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 ?

Next public speaking : Brainstorm K12 conference in Wisconsin

The Brainstorm conference will be held from the 28th of February to the 2nd of March in Wisconsin Dells. This is a dedicated conference for the IT+K12 world : the subtitle reads "For K12 techs by K12 techs".  K12 is a very particular domain where problems are somehow shared across the country and, I would even generalize a step further : problems in the US are the same as in most of other countries. Most of the K12 publicly founded education systems in the world don't have enough money to fulfill their core business.

In IT, this translate directly in terms of Student/Computer ratio. It vary from 3:1 to 7:1 depending on how you measure the statistics (computers that are older than 5 years, etc.). In the K12 IT department, the IT budget is only linked to the number of students, not to the number of computers that the IT department has to manage. Thus, increasing the number of computers really diminish the service quality : the same staff has to manage twice the number of devices !

All in all, we can say that education in general and K12 in particular can not leverage the power of networks and computers in a classroom environment : K12 schools manage scarcity while the IT world manage abundance (think Facebook, Google, etc.).

Open Source and thin-clients can certainly change this and empower students and teachers so that they can have one computer per user (when needed initially but, hopefully in a near future ... always) and, as a consequence, leverage the Web 2.0 and benefit from the global knowledge that is Internet.

I will present two conferences, one about large scale open source deployment in a K12 environment and the other one about Open Source thin clients, namely, the project Revolution Linux leads called LTSP-Cluster.

On another level, I will be co-chair of an Open Source round-table : my goal will be to make sure that every participants gets at least one of his question answered. We will prepare some questions and define the format. I will post our efforts on this blog.

Sessions that we will present :

• Break-1841 - The New 1 to 1: Scalable and Affordable Ubiquitous Computing Using Open Source
  
  In this session, you will see how the concept of "Ubiquitous Computing" could help bring your 1:1 project to life by removing barriers that prevent access to technology. Learn to provide access to the same computing environment no matter the device or the location ! All this using Open Source technologies that can scale to your entire school district.
  
• Break-1820 - Open Source Social Networking Tools
  
  MySpace, Facebook, You Tube.... Students in your school district are using them.
  Staff in your school districts are using them. Come and see how others are using internal open source social networking tools to leverage learning in a controlled environment. Get your feet wet using various open source social network and microblogging tools.
  
• Break-1840 - A Comprehensive LInux Back-End Infrastructure
  
  This session will describe a cost-effective approach to a global open source back-end infrastructure large number of students as deployed by Revolution Linux in various school districts in North America. The main goal of these projects is to centralize various information services (such as file servers, printing services, email and collaboration tools, web and authentication) in order to better manage resources and to transfer expertise locally. Using open source software enables the school board to offer more efficient services, such as automated schoolwork management and the automated generation of school website CMS.
   
• Break-1842 - Desktop in the Cloud with LTSP-Cluster
  
  See how it is possible to deploy and manage a large number of desktops in a private cloud using LTSP-Cluster. LTSP is the Linux Terminal Server Project. Using LTSP-Cluster enables you to deploy thousands of desktop in a scalable manner. You will be able to see and test yourself features that those Linux desktop offers using Thin or Fat Clients, such as 3D support, multimedia, 3D effects, and much more. You will also see remote access of the desktop in the Cloud, and support for Windows Terminal Server.
  
• Break-1843 - Netbook and laptop management with Linux
  
  Know how you can use Ubuntu Linux Netbook Remix in your netbook 1:1 environment, and see the possibilities available to manage a large number of mobile devices like laptops and netbooks in a flexible and scalable way.
  
• Open Source roundtable
  
  Come ask your question about K12 and Open Source !

I propose the #k12brainstorm tag for twitters out there.
Also, I have create a linkedin event : http://events.linkedin.com/Brainstorm-11-0-K12-techs-by-K12-techs/pub/232369