FLOSS for Medium Businesses : challenges and opportunities

Context

Last Friday, I did a presentation to a group of medium businesses. The audience was about 20 IT directors of businesses between 100 and 500 employees (Medium Businesses . A first presentation was made by another presenter about Open Source in general : basic principles, licence/freedom, ecosystem,  business model. As a consequence, we could say that Free Libre and Open Source Software (FLOSS) was introduced before my talk.

Every organization in the room use FLOSS. 90% of them ran some kind of FLOSS and were aware of it : Asterisk, Apache, CMS, etc. 10% used some kind of appliance or third-party (SaaS) with FLOSS inside.


Initial presentation : Success stories of Open Source deployment

My presentation was articulated around different business cases / success story. In each case, the initial business goal was stated :

• divide the total cost of ownership by 5 for a desktop project we are doing in China
• step by step migration to open source starting with infrastructure/servers and moving higher in the stack, including OpenOffice and then desktop
• replace legacy POS system for a restaurant franchise : distributed linux thin clients using LTSP-Cluster
• a manufacturing company that migrate its complete IT system : Open Source ERP and Linux thin client in the plant

The reception from the audience was great and several questions/objections were mentioned. If you attended the conference, you'll noticed that the form has been modified but, hopefully, not the content !

Challenges for Open Source in the Medium Business market

• Referral cases / business cases more difficult to publicize. It is relatively easy to find information about large migration of large organization. With an efficient PR service and marketing department, they tend to "brag" about their Linux/FLOSS deployment. Mid-size company don't and it is much more difficult to find market evidence of FLOSS Migration. Previsionnist companies (Gartner, etc.) do not analyze this market often...
  
• An IT director mentioned "We have a very small IT team, it is not possible to learn new technologies". The financial crisis has stretched the existing resources quite a bit and FLOSS, as a new technology to learn, is problematic. IMHO, this is more linked to the "exit cost" of any solution than something specific to FLOSS : solution in IT don't last for ever. Who should pay for the exit cost : the initial technology or the new challenger ? I will certainly blog about this point later on but I strongly encourage IT directors to integrate the exit cost in their initial technology purchase : this is good practice and will bring agility to your organizations.
  
• Another question "How can we find expertise in FLOSS ?". As a matter of fact, the business model of the Open Source companies was not clear enough and even if the two companies that presented (including Revolution Linux) were able to offer consulting, services and third level support to these companies, they were not known beforehand. The existing suppliers do not support FLOSS : they are used to sell hardware, licences and services.

Transition from a vendor market to buyer market

I think this was the biggest objection. It can be explained this way : "While I have vendors calling me all day long and pushing me new product and services, nobody is marketing open source..."

I think this is true : established companies with sales channel already open tend to rely heavily on interruption marketing to sell new products and new offerings to their existing customers. This is a well known marketing fact : selling a new product to an existing customer cost 7 to 10 time less than selling the same product to a new customer.

In a sense, I think that Open Source companies operate on a much more leaner business model than the closed source one and that marketing/sales is not in their ADN and is not their priority. On another level, Open Source companies can be seen as start-up/immature companies compared to some of the players in the IT market that exists since 20+ years with an established sales, marketing and partner management department.

My answer was that Open Source is essentially a buyer market, not a vendor market. If you want to select an open source software, you can certainly find between 10 and more than 1000 open source product depending on what you are looking for (ex: a Web Server, a CMS, etc.). As a consequence, you have to define your need carefully, select one or several open source solution and then evaluate the maturity of the solution.

In a sense, it is a very different experience than buying a proprietary product or even more easily done, fill a PO and acquire a new proprietary solution from you existing supplier...


Opportunities

As always, I think that all those problems are great opportunities : how can Open Source company embrace those problems and provide a better service to the medium business market ? How to lower the barrier so that FLOSS can become mainstream ?

Do you have similar experience about medium businesses and FLOSS ?

The end of the (Linux) desktop as we know it ?

Embedded Linux : common trends

More and more of the Linux ecosystem (PC hardware vendor, phone hardware vendor, search engine giant and more recently a well known Linux distro, Ubuntu) uses Linux as an embedded system for the desktop. Some examples to illustrate this trend :

• Asus Express gate embed Linux in the motherboard. You can have, in a few seconds, a browser, skype, etc.
  
