The Open Source Pragmatist

Recently I’ve been fielding a number of questions about why the company I work for, Levementum, decided to open an office in Australia (see press release: http://www.prweb.com/releases/20100814/levementum_sydney_au/prweb4386444.htm.)

The first thing I tell them to do, is look at the following Global Open Source Adoption webpage sponsored by RedHat: http://www.redhat.com/about/where-is-open-source/activity/.  Australian adoption and environmental acceptance is widespread and growing.  Few countries in the world have seen the kind of growth that we’re seeing down under. Why?

Australia leads the way in OSS adoption

1. They see it as a national imperative to help reverse the tide of excess IT imports: Consider this: from the charter of the FOSS/Australia organization:

“According to the Australian Bureau of Statistics, Information and Communications Technology (ICT) represents 13.8 per cent of total investment in Australia. According to a 2006 study, ICT comprises 8.4 per cent of all imports, but only 2.8 per cent of all exports. Australia loses more from importing ICT than we gain from exporting wheat and coal combined.  Through leveraging FOSS, local companies are able to create and offer world-class products and services….When you support FOSS, you are supporting Australian innovation and employment.”

2. Growth in the open source services sector:  While we aren’t late to the party down under, we’re certainly not the first OSS service players down there.  See an excerpt from the “Open Source Industry Australia” group:

“With at least sixteen independent South Australian organisations reportedly offering support services for open source software this demonstrates that there is real choice available to South Australian organisations seeking to obtain support for open source software on a commercial basis.”

3. Government backing.   Australians are looking for new and innovative ways of leveraging open source in the government sector.

4. Technology leadership in Australia.  Australia continues to lead the way terms of education and investment in technology.

5. Raw data.  Our biggest partner,SugarCRM has been growing in leaps and bounds in Australia and Asia, and in general, Open source solutions like Sugar have tremendous rates of adoption in Australia. 

It’s only natural that Levementum, as a global leader in SugarCRM and other open source solutions, expands its presence there.

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This past October 2009, I was lucky enough to be invited to participate in the Free Libre Open Source Summit and Think Tank in Paris, France. It was an opportunity for me to learn from the best and brightest that the world of open source has to offer – but more importantly, it was an opportunity to understand why, given the global relevance and reach of open source, Europe has so clearly established itself as the most dominating “consumer” of open source enterprise applications.

If you take one look at the global deployment footprint of say, a SugarCRM, or say an OpenBravo, clearly something is going on across the pond, that makes them more receptive, more successful, more bold and more committed, to the adoption of open source enterprise applications.  Given the spirit of innovation, and the burgeoning commercial open source business emerging in the US, I was curious…why there? why not here in the States?  why not in Asia?  Whats different?

At the conference, I came across folks from a number of VARs and integrators.  I was introduced to Smile consulting (www.smile.fr), a 300 person firm focused on Open Source implementation in France.  The team from RedPill-Linpro, the open source stalwarts from the Nordic region.  There were countless mid sized open source firms, all successful, all bullish about the future.

I immediately started to wonder, where the hell are the open source firms in the US?  Sure, we’ve got an abundance of innovators at the individual contributor level.  But large going concerns, exclusively focused on open source?  You’ve got us – Levementum,  and maybe Optaros, and maybe 2-3 others that are out there…but thats it.  And none of us are close to the big European players in size or reach.  So…Why?  After 6 glasses of Beaujolais in a bar on the Champs – I started to get some answers.  I’d name the individual references, but I suppose they were casualties of the investigative process(!).

I’ve come up with a few reasons.  Its not comprehensive, but its a start.

