Tomorrow's Business Model Today
Enterprise software vendors who leverage open source, subscriptions and grid computing to meet customer needs will emerge as next-generation industry leaders.
By John Loiacono, Sun Microsystems
Aug. 26, 2005
Larry Augustin, open source entrepreneur and the visionary behind the SourceForge developer community, told a packed Open Source Business Conference earlier this year that the enterprise software model is broken.
I couldn't agree more.
A series of social and technological forces are converging to permanently change the way software is developed, delivered and managed. These changes are tearing down the barriers that existed between the commercial software industry and end users and fostering an era of participation, while empowering these businesses through greater access to information.
During the 1990s, the majority of enterprise software was built in proprietary environments. Software was built by companies' own internal engineers and sold by expensive sales and marketing operations.
This model soon became inefficient because internal engineers couldn't always deliver the features customers needed. New software releases often contained buggy code and were sometimes even late to market. The average commercial software program contained 100 to 150 errors per 1,000 lines of code, according to a multi-year study done by the Carnegie Mellon University Software Engineering Institute.
An "Open" Ecosystem
Today, instead of locking up technology, companies are discovering ways to collaborate through licensing agreements, joint ventures and other strategic alliances. This strong ecosystem is breaking down barriers between companies and their customers and helping perpetuate greater innovation.
As both a social movement and development methodology, the principles of open source are being used by bootstrapped start-ups and enterprise companies alike to build databases, middleware and customer relationship management (CRM) systems. Distributed teams work to ensure software meets customer needs, but software bugs are addressed through the community, diffusing R&D costs - and making software affordable and better for the end user.
Recognizing that the next big technological jump to bridge communications and cross the digital divide may develop from a forward-thinking researcher working for a corporate competitor, or a computer user from the other side of the world, companies, including Sun, have also begun to open up their formerly proprietary software to a global online community of developers.
Why? Instead of restricting access to R&D efforts, open source communities share technology and knowledge for others to build on, refine and improve their own businesses, communities and society. For example, Sun recently launched OpenSolaris and released the source code of our Solaris 10 Operating System. OpenSolaris is comprised of thousands of developers who want to participate in the evolution of the technology but, more importantly, innovate and develop new applications on top of the source code that Sun originally released.
Open source is no longer synonymous with free or no/low value technology. While the base source code is freely accessible, companies can redistribute open source software and charge for different value-added services. There are often different distribution models, such as a free right-to-use edition that includes upgrades and patches but no support or a full service and support contract for commercial deployments. After all, very few enterprise companies would deploy any software involved with a mission critical application running on thousands of servers in multiple locations without having a service contract in place.
The Impact of New Technologies
In addition to all the activity happening in the open source community, other new technologies are emerging that are forcing changes in society, business and economics - all while also leading to the creation of yet more technological innovation. It's the most virtuous of circles but it also requires flexibility in both infrastructure and economy.
RSS is bypassing the browser as a means to deliver information to the desktop, 708 million mobile phones are providing ubiquitous access to information, software architectures like web services are fueling the "always on" generation and technologies in the field of identity management are helping to secure access to an ever-growing number of online services.
The reality of uninterrupted access demands new ways for companies to interact with their customers across this global landscape - from new products that allow users to connect to the network to new business models that introduce more flexible payment options. Several years ago, telecommunications companies only managed my home phone service. Today, the telecommunications provider for my home phone can also be my wireless carrier, my high-speed internet provider and even my satellite television service. Instead of getting a paper bill in the mail, I can log on to the telecommunications company's online portal, pay my bill online and instantly subscribe to new services or make changes to my account. On demand services and massive connectivity means that the consumers of enterprise technology, be that CRM software or storage and server capacity, will soon look to this same subscription model and only want pay for the services they need and use - no more.
I couldn't agree more.
A series of social and technological forces are converging to permanently change the way software is developed, delivered and managed. These changes are tearing down the barriers that existed between the commercial software industry and end users and fostering an era of participation, while empowering these businesses through greater access to information.
During the 1990s, the majority of enterprise software was built in proprietary environments. Software was built by companies' own internal engineers and sold by expensive sales and marketing operations.
This model soon became inefficient because internal engineers couldn't always deliver the features customers needed. New software releases often contained buggy code and were sometimes even late to market. The average commercial software program contained 100 to 150 errors per 1,000 lines of code, according to a multi-year study done by the Carnegie Mellon University Software Engineering Institute.
An "Open" Ecosystem
Today, instead of locking up technology, companies are discovering ways to collaborate through licensing agreements, joint ventures and other strategic alliances. This strong ecosystem is breaking down barriers between companies and their customers and helping perpetuate greater innovation.
As both a social movement and development methodology, the principles of open source are being used by bootstrapped start-ups and enterprise companies alike to build databases, middleware and customer relationship management (CRM) systems. Distributed teams work to ensure software meets customer needs, but software bugs are addressed through the community, diffusing R&D costs - and making software affordable and better for the end user.
Recognizing that the next big technological jump to bridge communications and cross the digital divide may develop from a forward-thinking researcher working for a corporate competitor, or a computer user from the other side of the world, companies, including Sun, have also begun to open up their formerly proprietary software to a global online community of developers.
Why? Instead of restricting access to R&D efforts, open source communities share technology and knowledge for others to build on, refine and improve their own businesses, communities and society. For example, Sun recently launched OpenSolaris and released the source code of our Solaris 10 Operating System. OpenSolaris is comprised of thousands of developers who want to participate in the evolution of the technology but, more importantly, innovate and develop new applications on top of the source code that Sun originally released.
Open source is no longer synonymous with free or no/low value technology. While the base source code is freely accessible, companies can redistribute open source software and charge for different value-added services. There are often different distribution models, such as a free right-to-use edition that includes upgrades and patches but no support or a full service and support contract for commercial deployments. After all, very few enterprise companies would deploy any software involved with a mission critical application running on thousands of servers in multiple locations without having a service contract in place.
The Impact of New Technologies
In addition to all the activity happening in the open source community, other new technologies are emerging that are forcing changes in society, business and economics - all while also leading to the creation of yet more technological innovation. It's the most virtuous of circles but it also requires flexibility in both infrastructure and economy.
RSS is bypassing the browser as a means to deliver information to the desktop, 708 million mobile phones are providing ubiquitous access to information, software architectures like web services are fueling the "always on" generation and technologies in the field of identity management are helping to secure access to an ever-growing number of online services.
The reality of uninterrupted access demands new ways for companies to interact with their customers across this global landscape - from new products that allow users to connect to the network to new business models that introduce more flexible payment options. Several years ago, telecommunications companies only managed my home phone service. Today, the telecommunications provider for my home phone can also be my wireless carrier, my high-speed internet provider and even my satellite television service. Instead of getting a paper bill in the mail, I can log on to the telecommunications company's online portal, pay my bill online and instantly subscribe to new services or make changes to my account. On demand services and massive connectivity means that the consumers of enterprise technology, be that CRM software or storage and server capacity, will soon look to this same subscription model and only want pay for the services they need and use - no more.
Pages: 1 2