• Google Chrome OS : not yet released but it is define as the Web OS with a minimalist/zen approach (like an OS based on Chrome, the browser)
  
• Mobile platform : you'll have plenty to choose. ARM based : Symbian, Meego, Android, etc.
  
• Last but not least, Canonical announce "Unity", a minimal/Zen OS that will be available to OEM but can be nonetheless deployed on Ubuntu Lucid and later.

Major desktop environment (Gnome, KDE) : things of the past ?

One interesting Linux specificity is the fragmentation of the windows manager market. No other "mainstream" operating system has such a complexity : the window manager is unique and completely integrated (from kernel to applications) into the Operating system. Thanks to the XFree standardization, Linux is more complex : several window managers exist and have to co-exist.

However, on this level, things are changing rapidly :

• Collaboration between Gnome, KDE and XFCE (and others) is accomplished with the Freedesktop project. The project goals are to define common tools (like X.org), sub-systems (Dbus, etc.), API to ease integration and interoperability of the different window manager.
  
• Zen-ification : Simple is beautiful. Minimalist systems set the trend. Clunky interfaces tends to disappear and are flagged as bad design. Esthetic and ergonomic are the two main change drivers. Simplicity is especially important in order to "cross the chasm" and reach the general public.
  
• Cloud computing : Browsers are the key to the world these days. An interesting point to notice is that none of the desktop environment are relevant in the browser war : they use/integrate a major browser based on user choices (OK. they provide a browser but ... those browsers do no exist on the larger scale of the Internet!).

Negative impacts for the (Linux) desktop

• With the cloud, more and more users will be completely satisfied with a browser. As a consequence, users are more likely to care about their browser and the associated information (bookmark, session, password, cookies, etc.) than about their desktop. Major browsers offers a form of cloud synchronization : Mozilla Weave and Chrome Sync (with a google account ... of course) are leading the pack here. Those tools contribute to free the user from the desktop : everything can reside in the cloud.
  
• Even if a desktop is less and less relevant, migration from 100% local applications (PC) to a 100% cloud will take time. During this time, a desktop is still needed but this is an end-of life situation for this product line. The fact that major players roll out their own desktop environment is a sign that current desktop environment do not meet the needs of the future. Instead of improving the current ones, major organization decided to ... create their own. Asus with Express Gate, google with Android and soon Chrome OS and, more recently, Canonical with Unity.
  
• The direct consequence is a form of "commoditization" of the different desktop environments : they all look alike and most "regular" users don't really care. The differentiation factor is small/difficult to point out : only style, look and feel is experienced by the user after all !
 

 

Positive impact 

• Linux everywhere : after the servers, here come some form of "desktop". The platform is now very popular and we can see convergence between mobile phones, netbook, mobile internet device, etc.
  
• Hardware support ... will become better and better on the "desktop". As more and more hardware manufacturers provide an embedded Linux, hardware support will become a non-issue. Most components are standard and this will lead to a well supported platform for the desktop.

Conclusion ?

The value is shifting from desktop environment and desktop applications to browser and cloud applications. The direct consequence is that the Linux desktop environments should unite and work more closely together in order to address this need.

This will not be an easy task as lot of flame-wars and ego-wars will have to be resolved : the feud between the different windows manager is long-lasting and not really decreasing. Key projects like Freedesktop are very important in this regard.

Major players created their own "non-desktop environment" to provide a zen-minimal environment that contain a browser and some additional technologies (video-conferencing, etc.). Those players decisions should be a serious wake-up call for the window managers : a major hardware manufacturer, google, an open-source friendly distribution editor (Canonical with the recent Unity announce) decided to create their own "desktop" environment. Those products will be delivered to millions of users...

At a certain level, one can say that the battle is already lost : the current desktop environments can not really fight this war as they don't own the key technology : the browser. As a consequence, the risk, for them (Gnome, KDE, etc.) is to be a tool that will launch a browser. A (relatively) simple tool that can be easily changed with almost no user impact...

The Cloud : at least an environment that favor open-source !

What is the cloud ... without its marketing tag ?

During the 2010 think tank in Napa, the cloud was very present. One of the question was about the "threat" that the cloud represents for Open Source. This is funny because some very well in informed participants mention some key statistics. The major player in the cloud field, namely Amazon and Google, run an open-source (linux based) solution for their cloud.

Some unofficial statistics mention that more than 90% of Amazon EC2 instances run ... Linux. At some point, one could define the cloud as an Open Source OS + Open Source virtualization.


