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Openbravo World Conference
The Impact of Open Source in a Down Economy
                                                   ...
Agenda


 Open Source – Still a Safe Bet?


 The Next Wave in Open Source


 Open Source Meets Cloud Computing


 Conclusi...
Open Source is the Safe Bet


• 1980: No One Ever Got Fired for Buying IBM

• 1990: No One Ever Got Fired for Buying
  Mic...
Investment in Open Source




                   Page 4
Venture Funding to Open Source


 600.00                                                                                  ...
Enterprise Adoption


Infrastructure Tier

• Survey of Fortune 1000 CIOs
   – Pervasiveness of open source at the infrastr...
IDC Industry Adoption of Open Source


• 86% of OSS projects are in some form of production
  deployment and usage within ...
More Enterprise Adoption


• “By 2010, Global IT organizations will use open-source products in 80%
  of infrastructure-fo...
Better Software




              Page 9
Code Defect Measurements
                                                                                                 ...
System Function Failure Rates
                                                                                            ...
Lean Budgets Favor Open Source




                     Page 12
Significant Growth in OS Downloads


• 7 of the top 10 Enterprise SW Projects on SF.net
  saw strong growth in Q4 of 2008 ...
Agenda


 Open Source – Still a Safe Bet?


 The Next Wave in Open Source


 Open Source Meets Cloud Computing


 Conclusi...
The Innovator’s Dilemma



                                                                             Overkill



      ...
Typical Pattern of Disruption


    Innovator’s Dilemma
• New entrant considered inferior
• New entrant gains toehold
• Ol...
In What Ways Can You Disrupt?


• Business model disruption

• Distribution disruption

• Technical disruption

• Market d...
Winners in Commoditization
         Company                Market         Mkt Positioning
                                ...
Factors Driving Growth of Open Source

                               IT Cost Pressure




      More Data                ...
The Perfect Storm?



• Open source is good enough --and often
  better

• LAMP infrastructure proven in IT

• Open source...
Next Wave: From Infrastructure to Apps




• Operating System
    – Linux, OpenSolaris



• Database / App Server
    – My...
Open Source Application Adoption


• 40% plan to increase application usage




                                   Page 22
Agenda


 Open Source – Still a Safe Bet?


 The Next Wave in Open Source


 Open Source Meets Cloud Computing


 Conclusi...
What the Heck is the Cloud?




                                        24




                              Page 24
Why People Like the Cloud

• Pay-as-you-go (utility computing)
   – No Initial Investment
   – Changes the economics of Co...
When to Use the Cloud


• Transient application lifespan or use

• Quick start required

• Budget pressure

• Variable use...
Cloud Open Source Realities


• The cloud reduces user unease about open
  source

• Open source supports cloud applicatio...
Real Users Are Already Doing It



• Pentaho has been
                                                               “The ...
Agenda


 Open Source – Still a Safe Bet?


 The Next Wave in Open Source


 Open Source Meets Cloud Computing


 Conclusi...
Conclusion


• Open source is a very safe bet

• The next inflection point is applications

• Cloud computing will drive g...
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Keynote Speech: The Impact of Open Source in a Down Economy - Richard Daley

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

  1. 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. 2. Agenda Open Source – Still a Safe Bet? The Next Wave in Open Source Open Source Meets Cloud Computing Conclusion Page 2
  3. 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. 4. Investment in Open Source Page 4
  5. 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. 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. 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. 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. 9. Better Software Page 9
  10. 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. 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. 12. Lean Budgets Favor Open Source Page 12
  13. 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. 14. Agenda Open Source – Still a Safe Bet? The Next Wave in Open Source Open Source Meets Cloud Computing Conclusion Page 14
  15. 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. 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. 17. In What Ways Can You Disrupt? • Business model disruption • Distribution disruption • Technical disruption • Market disruption • Pricing disruption Page 17
  18. 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. 19. Factors Driving Growth of Open Source IT Cost Pressure More Data Revenue & Analysis Pressure Commoditization Maturation of Web Page 19
  20. 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. 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. 22. Open Source Application Adoption • 40% plan to increase application usage Page 22
  23. 23. Agenda Open Source – Still a Safe Bet? The Next Wave in Open Source Open Source Meets Cloud Computing Conclusion Page 23
  24. 24. What the Heck is the Cloud? 24 Page 24
  25. 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. 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. 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. 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. 29. Agenda Open Source – Still a Safe Bet? The Next Wave in Open Source Open Source Meets Cloud Computing Conclusion Page 29
  30. 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

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