Many businesses consider using open source software as a means of keeping software license fees low. The selection of Drupal instead of Adobe CQ or Sitecore makes eminent sense if you’re primary intention is to keep the cost base low. Traditionally, the downside of open source was lack of commercial protection, professional support and a lack of roadmap. How things are changing.
In the past few years there has been an emergence of companies building commercial businesses around an open source technology platform. Drupal has found a commercial home in Acquia and Commerce Guys (among many others) who offer a range of professional services, support and hosting options. WordPress creator Matt Mullenweg founded Automattic offering commercial bolt ons to WordPress such as Akismet and JetPack.
When we examine the business model of these open source businesses there are two main activities that require attention:
Firstly the development of the core open source product offering. For some organisations this isn’t a case of actually developing the product, but is a community management role.
Secondly, these organisations are investing in and delivering professional services that support the core product. This may include solution hosting, development services or the sale of add-on products that enhance the core product.
Opencall case study
Former colleague and good friend, Scott Bowler recently transformed his software company, OpenCall, in this way.
OpenCall provides international call tracking services for marketing and sales professionals. Essentially a different phone number can be applied to each campaign or piece of marketing collateral allowing you to track which posters, flyers, website searches or events are generating calls. An important metric in multichannel marketing.
Originally Scott launched OpenCall as a paid for product. However he soon realised the power of the platform and decided to give away the business’ core asset for free. Users are now free to select how they customise and host the software. Of course Scott can then offer a range of professional services and hosting options around OpenCall to take the strain out of the customisation and hosting for end users.
Scott and I had the opportunity to discuss his reasons for transforming the business into an open source model:
As Scott admits, time will tell how successful this approach will be when compared to OpenCall’s enterprise competitors.
Ultimately the success of open source as a strategy is going to rely on OpenCall’s ability to attract free users, build a community and then experience a viral spread of influence. Scott then needs to transform this influence into paid for add ons and services.
For many organisations the most disruptive thing they can start to do is give away the core asset. Certainly when the price is free, risk is reduced for the person selecting your product. The buyer’s challenge then shifts to optimisation and running of the product – problems that your business is available to support (for a reasonable fee of course).