Free Software is good for business

Not so long ago the common wisdom was that free and open source software would grow strongly in the market for infrastructure software - operating systems, databases and web servers that have a generic applicability across all markets - but that non-free software would continue to dominate in the realm of vertical markets - where applications fulfil a specific role in a specialised commercial environment.

This view, which is still held by many, was based on the assumption that the "hobbyist" programmers who initiated many of the more famous free software projects tended to pursue sexier and more immediate objectives, and that many areas of applications software development would be ignored as a result. A second assumption was that companies would not find a free software commercial model that worked for more specialist business applications, where there is a smaller market for support services.

But realities change very quickly. Open source allows individuals and organisations with a diversity of skills to come together to scratch an itch or solve a problem. Individuals gravitate towards an open source project because of a particular skill or interest. But organisations in many industries have recognised a similar benefit at the corporate level - that the value lies in the final product, not the enabling software - and that it pays for organisations to collaborate with each other to share skills and lower the barriers on research and development.

The incentives may be different, but the effect is the same. John Sarsgard of IBM stated the case quite clearly back in 2003: "Is it a charitable thing for IBM to have 250 engineers working on Linux? Long term, we are getting a cheaper operating system than we can by building our own. It's self serving. We can't build a Linux class operating system all by ourselves with only 250 people."

The computer hardware industry sees direct benefits in supporting free software. The advantages of a free and scalable operating system are efficiency and cost. Resources can be dedicated to other activities, and development costs can be shared across the industry. The driver is open standards, which give both manufacturers and users a better deal. This cooperation is now reaching far beyond the bottom layer of the software stack. Companies such as Novell and Sun Microsystems, for instance, have contributed large chunks of code and personnel to the development of OpenOffice, Gnome and Firefox - and this phenomenon is set to continue into other fields.

Rising from the horizontal

There are many models for paying for software. The success of the JBoss J2EE application server has proved that a free software project, "free as in spirit, not as in beer", can generate substantial revenues without compromising its principles, and that subscription, installation, training, support, upgrades and maintenance can provide realistic opportunities for creating income streams for a product that is at least the equal of, and arguably superior to, many of its rivals. JBoss, now owned by Red Hat, has not only become a dominant player in its market, but also employs most of the key developers behind an expanding portfolio of Java middleware projects.

The fact that JBoss can be downloaded for free has been a marketable feature, and not an impediment to the rapid growth of JBoss. Open source has given JBoss a host of advantages that have depended on the readiness of JBoss and its founders, exemplified by the forceful personality of Marc Fleury (who is now languishing between projects), to follow them through to their logical conclusions. JBoss has fostered its user and developer communities, and there is close interaction between them. A user with a particular concern or requirement can gain access to the individual developer, resulting in more rapid and responsive development. Many of the advantages of free and open source software accrue from its dependence on a distributed development environment which is stripped of the traditional heirarchies, but demands greater debate and feedback from users and developers.

A logical corollary of this effect is that commercial "open source" software projects are more responsive to the demands of users and developers, because they have to be.

An ah-ha moment

"When we got started (only three years ago) there weren't any other commercial open source companies, so we were blazing a trail, especially at the applications level. We were the very first venture funded commercial open source company, and the wisdom among people who didn't really know much about application software was that open source was only good for infrastructure software," he says, "but having spent our entire careers in CRM (Customer Relationship Management) we knew that there was a huge community of developers out there who had spent their lives tailoring and customising, integrating and modifying proprietary CRM packages. No two CRM implementations are exactly the same, and no two businesses are exactly alike, so there were system integration shops modifying proprietary CRM packages all over the world. We knew absolutely that there was a community out there that hadn't yet been introduced to open source, and personally, I am proud that SugarCRM has helped this community to move out of the world of proprietary CRM development into open source."

"That was one of the ah-ha moments we had," says Oram, "knowing how large the CRM community was."

From the beginning SugarCRM was licensed under an attribution license (the Sugar Public License) which was a variation of the Mozilla Public License but met with criticism from its own developers and the wider open source community because of license compatibility issues and the attribution clause of the license which required any derivatives to display the SugarCRM logo. Subsequently SugarCRM has announced its intention to switch to version 3 of the GNU General Public License (GPL) and can legitimately claim to be the first commercial open source company to do so.

Historically, it was claimed that the viral nature of the GPL was an impediment to business adoption of free software, but the opposite has proved to be true. "The GPL creates a very level playing field for everybody involved," says Oram, "for those people who take the time and effort to build the core software initially, as well as the people who leverage that to build new and exciting ideas into the software. The GPL will enable our community to interact within the larger software community. We've been following the development of the license for about a year now, and all the thought and consideration being put into it. It is the most modern open source public license available today. It is targeted towards today's computing environment and today's software, and we really like the patent protection aspects of the license."

"Secondly we think its going to accelerate the innovation and interaction of our own community with other open source development communities around the world. The Sugar Public License (SPL) and the GPL are incompatible due to the viral nature of the GPL. There is more code out there, and there are more developers working under the GPL than under the SPL. Given that the GPL is the most widely accepted open source license around the world we wanted to remove that obstacle to integrating our product with other products running under the GPL."

During the last three years SugarCRM has been very successful in a rapidly growing market. Over 8000 developers have registered with the project, and there have been over 3 million downloads of the software. At the enterprise level SugarCRM has over 1300 customers, with up to 500 seats a time. The download version is even more successful.

Oram notes that "the market for open source business automation software, CRM and ERP, is getting bigger. 10 years ago a lot of companies still ran themselves on paper." The open source nature of SugarCRM is creating new markets for business automation. "Smaller companies that wouldn't previously have invested in CRM are running Sugar Open Source. There is a lot of green field opportunity for us. In this market [in which there is no history of business automation software] our biggest competitors are Outlook and Excel..."