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Keynote Speech: The Impact of Open Source in a Down Economy - Richard Daley
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Keynote Speech: The Impact of Open Source in a Down Economy - Richard Daley

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  • 1. Openbravo World Conference The Impact of Open Source in a Down Economy Barcelona, April 18, 2009 Speaker: Richard Daley, Founder and CEO, Pentaho Corporation
  • 2. Agenda Open Source – Still a Safe Bet? The Next Wave in Open Source Open Source Meets Cloud Computing Conclusion Page 2
  • 3. Open Source is the Safe Bet • 1980: No One Ever Got Fired for Buying IBM • 1990: No One Ever Got Fired for Buying Microsoft • Today: No One Ever Got Fired for Buying Open Source • Open Source is the safe choice: – New investment continues in open source – Businesses are adopting Open Source – Open Source produces better software – Leaner budgets favor Open Source Page 3
  • 4. Investment in Open Source Page 4
  • 5. Venture Funding to Open Source 600.00 60 500.00 50 400.00 40 300.00 30 200.00 20 100.00 10 0.00 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 US$ Raised (MM) Number of Deals Source: The451 Group Page 5
  • 6. Enterprise Adoption Infrastructure Tier • Survey of Fortune 1000 CIOs – Pervasiveness of open source at the infrastructure tier widely recognized – 80%-100% of Fortune 1000 have deployed or are evaluating deploying Linux Application Tier • Survey of IT/corporate execs in companies with >$5 MM in rev – 86% deploying some enterprise apps on open source platforms – 35% deploying >20% of all apps on Open Source Source: Smith Barney Page 6
  • 7. IDC Industry Adoption of Open Source • 86% of OSS projects are in some form of production deployment and usage within these organizations • 70% are of critical or high importance to the organization • 48% of project mentions indicating an increase in activity in the next year • 87% plan to expand their activity with at least one new OSS project. • Only 12% of all projects are supported by a commercial software vendor, and, less than 1% of the projects have attendant services sourced from service providers. – Opportunity for commercial open source providers Page 7
  • 8. More Enterprise Adoption • “By 2010, Global IT organizations will use open-source products in 80% of infrastructure-focused software investments and 25% of business software investments.” -- Gartner • 58% of IT execs reported that they now use Open Source for mission- critical applications • 79% now use open source in application infrastructure • 62% view open source software as capable of delivering significant business payback • 80% viewed factors other than cost such as open standards support, use of code, and avoiding lock-in -- Forrester/Unisys Page 8
  • 9. Better Software Page 9
  • 10. Code Defect Measurements Source: Reasoning Defects per KLoC Defects per KLoC (per Thousand Lines of Code) 0.8 Defect Rate (lower is is better) 0.8 0.7 Defect Rate (lower better) 0.7 0.6 Unix-B 0.6 0.5 Unix-A Unix-B Embedded 0.5 Unix-A 0.4 Embedded OS-B 0.4 OS-B 0.3 Embedded 0.3 0.2 Embedded OS-A 0.2 OS-A 0.1 Linux 0.1 0 Linux 0 Linux Unix-A Unix-B Embedded OS-A Embedded OS-B Page 10
  • 11. System Function Failure Rates Source: University of Wisconsin OS Function Failure Rate OS Function Failure Rate (% OS Functions that Failed Against Test Data Set) 50% Failure Rate (lower is is better) NeXT 50% Failure Rate (lower better) NeXT 40% 40% Windows 30% Windows 2000 Solaris 30% 2000 Solaris 20% Irix SunOS 20% Irix HP-UX SunOS HP-UX AIX 10% 10% Linux AIX Linux 0% Linux SunOS Windows HP-UX AIX Solaris Irix NeXT 0% 2000 Page 11
  • 12. Lean Budgets Favor Open Source Page 12
  • 13. Significant Growth in OS Downloads • 7 of the top 10 Enterprise SW Projects on SF.net saw strong growth in Q4 of 2008 versus Q4 of 2007 • The top 10 Enterprise SW projects on SF.net averaged 41% increase in downloads quarter over quarter • Cost cutting and budget reductions are driving increased interest in Open Source • Good for Open Source businesses in the long term Page 13
