451 Sugarcrm Aslett

The convergence of open source and Software as a Service Matthew Aslett , Analyst, Enterprise Software SugarCRM Acceleration Summit September 17, 2008 • Radisson SAS Portman Hotel • London

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451 CAOS Research Service
The impact of open source on software vendors, end users, and investors
Ongoing coverage
Advisory service
Qualitative research
Quantitative surveys
‘Lessons learned' from early adopters and vendors
3 dedicated open source analysts

The convergence of open source and Software as a Service

What is (commercial) open source?
A software development and distribution model enabled by a licensing tactic
License ensures (among other things):
Software is freely distributed
Source code is always available
Software can be modified and improved upon
Lowers barriers to adoption

What is SaaS?
A software delivery model
Tend to be Web-based applications
Provided as a monthly or annual service to users
Typically hosted and supported by the creator of the SaaS product, but third-parties may be involved
Aims to remove burden of IT operations and support from customer

Similarities
Disruptive
Initial proof-point
Wider implications
State of flux
Everyone has an opinion
Incumbents struggling
Complementary, rather than competitive

Open source-as-a-service providers

451 Group research findings
CAOS report to be published October 2008
Analysis of 114 vendors generating revenue from open source software
Includes analysis of:
license choice
development model
licensing strategy
revenue trigger

451 Group research findings
Software as a Service
Used by 16.0% of all open source vendors
5.3% as primary revenue source
6.2% as secondary revenue source
11.4% as tertiary revenue source
Responsible for 40-50% of revenue, on average, for those vendors
Expected to rise to the high end of that scale by 2010

Strengths and weaknesses: open source
Strengths
Lowers development and distribution costs
Lowers barriers to adoption - try before you buy
Avoid lock-in
Weaknesses
Requires trust in licensing model
What is the commercial value-add?
Requires in-house skills/vendor support

Strengths and weaknesses: SaaS
Strengths
Lowers barriers to adoption – no licensing
Clear demonstration of value – pay as you go
Lowers infrastructure and support costs
Weaknesses
Requires trust in SaaS model
Marketing and sales costs
Risk of lock-in

Best of both worlds?
Open source software
Lowers development and distribution costs
Lowers barriers to adoption - try before you buy
Avoid lock-in
Requires trust in licensing model
What is the commercial value-add?
Requires in-house skills/vendor support
Software as a Service
Marketing and sales costs
Requires trust in SaaS model
Risk of lock-in
Lowers barriers to adoption – no licensing
Clear demonstration of value – pay as you go
Lowers infrastructure and support costs

Q&A
Matthew Aslett
Analyst, Enterprise Software
[email_address]
+44.207.299.7753
http://blogs.the451group.com/opensource/
China Martens
Senior Analyst, Enterprise Software
[email_address]
+1.617.261.0691

451 Sugarcrm Aslett

by Matthew Aslett

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