Why open source matters ?

Price of a computing cycle, bandwidth, RAM and storage are going down because of various factors including Moore's law (processors, memory) and unprecedented market size increase : developing countries are now entering in the digital age and crossing the digital divide.

An old open-source theory stated that, when the cost of a computer will reach 250$ then Open Source software will be in a strong position because it will be very difficult to pay hundred of dollars for ... software (was not able to find the reference but this is not my theory, feel free to comment and I will correct this blog entry).

I think that Open Source allows the cloud to exists : as the cost of servers get under 2500$ (lets assume that a server can be used by 10 users, we will find the same kind of ratio as for the initial prediction). In this context, when you manage 100 000s of servers, should you pay for ... operating system ? virtualization layer ? etc. In fact, most of the cloud players (Google, Facebook, Amazon, etc.), as start-ups, rely exclusively on open source. Constraint drive innovation and I really think that the present scale of those companies is a direct consequence of their platform choice : using any type of closed source software would have hurt the control on their platform and kill any innovation in the egg.

From and end-user point of view, the number one OS vendor (Microsoft) adapted itself to the cloud in a very reactive mode. In order to use a proprietary system in the cloud, you have to pay an extra 10c/hours/EC2 instance. If you use 100000s of hours, should you pay this tax ? Should you port your cloud-software to ... Linux ? At a certain level, RedHat and other licence-based commercial distros have the same problems : they have to somehow "rent" you your licence so that you can use them on the cloud. Once again, why pay for this and not use ... a freer distro like Debian or Ubuntu or even Fedora, CentOS or OpenSuse ? As a customer, no doubt you will consider alternatives and cost/benefits as it


What of the dominant players ?

While there is different players, I will concentrate on Amazon as Amazon is clearly in the leadership position : they published the API and offer a multi-tenant cloud infrastructure that is very cheap and very ... scalable. Scalability is not the problem of the user anymore at least from a hardware, storage and bandwidth point of view. However, applications scalability on the cloud is a very young and immature science ;-)

The EC2 API is in the process of becoming a de-facto standard and most of the cloud provider build their solution on top of this API. Others, like Eucalyptus, re-implement the API with a different toolbox (i.e. : other virtualization technologies) and as an open-source : you can have your own private cloud on your servers.

The Cloud : at least an environment that favor open-source !

If you look at the proprietary/closed-source/traditional licence-based business model they have to adapt to the cloud and somehow switch from a multi-instance architecture to a multi-tenant one. They also have to switch from a per-user licence to a per-usage model.  This involves all kind of interesting gymnastic like the one Microsoft did : 10c/hour/instance. If you "rent" an instance for one year, your cost for MS Windows in the cloud is .10$*24*365 = 876$. Very expensive IMHO : they don't really believe in the cloud. If you are doing the math, you better buy a bunch of  server licences that includes 5 VM : this will be way cheaper.

On the other hand there is no cost involved and no change required to any open-source software is you want to run it on the cloud : just do it ! No licence change, no hassle, almost no difference from a regular deployment in your data-center, no supplier to contact and ask "if you can run it on the cloud/how you can run it, etc.", no special provisioning (to have your precious licence number for each instance or to connect your licence server to your instances).

Moreover, open-source companies that develop open-source software already have a business model that is compatible with the Cloud : their software is already freely downloadable and can be run on any computer. When the old license-based model is used then some adaptation on the business sides of things, for instance usage based vs instance based. When a service-model is used, then no change is needed.

This can be a great opportunity for Open Source : a virgin territory without any legacy players and a business advantage because there is no need to change the existing software to benefit from this new market...

Switch : When change is hard. A change management book !

Introduction

Another book about change management could certainly be your reaction when reading this review. The Heath brothers are well known for the bestseller "Made to stick". In "Made to stick" (this is a recommended reading ;-), the emphasis is psychological and human centric : this is a (vulgarized) psychological book that propose a model for human mind : rational mind and emotional mind. I think this is important to mention because "Switch" is compatible with this psychological model and both books work well together.

Change : if was easy, it would already be done !

Change is, by definition, hard. If it was not the case then ... it would already be done. As a consequence, the second part of the title is somehow redundant but that is certainly a good marketing coup ;-) The second part of the title has at least one virtue : it explains clearly what he book is about "How to change when change is hard". I've read in an unidentified source (don't remember!) that the greater the success, the harder the change.