Nov. 22, 2006

In today's busy B2B segment of the economy, open source is among the tech community's hottest topic. However, if you mention the concept to various IT leaders in enterprise development, they will probably all cringe at the same time.

To many people, if you coin the term "open source" it usually means "free software" to them. So they usually tell themselves "it can't possibly equal the quality of products you pay for." This kind of a "generic write-off" simply misses the point altogether.

To those that really understand what open source is, to them it means is flexibility, value, selection and a new pricing arrangement that allows enterprises to pay for IT systems at the point where they derive real value from them.

You can compare this with the commercially-available software industry in which customers pay in advance for the privilege of using their software. So the move to an open source model significantly increases value for vendors and enterprise customers alike. In fact, the shift may be much more subtle than anticipated.

A more simplistic view of the open source model is "getting software for free." Naturally, nothing is entirely for free anyway. When software is put into production, there are always the inherent cost of updates, hardware fixes, software patches, the inevitable training staff, new features and so on and so forth.

People often stumble into the erroneous belief that "open source" somehow makes these costs disappear. The distinction is that that the open source model allows managers to freely select which costs their organization will bear and which ones they're willing to outsource.

In open source, everything is without charge to someone, but nothing is without charge to everyone: it all depends on the skills you have in-house and the ones you need to buy in.

In the B2B sector, the most significant transformation isn't that enterprises will cease to pay for IT, but rather that enterprises will be making value-based investments in IT on their own terms, and according to their own specific needs.

Imagine it in this manner: Back in what is referred to as the "software market 2.0," vendors created systems or applications and monetized them at the point of sale. Yet since the Internet has revolutionized connectivity and collaboration, there's been a gradual shift in the way individuals and companies utilize IT.

They no longer want single, shrink-wrapped solutions, but rather the liberty to pick and choose from the great variety of features and options they know exist out there.

In the ensuing "software market 3.0" world, programs are assembled, prepared and deployed in an open forum, with users providing input along the way. Monetization happens at the other end -- when the software is put into its final production.

In the old world, if you couldn't afford a certain IT system, you couldn't use it. Today, the right to use the software is free. Enterprises can evaluate a variety of products -- and assemble the pieces of their own choosing -- to build the ultimate customized solution at the right price.

They have the freedom to determine exactly which products and services are required to make their deployments succeed.

Simply put, open source essentially introduces an alternative pricing model that places enterprises in control of costs, rather than being at the mercy of IT vendors.

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