open source software - a guide to innovation
DESCRIPTION
[heavy content] This guide explains how to make proper use of different software forms. Particularly, the guide stresses that open source software is an essential part of software development ecosystem. It outlines its evolutionary role and challenges that are faced by the software industry. The guide should help IT managers to build sound software strategies. It also signals where are growth points for a forward looking and proactive participation in the technology community.TRANSCRIPT
This is ahigh qualitysoftware product
They never ever bake it alone
There are at least
three partsthere
design &coding
shipping &install
support &service
They all add essentialspices to the mix
The three parts arealways there
They bring required but different mind setsand skills to the table
Customers tend to emphasizecertain product components
Customers distinguish componentsvery well and pick what they need
A stress on one product’scomponent doesn’t mean thatothers don’t exist
The components are just hidden by the vendors
This gamesimplifies messagingto the customers
The simplificationis causing expenses
Vendors charge forthe convenienceThey call it a
Customers see design-to-order
custom built code
Vendors see business model #1
contracting
uniqueness grants competitive potential
• Project Ware• Program Ware(Need something done? Specify. We will code it, delivery and service included)
The most lucrative model
contracting
secure,unique,efficient
up-frontexpensive,quality isn’t granted
no-risk,get paid before you deliver, limited QA
no scaling,a lot of hand-holding
customer
vendor
Consumers pick off-the-shelf
packaged code
Companies use business model #2
software vendor
We have already coded and shipped a software that does many things. Adjust your needs. We will help.• Product Ware, Share Ware(buy the box or license)• Cloud Ware(buy the functionality set)• SaaS Ware(rent the license)• Open Source Ware(buy the license, fix and service the code yourself)
lucrative and robust model
software vendor
universal,cheap,immediately available
up-frontcosts,quality isn’t detailed
scaling,no depen-dency on a single cus-tomer
up-front investment,many eye-balls track quality
customer
vendor
A buyer wants customization or
on demand fixed code
Vendors think business model #3
free, free open source
We have a software that can do some things. It is delivered to your door and free to try • Free Ware(use it or leave it)• Share Ware(take it, pay for updates and support)• Free & Open Source Ware(take it, adjust it or pay us to do so)
easy to enter model
free & open source
no up-front investment,quality is granted or no payment
limited or expensive features,hassle
scaling,simple shipping, cheapest foot in the door
huge up-front investment,return is not granted
customer
vendor
http://www.flickr.com/photos/mrtruffle/140233293/
WTF
Howcan I eat my
three options to bite
#1
#2
#3
bake it
Buy all ingredients
time costs quality
progress bar
let them mix &put it in stove
time costs quality
progress bar
pull out and eat
time costs quality
progress bar
buy it
Figure outwhat kind of cakedo you need
time costs quality
progress bar
go to the store.does it smelllike cake? buy
time costs quality
progress bar
eat
time costs quality
progress bar
feastjunk yard
sneak to the buffetat a late nightparty
time costs quality
progress bar
grab what likelyhas been a cake
time costs quality
progress bar
mix it with salt,sugar and pepperto taste. eat
time costs quality
progress bar
get a drink
time costs quality
progress bar
Seriously!
http://www.flickr.com/photos/mrtruffle/140233326
HOWcan I eat my
There are three options
#1 #2 #3
If you know what you do…
#1
…and can afford it
#1
Go ahead. Buy a locomotive
#1
your custom built wagons arecomplimentary
code delivery use
#1
time
so you can reachyour destinations
#1
If you are shortof money or time
#2
Buy ready-to-ship solutions
delivery
#2
Buy ready-to-ship solutions
One ticket to Choo-Choo City!
#2
Your wagon is meant to be there
delivery use
#2
But don’t expect much
#2
It is one size fits allsomewhere
#2
The trouble there: it is hard to find right train
One ticket to Choo-Choo City!
There is no such destination
#2
You know it after you boughtsoftware. Media reviews don’tconsider your specific needs
One ticket to Choo-Choo City!
I’m sorry, we’ve sold you a ticket
to Cha-Cha
#2
Outgrown it?
#3
Can’t stand it?
Wait!
#3
or no money to invest now?