1. The reach of Government and the power of associations in Europe: No one doubts that the reach of government in Europe is far deeper than we’re accustomed to in the US.  Invariably, as is the case with most agencies of the state – there is a need to do more with less.  The notion of ROI tends to be “cost reference” versus the traditional “value reference” as it relates to implementation of technology.  Of course, value is paramount with respect to implementation, but the purchase profiles and criterion are different.  Additionally there is a clear distrust that the EU has for the big “IT gorillas” of the US…the Oracles, the Microsofts, et al.  The combination of cost sensitivity, government policy,  and mistrust has led European government agencies to supremely value “control of their destinies”…perhaps more so than their US counterparts.  Clearly open source gives them this control: on cost, on features, on scale, on customization.  This explanation, provided by my dear friends in Paris, made a lot of sense to me.

2. The need for regionally customized solutions in Europe. As a native of Boston, Mass, I can tell you there’s a lot of difference between Beantown and say, the Big Apple.  It starts with the Sox and the evil empire…but thats another story.  Back to point…even with the great diversity of the US, we still have a fairly homogeneous culture of business. Try and contrast French business practices with say Italian business practices.  Try and take your Spanish salesforce, and send them to close a deal in Copenhagen.  Doable yes…easy no.  Europeans are fiercely proud of their language, culture and history, and it permeates the business sphere in every way imaginable.  The walls start with language differences, and follow through to customs and legal practice.  Invariably, a business solution that works in Kiev, is likely not going to seamlessly work in London.  Open source applications, buttressed by their optimal flexibility, clean architectures, and open development environments, offer the European regions to shape a core of business features to their regional needs.  The US regions have much less of a need in this dimension.  These characteristics, that are inherent to open source, are vital in Europe.

3. The fall of the wall and the influx of skilled Eastern European engineers into the European market. With the fall of communism in Europe, millions of eastern European engineers and scientists were emancipated, armed tremendous skill, unparalleled resourcefulness, and a hunger for tools.  With a dearth of capital available to them…many of these great scientists and engineers jumped head long into open-source.  This created not only a skilled mass of open source experts and professionals, but also created new innovations that served to accelerate open source application adoption throughout Europe and the World.  If you want proof of this…take a look at odesk.com or guru.com.  Eastern European software developers outnumber just about any other global region (with respect to open source technologies).

In summary, its the perfect storm of demand, culture, and supply.  This European tempest will rage for quite some time…and frankly, I’m happy about it.  There are some lessons learned that I’m sure we can apply here in the new country!

NOTE: Ok…so, so what…what have I learned that we can apply here in the US?   I’m going to crack this code somehow – the elements related to government don’t seem to be that different than today’s US.  There’s an opportunity there I’m sure.

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As we trudge through the weak economy looking for ways to attract new clients and grow our business, the old Marketing 101 adage comes to mind:

“Your best new customers are the customers you already have”

At Levementum, we’re finding that this rings true in an amazing way.

With our SugarCRM, Compiere, and Magento Open Source service offerings, we’re finding that the hit rate (on new Open Source apps) for customers that previously have implemented one of these outstanding products, is well over 50%…an amazing rate of Opportunity conversion.

Why is that?  I think its a reflection of how these clients have crossed their own chasms relative to the key “Objections” raised in the course of a Commercial Open Source sale.

When we talk to a new customer – one that has never implemented an Open Source product at an enterprise level, the four concerns we tend to see are:

1. Concerns about the Project/Company viability.

2. Concerns about support and SLA.

3. Concerns about Intellectual Property rights of derivative works.

4. Concerns about quality and features.

Clearly these objections are colored in the spirit of Open Source as a “new” and “disruptive” force, and customers have to be carefully navigated through these discussions.

The key  is, once the bridge has been crossed with one application project, the propensity to steamroll through these objections on the following application project is very high.

We’re finding that SugarCRM customers love Compiere…Compiere customers love what SugarCRM has to offer, and we’re also seeing an interest in Magento from customers of both SugarCRM and Compiere.  Again I propose its because they’ve already taken the Open Source plunge – and already subscribe to the unparallelled value proposition that they can take advantage of:

1. Control of Your Own Destiny.

2. Cost Benefit and TCO.

3. The Quality factor (as a strength)

We’re hoping to continue to see more and more progress – its a bet Levementum has made in spades – and why we continue on our path to being at the forefront of service firms that help Enterprises make sense of how to deploy broad Open Source solutions as an enabler for their own value propositions.

