This is a
high quality
software product
They never ever
bake it alone
There are at least
three parts
there
design &
coding
shipping &
install
support &
service
They all add essential
spices to the mix
The three parts are
always there
They bring required but
different mind sets
and skills to the table
Customers tend to emphasize
certain product components
Customers distinguish components
very well and pick what they need
A stress on one product’s
component doesn’t mean that
others don’t exist
The components are just
hidden by the vendors
This game
simplifies messaging
to the customers
The simplification
is causing expenses
Vendors charge for
the convenience
They call it a
Customers see design-to-order
custom built code
uniqueness grants competitive potential




Vendors see business model #1
contracting

          • Project Ware
          ...
The most lucrative model
contracting

                      secure,      up-front



           customer
                 ...
Consumers pick off-the-shelf
packaged code
Companies use business model #2
software vendor
         We have already coded and shipped
         a software that does m...
lucrative and robust model
software vendor

                      universal,    up-front



           customer
          ...
A buyer wants customization or
on demand fixed code
Vendors think business model #3
free, free open source

We have a software that can do
some things. It is delivered to
you...
easy to enter model
free & open source

           no up-front   limited or
customer




           investment,   expensiv...
WTF




http://www.flickr.com/photos/mrtruffle/140233293/
How
can I eat my
three options to bite

                        #2

 #1




      #3
bake it
Buy all
ingredients         progress bar




              time costs quality
let them mix &
put it in stove         progress bar




                  time costs quality
pull out and eat
                         progress bar




                   time costs quality
buy it
Figure out
what kind of cake           progress bar


do you need




                    time   costs quality
go to the store.
does it smell              progress bar


like cake? buy




                   time   costs quality
eat
              progress bar




      time   costs quality
junk yard

feast
sneak to the buffet
at a late night               progress bar


party




                      time   costs quality
grab what likely
has been a cake            progress bar




                   time   costs quality
mix it with salt,
sugar and pepper            progress bar


to taste. eat




                    time   costs quality
get a drink
                      progress bar




              time   costs quality
Seriously!


http://www.flickr.com/photos/mrtruffle/140233326
HOW
can I eat my
There are three options


  #1       #2        #3
#1

     If you know what you do…
#1

     …and can afford it
#1

     Go ahead. Buy a locomotive
#1

     your custom built wagons are
     complimentary




         code    delivery   use


                           ...
#1

     so you can reach
     your destinations
#2

     If you are short
     of money or time
#2

     Buy ready-to-ship solutions




                 delivery
#2

        Buy ready-to-ship solutions




  One ticket to
 Choo-Choo City!
#2

     Your wagon is meant to be there




                 delivery   use
#2

     But don’t expect much
#2

     It is one size fits all
                   somewhere
#2

       The trouble there:
       it is hard to find right train




  One ticket to                There is no such
 C...
#2

       You know it after you bought
       software. Media reviews don’t
       consider your specific needs



      ...
#3

     Outgrown it?
#3

     Can’t stand it?




                       Wait!
#3

     or no money to invest now?
#3

     Here you are.
     Free software




                 code delivery   use
#3

     …if it moves
      the wagon won't be roomy
#3

     Free and open source software
     enables you any wagon size
#3

     …but eventually you will
     need to spend money & time




         code       delivery   use
#3

     More likely like this
                  some day
#1

     Then you start
     to think about this
http://www.flickr.com/photos/mrtruffle/140233345
Basically the entire spectrum
of business models can be
placed on a line
pick yours by
setting up a screen
Project Ware




             Program Ware



             Cloud Ware


             Product Ware


             SaaS Ware...
line is looped
A software
product drifts
the cycle over time
…following business sense
  for a consumable value that               The idea is
                                        ...
From an innovative code
  to a standard component.
  New loops continue
  the life cycle
                                 ...
So..
                                                   do I really
                                                    ch...
Do I choose
how I get my   ?
Yes!
   read again
   slide 28
No!
 You have no choice
 if the desired functionality
 is at the technology edge
Industry produces pies
“on a conveyor belt”
Industry has its own dynamic
and macro-sized forces




               you   industry
You probably
can’t pull the rope alone
…but at any moment you can
choose the best bit
                             #2

