and support have been the FUD (fear, uncertainty and doubt – a tactic used in sales and politics) of proprietary vendors — vendors who ask you to rely on their competence that they stay up-to-date with technologies and security vulnerabilities.

Linus Torvalds, Finnish American software engineer who was the principal force behind the development of the Linux kernel, noted on security and bugs, “given enough eyeballs all bugs are shallow” or, more formally, “given a large enough beta-tester and co-developer base, almost every problem will be characterized quickly and the fix will be obvious to someone.”

Thus, the xTuple source code is available, and there are many eyeballs on it. The FUD has clearly been dismissed — even the White House now uses open source, running what is arguably the most vulnerable website in the world on an open source stack, including Drupal.

Introducing a hidden bug? How can you do that when it is not hidden? There are millions of people testing, identifying and fixing bugs in open source solutions before a release. xTuple and other companies have open forums with bugs identified and status updates completely transparent. Contrast that with the release of Apple Maps. Blasphemy perhaps, but the quality difference between Google Maps and Apple Maps is astonishing. Apple is the epitome of a proprietary vendor's closed road map and lack of transparency. Apple worked in secrecy and users never saw a preview of Maps. If they had, someone would have noticed that Greenland was not in the Indian Ocean (true bug!).

The open source model is better on all fronts, especially with commercial sponsorship and support. So the velocity of innovation is faster, the quality of code is better, the total cost of ownership is lower — and why I am excited with commercial open source for 2013 and beyond.

Stable companies and no end-of-life pronouncements

There has long been a question from corporate IT departments as to who would support open source software, a concern which evoked images of the Wild West. Look at the vibrant success of Red Hat with Linux, Acquia with Drupal and now xTuple ERP. These thriving companies and their proliferation of open source solutions are part of an ecosystem which continues to be a driver for stable company growth. (Example: Red Hat has over a $10.5 billion market capitalization and over $1 billion in revenue, supporting Linux which is free open source software.)

The open source model works for the marketplace and also for the companies supporting the solutions. This is obviously good for companies such as xTuple, yet also good for its customers. How many ERP users have had their software sent to an “End of Life” (EOL) status or had their vendors acquired in a distressed sale? In both cases, the customer loses without continued investment and innovation. It has become so common, there is a blog to monitor it all called the ERP Graveyard.

What is the roadmap for end-of-life products? xTuple’s PostBooks® cannot be sent to an EOL status; it is available to everyone for innovation. xTuple even publishes pricing on the website. The lack of visibility into roadmaps and corporate direction by closed and proprietary vendors forces blinders on long-term forecasting for their customers. Transparency and clarity is important, and open source vendors don't restrict but ensure this information is publicly available. Have you ever tried to rationalize the Microsoft pricing and CALS licenses, including SQL Server, Dynamics, CRM?

Don’t be surprised if you receive different answers from both Microsoft and their partners regarding the licensing requirements for internal/external users. Worse is receiving an audit letter from Microsoft or another vendor accusing you of violations — after taking their recommendations. Yes, it happens daily!

Commercial open source and xTuple in 2013

The xTuple community and company are booming, announcing 66% growth in the second quarter of this year and 74% growth in the third quarter. I was fortunate to join xTuple during the recent annual partner conference. What a great experience to meet partners from around the world. Consistent with other thriving open source companies, highly motivated and successful subject matter experts are building their businesses around xTuple. This means great worldwide support but also rapid innovation, with partners and customers alike creating modules and additional functionality as well as integrations with other software. The source code is available for the community to extend, which adds to the velocity of innovation.

2013 will be a big year for commercial open source vendors, including xTuple. Companies such as SugarCRM and Acquia may be preparing for initial public offerings (IPOs) based upon their business models. We will continue to see more large companies and governments worldwide adopt open source as their standards or as an “Open Source First” policy, whereby open source solutions are preferred and must be precluded prior to adopting a commercial alternative. This trend will continue as well as become pervasive within the corporate world. “Open Source First” will continue to spread due to its success stories, enabling xTuple and other open source solutions to be universally evaluated. When xTuple is evaluated as an ERP solution, it has an amazing success rate, including such recognized companies as U-Haul and Nordic Naturals, the international leader in delivery of the safest, most effective omega oils.

xTuple is looking forward to even more success in 2013 and beyond, riding the same wave of innovation that other solutions are seeing in commercial open source growth. Building on success to-date , the xTuple team has added depth and continues to invest in improving both the classic Desktop offering and the recently launched Mobile Web application. xTuple, recognized as the world's leading open source ERP, also has many companies interested in Partner opportunities — all at the same time the vast list of companies relegated to the ERP Graveyard is growing.

Have you seen your ERP solution pronounced “End of Life” and what are your plans for the future?

Photo credit: Opensourceway on Flickr