Taking Your Software Code Open Source & How It Changes the Business Focus

If we look back at the history of software development, we see an ‘arc’ from the days when software, and software development, was a specialized skill owned by the few—to now, when we recognize that software knowledge is far more widespread.

In the 1990’s the Software industry saw the emergence of Open Source Software (OSS) which became an important part of the total ecosystem, and inspired an awareness of the business value that could come from sharing and the power of community.

The Distinctive Difference Between Leveraging Open Source and Going Open Source 

As we all know, there are two sides to the open source discussion. First and probably most prevalent, is leveraging Open Source Software as an integral part of your development strategy. Initially, this was commonly driven by the desire to lower costs, but today it’s more about using Open Source Software so engineers can focus on critical design tasks of higher business and innovative value. It’s well documented that more than half of tech companies today have developed their software on open source.

“….. and 66 percent said their company creates software for customers built on open source. This statistic has nearly doubled since 2010….” Source: Black Duck, Future of Open Source Software  

Of course, the flip side of leveraging Open Source, is altogether a different story. It’s the decision to contribute your source code to Open Source, which is a much bigger question for any executive team, and one that changes your business focus.

Recognizing Noteworthy Open Source Companies That Have Demonstrated Success & Value 

A list of notable software packages previously published under a proprietary software license, but later released as free software or open software or into the public domains, includes software from market leaders such as Google, Microsoft, Adobe and Sun Microsystems. Red Hat is frequently held up as the premier and market-leading example of business success in the OSS movement, but they are by no means the only example. Today companies continue to turn to an OSS-led business strategy—that would have traditionally been firmly in the ‘closed IP’ camp—because they see value beyond “lines of code.” 

They see the value of building markets, distribution channels, and communities; and the value of collaboration, innovation, speed, and the interoperability of markets and businesses working together over a shared, open code base. Open Source represents the potential to expand audience footprint to new groups, further embed tools into the fabric of an enterprise and in doing so, increase switching costs. In essence, the ‘value’ has become solid business rationales for opening up a code base to Open Source:

• To consolidate a market leadership position.
• To open new revenue streams.
• To build brand, competitive advantage and market share.

Realizing the Value of Going Open Source Comes Through Preparation

As exciting as the success stories sound, choosing a path to take your code Open Source requires thoughtful preparation, and consideration about how this strategy shifts your approach to the marketplace as well as potentially drives a different trajectory for the market’s evolution. 

“Companies in the open source space, including even [Microsoft] these days, have to change their business plan focus… The shorthand I use to explain this shift is that you're no longer trying so much to get a bigger slice of a pie, you're trying to expand the size of the pie.” Source: Steven Vaughan-Nichols, ZDNet , Contributing Editor

Your business focus must expand. For example, think about the change this creates in terms of choosing the right revenue model—one that complements the license structure and optimizes your potential to capture incremental share without cannibalizing your core business. Understand the legal implications and select the correct licensing that aligns with your business model and sustainably protects your interests over the long term. And, remember an OSS strategy requires investment to build a development ecosystem with the right organizational support in order to have a thriving community of contributors.

It’s a different path that takes rigorous business planning to handle the unique nuances and complexities associated with an OSS strategy. When you look at the performance of the original success stories, you will find they left little to ‘chance’ and proactively worked to anticipate needed change.

Having worked through OSS strategic planning with clients, Daitan has developed business, legal and engineering Checklists to help ensure the right due diligence is completed before launching an OSS project. We believe it’s important to invest the initial effort in order to achieve a more-predictable—and successful— outcome.