Ict@innovation: Free your IT Business in Africa/5-5

Module 5.5 FOSS Strategies

Duration

1:00hrs

Delivery method

For instructional purpose, it is advised that trainers/lectures use lectures, role play and group and individual exercises as a major means of delivering this module.

Introduction

FOSS business is seen as supporting fair competition between companies, benefiting customers by not having them locked-in to one and only one vendor, and reducing software development cost. However, FOSS business will not operate in a vacuum. FOSS businesses should be cognizant of competition and/or cooperation (Module 5.3), develop novel means of dealing with communities of diverse interests (Module 5.2), and cultivate the skills necessary to successfully market their products. This module explores strategies to adopted, contemporary business activities as they relate to FOSS and the software industry, and managerial decisions which may hinder or support the wide spread acceptance of FOSS. However, there might not be the “FOSS strategy“, as each business environment and market is different, but this module provides exemplars from which FOSS businesses can draw lessons for the implementation of effective FOSS business strategies.

FOSS Strategies

What is interesting for the IT business industry in the past years is that companies (e.g. Sybase, Oracle, Sun, IBM) are increasingly implementing open source strategies - porting programs and applications into the Linux environment while at the same time realizing that they can charge complementary services such as post-sale services. Companies are increasingly relying on the open source LAMP (Linux/ Apache/ MySQL/ PHP or Perl) stack as an alternative to proprietary software because of the inherent cost savings available. Thus, FOSS is redefining the way the software industry and businesses develop, maintain, support and deploy software (Hawkins, 2004; Sowe, et. al., 2009). In addition, FOSS has changed the intellectual property landscape of the software industry (Samuelson, 2004). There is gradual shift in focus from protecting software knowledge to maximizing gain from FOSS development, use, and distribution. Software enterprises are realizing that there is the need to move from being in-house software developers and distributors to that of service industries where software products are judged by quality, reliability, and performance by the people who develop and use the software. Beyond the promise of a reduced total cost of ownership of the software and potentially better support, there is an added dimension of freedom from vendor lock-in, where an entire software application becomes dependent on a single vendor (Sowe, et. al., 2009). As the FOSS development paradigm grants ’free’ access to the source code, companies using open source are not forced into a perpetual upgrade cycle. Free access to the source code gives companies using a particular solution a lot of choice to modify and improve the software. However, form many businesses; it may not be viable to focus on FOSS solutions alone. A common approach is to target a FOSS business model employing innovative strategies and doing business by combining FOSS products with proprietary software. See Modules 2.2 and 2.5 as an example. Furthermore, Michael Coté, et. al., 2007 presented a fitting note which discusses open sourcing strategies in use by organizations and companies – with the goal of providing background for companies considering open sourcing parts of their portfolio.

Business Activities

Even though FOSS applications have made a giant leap in the server sector (e.g. Apache) and operating system and network environment (e.g. Linux), there are certain areas (for example open source databases, Word-Processing software, Learning Management Systems or LMS, Content Management Systems or CMS) where proprietary software still plays a dominant role. For many organizations facing rising software cost, FOSS is a possible alternative. This phase-shift is in recognition of the attractive nature of FOSS in terms of

• ease of obtaining upgrades and new application,
• and should a business consider buying FOSS, attractive pricing of major FOSS applications such as MySql,
• viable developer and support community, and
• ability to be easily integrated with other FOSS tools and systems.

However, a growing number of companies adopt a cautionary approach towards FOSS full utilization. The apprehensive trend is expected to continue, albeit, FOSS solutions are continually improved upon. The main challenges faced by large enterprises in adopting FOSS in mission-critical application have constantly been scalability and third-party support. Despite success with the lower-end and mid-sized markets, it may take a while for the low-cost attraction of some FOSS applications to make a real impact in certain industrial areas (medical, navigation, military, and other essential government services) the way Linux has in the operating system. However, releasing the source code and pricing are two separate decisions. What is encouraging in this sense is that releasing the source code of a given system or application only improves the innovation base of the system. Understandably, one can reinstall a crashing operating system, or restore a network server malfunction with little damage to a company’s valuable data, but when a database application fails, a lot is at stake- because databases contain information that is vital for the success of any industry in the information age. This can also be extended to applications which hold other critical or security information.

Managerial Decisions

In a survey of 500 of Australia’s top firms, G. Sigi, 2005 reported that managers reject FOSS in general because they could not see that it had any relevance to their operations, perceived a lack of reliable ongoing technical support of it, and the substantial learning costs associated with FOSS. However, for many company executives, vendors, and users there are some urgent issues to consider when it comes to FOSS solution. The figure below shows that reliability and total cost of ownership are high on the agenda. Other factors include readiness by many managing directors, employees, and some sectors of the public to accept the open source development paradigm [Module 1]. The factors are used to measure the most important criteria managers cited when selecting a FOSS solution. The data is based on a survey of 150 companies implementing FOSS strategies and have, as a policy, to migrate to FOSS.

Nonetheless, software development firms continue to implement FOSS strategies and make business by selling their commercial versions and offer support and other services (the '3-zations'; customization, localization, and internalization). At the same time, firms will embrace FOSS in order to tap into ’the vast global community of developers and reduce their cost of production by not having to [re]invent the wheel’ (Sowe, 2009).

Module 5.5: ASSESSMENT

• Discussion 1: What do you understand by a FOSS strategy?
• Discussion 2: Present and discuss the FOSS strategy of a company you may know in your region.
• Role play 1: Assume the position of a consultant. If someone wanting to start a FOSS business comes to you and asks for a strategy for establishing a business, what is the outline strategy will you present to the customer?

Notes

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