We’re in exciting times in the world of Open Source…The strength of the community has been, well, the community!  I see the opportunity for the SugarCRMs, Compieres and Magentos of the world to cross pollinate – share customers – share ideas – define boundaries – maximize opportunity value.  Its a win win for everybody, mostly for our customers .

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Consider the scenario. You’re the CIO of a regional distribution company, supporting a “knowledge worker” environment of 200 users spread though 18 warehouses in 7 states. Your accounting team is demanding a flexible and scalable solution that lets them adapt in the face of changing economics and measures. Your warehouse teams are demanding more feature rich Order Management solutions that provide better information at the Point of Sale. Your Sales team is screaming for wireless access to orders and inventory, so they can respond to customer needs in real time…and of course your boss, the CEO, is demanding that you deliver all of the above, on a shoestring budget, and wants a working proof of concept that covers all these solutions – Accounting, Sales and Inventory/Order Management with Wireless…in 3 weeks…for less than 10k.

So you’re the CIO. What do you do? Laugh? Polish off the resume?

Well, if you’re Russell Smith, the CIO of Estes Industries, you take a deep breath – and look to Open Source. Estes Industries, based in Wichita Falls, TX, is a distributor of crop protection chemicals, specialty chemicals, seed and fertilizer. Smith turned to Levementum LLC, an open source consulting firm, to help complete this “Mission Impossible”.

Levementum brought three enterprise class solutions to bear, SugarCRM, Compiere ERP and Talend Data Integration to implement a complete ERP, CRM and Data Integration solution, in less than 3 weeks, and at an astoundingly low cost.

Levementum selected all three of these solutions, recognizing them as best of breed Open Source Software solutions. All three software packages have come of age relative to the tried and true(…but expensive) commercial closed source solutions in the marketplace.
Compiere, a robust Enterprise Resource Planning (ERP) solution was deployed to support accounting and operational needs. SugarCRM, the leading open source Customer Relationship Management (CRM) solution, was deployed to support the myriad of Sales Force Automation needs, as well to satisfy the need for Wireless access to Customers, Contacts, Orders and Inventory (using SugarWireless). Talend, a software product touted as the first provider of open source data integration software, was used to tie the systems together in a clean manner. Using add-ins and prebuilt adapters available in the Open Source community, Levementum was able to assemble, connect and deploy the solution quickly and cleanly.

The integrated pilot solution was built by Levementum using free “community editions” of all 3 software packages, but Estes intends to upgrade these to the Professional or Enterprise versions of the software packages, to take advantage of software support for these mission critical systems as they begin to roll the solution out in production.

Certainly there was a lot of excitement among Estes’ users – certainly a highlight of the project was demonstrating Order Tracking and Inventory management on an iPhone…but beneath the fun and excitement of accomplishing the critical functional goals of the program, there were a couple key takeaways, that are lessons for any CIO:

1. The Breadth of Open Source Solution offerings that are available to the public, are empowering companies to cover almost any information challenge they have. Whereas in the past all you had was Linux, today you have SugarCRM, Compiere, Talend and a host of other robust software packages that you have to choose from.
2. Open Source Solutions have “Come of Age” (like Compiere, SugarCRM and Talend). From a feature and architecture perspective, these applications have “grown up” and provide the depth of functionality, and the scalability that Medium and Large companies require.

The fact is, what cost hundreds of thousands or millions in the past, can now, with Open Source, be accomplished at a fraction of the cost. Open source solutions are the “great technology/value equalizer”. Luckily, over the past decade, these solutions have come of age – and as CIOs tackle their most challenging problems, Open Source tools are steadily proving to be far and away the most valuable tools in the arsenal.

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