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An Open Secret

Open-source software is quietly gaining ground well beyond the data center.
Marshall Krantz, CFO Magazine
January 1, 2009

Last November, Openbravo, an open-source software (OSS) company in business for less than three years, celebrated the one-millionth combined download of its enterprise resource planning (ERP) and point-of-sale applications. While the number of actual deployments is far less, given that developers often download the software as part of a tire-kicking exercise, the high interest in an open-source application as sophisticated as ERP reflects the increasing traction that OSS is gaining in the corporate world.

Indeed, by 2012 more than 90 percent of enterprises worldwide will deploy OSS in one form or another, predicts Gartner, an information technology advisory firm; over the past four years the corporate interest in OSS application and infrastructure software has shown a slow but steady increase. Yet many corporate managers may not realize the extent to which open source has already infiltrated their enterprises — not only as stand-alone software but also bundled with proprietary applications. Even those companies that have openly rejected OSS "might find themselves unintentionally using open source despite their opposition," says Gartner in a recent report.

Open-source software is still used most often in operating systems, particularly in various forms of Linux, with which it is virtually synonymous. But more than half of companies adopting OSS are rolling out open-source applications, according to a Gartner survey conducted in 2008 of 274 enterprises in North America, Europe, Asia, and Australia. When those rollouts take the form of new projects, versus extensions to or modifications of current systems, the OSS applications in question are just as likely to involve mission-critical tasks as they are to involve smaller-scale IT needs.

Ready for Prime Time
One of the initial raps against OSS was that, while the idea of free and continuously modified software had a certain appeal, it also inspired a certain terror; what business would hitch its technological star to software that was pulled off the Web and unsupported by a major vendor? Who knew what lurked in the code, or how easily that code might be cracked into?

Today, the recession and its attendant impact on IT budgets have prompted companies to live with a certain level of anxiety. And, as well, years of experience by those on the cutting edge have shown that many applications within the OSS world may now be ready for prime time. Vendors do in fact play a role in supporting OSS, and while their fees have been rising, overall cost of ownership is still substantially lower; often that vendor support feels more like a security blanket than a shakedown.

"We've seen rising interest in open-source software over the last six months," says Kim Weins, senior vice president at OpenLogic, an open-source provider that certifies OSS. "CFOs should consider open source. It may not be the best option in every case, but it's probably the best option in more cases than they realize." An OpenLogic survey of its clients found that nearly half plan to deploy more OSS as a result of current economic conditions, and another third are considering it.

InterContinental Hotels Group uses a variety of OSS products from Linux Red Hat, JBoss/Apache, and MySQL/PostgreSQL (in operating systems, servers, and databases, respectively), although not across the entire enterprise. In 2007 InterContinental adopted SugarCRM, an open-source customer relationship management application. Last year the company adopted Alfresco, an open-source enterprise-content-management system, in order to consolidate data about the group's 4,000 hotels. "We couldn't be more pleased," says Alex Grigorian, InterContinental's vice president of enterprise technology, of the Alfresco product.

It doesn't hurt that the software's annual support fees are a fraction of the millions of dollars it would have cost for a proprietary system. And thanks to the absence of licensing fees, Alfresco consistently quotes prices 90 percent lower than those of its proprietary rivals, according to vendor vice president Matt Asay.

Barriers to Growth
But InterContinental's central reservations system — a mission-critical application if ever there was one for a hotel company — still resides on a decades-old, tried-and-true IBM mainframe. The cost of maintaining the application remains high, but an overnight change of such a huge system, which processes some 2,000 transactions per second, to any other system would present huge risks. "We're taking a gradual approach to the mainframe offload," says Grigorian. "Our architectural direction is open-source where appropriate. But we're transforming the technology at a pace that does not put the enterprise at risk."

While a large company such as InterContinental may choose to adopt OSS on an incremental basis, small and midsize companies may have the freedom to be bolder, given that the software does not have to scale up to meet massive transaction volumes or similar demands. "You're not going to see huge companies rip out SAP and put in SugarCRM," says Gartner research director Laurie Wurster. "Large companies might hook an application like SugarCRM into the financials of an Oracle or SAP. Pure-play open-source applications mostly target small and [midsize] businesses."


Perhaps the biggest headache companies still face in adopting OSS is not technical but legal. Despite its name, open-source software isn't always open: more than 60 licenses pertain to its use, and some licenses are not certified by OSI (the Open Source Initiative, a community-recognized body for license review and approval), according to Wurster. Although end-users don't pay to license OSS in the same way that they license a proprietary system from a traditional vendor, there are licenses that govern conditions for using the software, such as trademarks and distribution. Companies that change OSS code and then distribute the customized software outside their organizations may be required to publish the code changes, for example. This becomes an issue only if the business distributes changes externally, according to Matthew Aslett, enterprise software analyst with The 451 Group, a technology advisory firm. Companies can reduce their legal risks considerably if they subscribe to enterprise products with indemnification when acquiring OSS from commercial vendors, he says.

Despite the drawbacks that still dog OSS, Aslett says decision-makers are coming around as they see open-source successes in IT infrastructure and applications projects. "In many cases, people stick with what they know," he says. "But things are changing as people become more comfortable with open source." Given the current economic conditions, interest in OSS may soon shift from the techno-savvy to the finance-savvy.

Marshall Krantz is a freelance writer in Oakland, California.





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