#3
Here you are. Free software
usecode delivery
#3
…if it movesthe wagon won't be roomy
#3
Free and open source softwareenables you any wagon size
#3
…but eventually you willneed to spend money & time
usedeliverycode
#3
More likely like this
#3
some day
Then you startto think about this
#1
http://www.flickr.com/photos/mrtruffle/140233345
Basically the entire spectrum of business models can be placed on a line
pick yours bysetting up a screen
Project Ware
Program Ware
Product Ware
SaaSWare
Open Source Ware
Cloud Ware
Share Ware
Free Ware
Support Ware
Ad Ware
Sponsor Ware
Beg, Mascot Ware
line is looped
A softwareproduct driftsthe cycle over time
…following business sensefor a consumable value thatthe product contains
1 2
3
4
A text editor is createdas custom built code
The idea is picked up. Mass product
Cheaper and adjustable replicas of the editor
The editor’s functionality is integrated in other products as a component
From an innovative codeto a standard component.New loops continue the life cycle
Text editor’s life cycle as a stand-alone product
Text editor’s life cycle as a product component
inception
pervasion
So..do I really
choose?http://www.flickr.com/photos/mrtruffle/140233326
Do I choosehow I get my ?
Yes!read again
slide 28
No!You have no choiceif the desired functionalityis at the technology edge
Industry produces pies“on a conveyor belt”
Industry has its own dynamicand macro-sized forces
industryyou
You probablycan’t pull the rope alone
…but at any moment you canchoose the best bit
#1
#2
#3
http://www.flickr.com/photos/mrtruffle/140233345
Organizational constrainstheory
Two organizational formsas a Fn of product complexity
Market exchangeis more efficient
In-house production is
better than procuring the
product
Coase’s firm theory
Two ownership formsas a Fn of asset building costs
Demsetz’s property theory
Implementationcosts are higher than the value of property that controls an opportunity
Property is more valuable than implementation costs
Organizational formsas a function of relative costs
Markets Commons
FirmsProperty regimes
Cheaper
goods
exchange
Cheaper
to build
in-house
Coase’s firm theory +Demsetz’s property theory
Value > property costs
Costs > property value
Organizational formsas a Fn of software eco-cycle
Goods
exchange
Build
in-house
Value > property Costs
Costs > property value
Markets
Firms
Commons
Property regimes
Efficient production formsas a Fn of product attributes
Abundance of market players, universal product
Complex, unique
product in monopoly
Commodity product
that serves significant
need
Hygienic product in an inapt providers’ market
buying entities
costs/profitProduct A
Product B
product-market-costs-timeoptimization cycle
entities
costs/profit
Break-through products
“final touch” phase
next levelinfrastructure phase
the tipping point
pop share
demands
coverage
entities
costs/profit
Mass market productspop share
demands
coverage
entities
costs/profit
Saturation productscommon base standards
pop share
demands
coverage
This phase deliversflavors to any taste.That makes the corefunctionality a commongood and knowledge
You can use any product formfrom the previous complexity cycle
inception
pervasion
components cycle
http://www.flickr.com/photos/mrtruffle/140233345
Resources constrainstheory
Producing software requires resources
infrastructure skills money
Somebody has to payto keep the talent alive
supply
train,feed
work
FOSS
Resources come from
1institutions
individuals2
1seeking an infrastructure leap
system components are open sourced
in the “final touch” phase
typical product is an integrated system complexity
A. ambitious to wait until a system becomes ubiquitousB. creative to dare the proliferation semi-cycleC. resourceful to support the components development
1requirements
North America
United Europe
Asia & Oceania
Others
38%
41%
9%
7%
Debian developersreside in rich countries
http://widi.berlios.de/paper/study.html
A. resources B.incentive to close the source after the tipping point
BOTTOM LINE: projects are rarely started, and eventually shut off
1constrains
2the skilled workersbridging the gap of underemployment
civilians unemployed 27+ weeks
Bureau of Labor Statistics
2requirementsA. critical mass, i.e. industry wide unemployment trigger B. personal resources, i.e. credit access or savings
A. industry changesB. limited personal resources can’t sustain the movement in the long run
BOTTOM LINE: rare temporary opportunity
2constrains
http://www.flickr.com/photos/mrtruffle/140233293/
CANI eat my
Belongs toendangered
species
Free, collectively builtsoftware is essential
enabling expedient leaps into the next generationsoftware products
FOSS does to software whatuniversities did to knowledge
1 2
4
commercialization
mass production
knowledge propagation and settle down to standards
ideation by individuals
today huge ”fired” IT-force seeds the FOSS
This is a life time opportunity that is not sustainable unless systemic changes occur
US information services employees
Bureau of Labor Statistics
entities
costs/profit
software proliferation is a fragile business process
Startup drivendevelopment
Customization drivendevelopment
an overarching systemis required
a raw model for free software on a sustainability rail
ContributorsKonstantyn Spasokukotskiy
Yochai Benkler http://www.yale.edu/yalelj/112/BenklerWEB.pdf
Mykola Dimura
http://widi.berlios.de/paper/study.html
References
Dana Blankenhorn - ZD Net publication on software business models
http://modeledbehavior.files.wordpress.com/2010/07/image5.png
free to copy and reusewith proper attribution