  • 14. Agenda Open Source – Still a Safe Bet? The Next Wave in Open Source Open Source Meets Cloud Computing Conclusion Page 14
  • 15. The Innovator’s Dilemma Overkill Di What Customers Want sr up tio n Perceived as a Toy Open Source Software is disrupting the Enterprise software market time Source: ”The Innovator’s Dilemma”, Clayton M Christensen Page 15
  • 16. Typical Pattern of Disruption Innovator’s Dilemma • New entrant considered inferior • New entrant gains toehold • Old incumbent waits & watches • New entrant becomes “good enough” • Niche market booms • Old incumbent “crams” disruption • New model wins Implications • Aim for new application development, not legacy • There will be many cases where we co-exist with incumbent • Target customers who “get it” (and may also be disruptive) Page 16
  • 17. In What Ways Can You Disrupt? • Business model disruption • Distribution disruption • Technical disruption • Market disruption • Pricing disruption Page 17
  • 18. Winners in Commoditization Company Market Mkt Positioning Cap Retail $206 B Everyday low prices Online Retail $32 B World’s largest selection at the lowest possible prices Microprocessors $84 B The world leader in silicon innovation Travel $4.5 B Great low fares Linux $ 3.4 B Making high quality, low cost technology accessible CRM $ 3.9 B On-demand solutions cost 90% less than traditional IT DBMS $1 B 90% lower TCO than legacy closed source databases Page 18
  • 19. Factors Driving Growth of Open Source IT Cost Pressure More Data Revenue & Analysis Pressure Commoditization Maturation of Web Page 19
  • 20. The Perfect Storm? • Open source is good enough --and often better • LAMP infrastructure proven in IT • Open source reduces TCO up to 90% • Global IT $$$ down 10% • Closed source strategy: Raise prices! Page 20
  • 21. Next Wave: From Infrastructure to Apps • Operating System – Linux, OpenSolaris • Database / App Server – MySQL, Postgres, Glassfish, JBoss • Enterprise Applications – Pentaho, Alfresco, – Zimbra, SugarCRM, – OpenBravo, Drupal… Page 21
  • 22. Open Source Application Adoption • 40% plan to increase application usage Page 22
  • 23. Agenda Open Source – Still a Safe Bet? The Next Wave in Open Source Open Source Meets Cloud Computing Conclusion Page 23
  • 24. What the Heck is the Cloud? 24 Page 24
  • 25. Why People Like the Cloud • Pay-as-you-go (utility computing) – No Initial Investment – Changes the economics of Computing from being a Capital Investment to Utilities • Reduced Operational Costs • Scalability – From 2 processors to n processors with no notice, no long term commitments • Availability – Always on – Backup Page 25
  • 26. When to Use the Cloud • Transient application lifespan or use • Quick start required • Budget pressure • Variable use/scale of application unknown • IT unavailable/unresponsive Source: Bernard Golden, Hyperstratus www.hyperstratus.com Page 26
  • 27. Cloud Open Source Realities • The cloud reduces user unease about open source • Open source supports cloud application architectures better than proprietary • Open source supports cloud licensing much better than proprietary Page 27
  • 28. Real Users Are Already Doing It • Pentaho has been “The experts at OpenBI addressed our developing on Amazon EC2 business requirements and were able to for more than a year rapidly deliver a comprehensive and – Prototyping and validation of parallel architecture approaches integrated solution. With Pentaho, MySQL, – Benchmark testing and Amazon EC2, we now have a low-cost, standards-based solution that can easily scale • Pentaho customers are from both a software and hardware starting to embrace cloud perspective.” computing for BI – Lower startup costs – Lower ongoing costs – Scale up easily based on needs without traditional per- user BI license fees or hardware procurement costs Page 28
  • 29. Agenda Open Source – Still a Safe Bet? The Next Wave in Open Source Open Source Meets Cloud Computing Conclusion Page 29
  • 30. Conclusion • Open source is a very safe bet • The next inflection point is applications • Cloud computing will drive greater open source adoption, and further reduce IT costs Page 30