Open source in the enterprise I attended a seminar this morning by The Massachusetts Software Council on Open Source & the Enterprise: Enterprise Adoption and it was the best $50 I've spent in a long time. Dan Bricklin moderated, which was a good reason to attend right there. Dan's new passion is podcasting and he was recording the event for posting in the next week or two (keep an eye on his blog for details). I love Dan. He brings such energy and enthusiasm to his work, running around with microphones and audio equipment, you almost forgot this guy is an industry legend and one of the smartest programmers in the world. But on to the subject at hand...

The takeaways I got from listening to Nick Gall, who's a Distinguished Analyst at Gartner, and speakers from Blue Cross/Blue Shield of Massachusetts and Fidelity Investments is that open source software (OSS) has clearly turned the corner in the enterprise and is now seated at the table with the software elite. Noting that open source represents the transition of power from the vendor to the user, Gall predicted that OSS will nearly quadruple as a percentage of software spending over the next four years. While that's still a relatively small percentage (Gartner's actual forecasts are under embargo until next Wednesday), it's a huge dollar amount when you factor in the growth in overall software spending during the same period.

Gall sees the action shifting quickly from infrastructure markets where the LAMP stack is already well-established into applications. Business programs like SugarCRM, Asterisk, OpenOffice and Compiere are beginning to make their presence felt and even in the infrastructure area, newcomers like mySQL and JBoss are challenging the proprietary leaders. Helping this trend is the move by companies like Sun and IBM to put large libraries of proprietary code under the GNU General Public License, thereby presenting new competition to the market leaders. Gall pointed out that these gestures aren't necessarily altruistic: open-sourcing is an alternative to supporting old code and gives second-tier vendors a chance to disrupt markets where they couldn't achieve dominance.

Gall sees OSS making greater inroads in new applications than as legacy replacements. At the same time, the software industry will undergo a transition from its current dependence on licensing fees to reliance on service and support revenue. This is already happening, he noted, as many software companies now get as much revenue from service as from sales.

Revenue declines can be partially offset by lower costs. In fact, Gall said, "By 2010, software companies that don’t incorporate OSS into offered solutions risk becoming uncompetitive due to the cost of in-house engineering. " Wow. Talk about making it to the big leagues.

The business model for open-source vendors certainly is different. These companies spend less on development because much of that work is done in the community. They also spend less on distribution, since trial downloads are the way the software spreads. These companies have a leaner business model and, at least for now, get closer to their customers, according to the two Fidelity speakers at the event. Those speakers - Mike Askew and Charles Pickelhaupt - agreed that open-source suppliers tend to be more accommodating of their needs and more responsive to their requests.

Much of the discussion centered around the GPL, which is undergoing its first major revision in nearly 15 years. Speakers agreed that the current GPL has too many vagaries and loopholes to make it completely enterprise-friendly. The language makes enterprise users nervous, for example, that proprietary enhancements that they make to a program covered by GPL may have to be disclosed to the world, thereby negating their value. There's also lingering concern over SCO's campaign last year to recover license fees from Linux users, including some enterprises. Gall said the concerns are real. Until the license issues get hashed out in court - and ultimately by the Supremes - users have every right to be cautious, he said.

Speakers largely agreed that a lot of the old myths about OSS are precisely that: myths. The community support model is responsive and effective, they said. The quality of most mainstream OSS applications is at least as good as that of their commercial counterparts and you don't need a highly skilled team of programmers to make open source work. Independent service providers are rushing in quickly to fill that void.

Fidelity's story is especially interesting. The company first adopted an open-source development platform, TKL, in 1995. In fact, that TKL program once accounted for almost 10% of the trading action on the NYSE, said Mike Askew, an executive in Fidelity's Center for Applied Technology. It has since been rewritten with more modern technologies, including Java. Fidelity uses more than a dozen open-source applications in production, including Apache, Tomcat, Axis, Eclipse and Jetspeed-2. And, in keeping with Gall's prediction about the growth of open-source business applications, is looking at BIRT and OpenOffice as alternatives to mainstream business products.

Fidelity has an open mind about all things open source but does put candidates through the wringer. Open-source alternatives to existing applications must demonstrate comparable functionality and go before a review board that sets standards for certification, support and maintenance.

Though open source is an exciting new opportunity, the wild-west nature of the market is still an irritation to some users. Fidelity VP Charles Pickelhaupt noted that his firm has counted 58 different variations of open-source licenses. And code revision cycles that can lead to daily builds can make version control a chore. Nevertheless, Fidelity is charging ahead. Not only is OSS comparable to proprietary alternatives in most cases, "Many people think it's superior," he said.  ¶ 2:38 PM