SAN FRANCISCO -- Larry Augustin believes that open source can easily hold its own against proprietary vendors like SAP AG and Oracle Corp. in the business applications game.
During a keynote address to attendees of the Open Source Business Conference yesterday, the Medsphere Systems Corp. CEO said people who disagree with him are the same shortsighted folks who once touted open source and Linux technology as being suitable for nothing more than computer game development.
To further his point, Augustin described four "poster children" of open source and mission-critical enterprise applications. He said these four-little-products-that-could are fanning the flames of an open source revolution in enterprise applications.
Augustin said the progress of open source business applications is evident in the growing popularity of the following applications: Compiere enterprise resource planning (ERP), SugarCRM, Digium's Asterisk Voice over Internet Protocol (VoIP) and his own company's Vista electronic health record applications.
These OS applications have several things in common, Augustin said, including short implementation cycles, large and enthusiastic user and developer bases, and a huge opportunity for all businesses. He said they've also made inroads into the business and developer marketplace.
Augustin cited some milestones, such as:
• There are over 20,000 downloads a month of and 25 development projects for SugarCRM.
- There have been 800,000 downloads of Compiere.
• There are 130 Asterisk systems vendors worldwide.
• Over 1,300 sites, including 158 medical centers and 850 clinics, use Vista.
Like Linux, all four applications came into a marketplace dominated by big, traditional proprietary products. SugarCRM goes up against CRM systems from Siebel and Oracle; Compiere against SAP and Oracle; Asterisk against Nortel Networks Ltd., Siemens AG and Avaya Inc.; and Vista against Cerner Corp. and McKesson Corp.
While the competitive scenario sounds daunting, Augustin believes that "the competition is vulnerable."
He pointed out that, like Linux, these and other open source apps have significant competitive advantages. Their cost is lower, not just in initial price, but in the price of the implementation. And it only takes months to deploy most open source applications, he said.
Augustin said another advantage is that the open source development model fights product stagnation, because a community of developers and users have access to the code and are constantly improving functionality.
"It's hard for individual developers to build independent solutions on [proprietary software such as] SAP or McKesson," Augustin said. "Open source application companies have a model that enables other developers to participate." Therefore, he added, product development is not totally dependent on one company's work.
Following Augustin's presentation, Jorg Janke, co-creator of Compiere, said potential users don't have to learn about his product through the filter of a salesperson's pitch.
"There's a certain disconnect between sales and the real world," Janke said. Often, he said, some information is kept from the buyer in order to make the sale. "[But] with open source, there is no information hiding. Bugs are visible. Everyone can see them."
Citing a Goldman Sachs report, Augustin said an astonishing 76% of major proprietary application license revenue goes to sales and marketing.
"There's something wrong with this model," Augustin said. "The open source promise … is to reduce sales and marketing costs with the try-before-you-buy model."
Commenting afterward on this aspect of Augustin's open source presentation, Bernard Golden, CEO of Navica Inc., a technology consulting firm, said proprietary vendors' marketing has bought mindshare in corporate boardrooms.
Nowadays, Golden said, the buying decision has moved upstairs to executives more focused on the business case for a solution. At this point in history, they may be less likely to take the try-before-you-buy option and go with a proprietary product that has a long legacy.
Education of corporate decision makers is needed before they'll adopt mission-critical open source apps, Golden said. In particular, they should be made aware of the longevity of an open source project. And, contrary to some CIOs' beliefs, open source software has more staying power than products created by proprietary companies that could be acquired, he said.
Fortunately, open source vendors will not have to spend a lot of time or money on educating the marketplace, Augustin said. After all, there are already thousands of thousands of evangelists in the field -- all those enthusiastic end users who downloaded the applications.