 #1




      #3
http://www.flickr.com/photos/mrtruffle/140233345
Organizational constrains
                     theory
Two organizational forms
as a Fn of product complexity




           Market exchange
         is more efficient



      ...
Two ownership forms
as a Fn of asset building costs




             Property is more   Implementation
             valuab...
Organizational forms
        as a function of relative costs


                                         Value >          C...
Organizational forms
as a Fn of software eco-cycle


                           Value >          Costs >
                 ...
Efficient production forms
as a Fn of product attributes




                     Abundance     Commodity
                ...
product-market-costs-time
optimization cycle




                                  Product A
               buying entitie...
Break-through products
  pop share




                          entities
              coverage

                demands
...
Mass market products
pop share




                       entities
            coverage


            demands




        ...
Saturation products
   common base standards
  pop share




                             entities
              coverage
...
You can use
any product form
from the previous complexity cycle

                                pervasion




           ...
http://www.flickr.com/photos/mrtruffle/140233345
Resources constrains
                 theory
Producing software
requires resources




infrastructure   skills   money
Somebody has to pay
to keep the talent alive




                   train,
                    feed
                      ...
Resources
come from




            1
            institutions


                2
                individuals
1
seeking an infrastructure leap
                      in the “final touch” phase



      typical product is
    an integ...
1
requirements




A. ambitious to wait until a system becomes ubiquitous
B. creative to dare the proliferation semi-cycle...
Others

                                9%            Asia & Oceania
                                         7%
         ...
1
constrains



        A. resources
        B.incentive to close the source
        after the tipping point

        BOTT...
2
the skilled workers
bridging the gap of underemployment


           civilians unemployed 27+ weeks

            Bureau ...
2
requirements




        A. critical mass, i.e. industry
        wide unemployment trigger
        B. personal resources...
2
constrains




     A. industry changes
     B. limited personal resources can’t
     sustain the movement in the long r...
http://www.flickr.com/photos/mrtruffle/140233293/
CAN
I eat my
Belongs to
endangered
species
Free, collectively built
software is essential




                 enabling expedient leaps
                 into the nex...
FOSS does to software what
universities did to knowledge
                                      mass
                      ...
today huge
”fired” IT-force seeds the FOSS



                      US information services employees




This is a life t...
software proliferation is
  a fragile business process




                       entities


Customization driven
        ...
an overarching system
          is required




              a raw model for free software
              on a sustainabil...
Contributors
Konstantyn Spasokukotskiy

Mykola Dimura




References
Dana Blankenhorn - ZD Net publication on software bus...
Open Source Software - A Guide to Innovation
Open Source Software - A Guide to Innovation
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Open Source Software - A Guide to Innovation

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[heavy content] This guide explains how to make proper use of different software forms. Particularly, the guide stresses that open source software is an essential part of software development ecosystem. It outlines its evolutionary role and challenges that are faced by the software industry. The guide should help IT managers to build sound software strategies. It also signals where are growth points for a forward looking and proactive participation in the technology community.

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Transcript of "Open Source Software - A Guide to Innovation"

  1. 1. This is a high quality software product
  2. 2. They never ever bake it alone
  3. 3. There are at least three parts there
  4. 4. design & coding
  5. 5. shipping & install
  6. 6. support & service
  7. 7. They all add essential spices to the mix
  8. 8. The three parts are always there
  9. 9. They bring required but different mind sets and skills to the table
  10. 10. Customers tend to emphasize certain product components
  11. 11. Customers distinguish components very well and pick what they need
  12. 12. A stress on one product’s component doesn’t mean that others don’t exist
  13. 13. The components are just hidden by the vendors
  14. 14. This game simplifies messaging to the customers
  15. 15. The simplification is causing expenses
  16. 16. Vendors charge for the convenience They call it a
  17. 17. Customers see design-to-order custom built code
  18. 18. uniqueness grants competitive potential Vendors see business model #1 contracting • Project Ware • Program Ware (Need something done? Specify. We will code it, delivery and service included)
  19. 19. The most lucrative model contracting secure, up-front customer unique, expensive, efficient quality isn’t granted no-risk, no scaling, get paid a lot of vendor before you hand- deliver, holding limited QA
  20. 20. Consumers pick off-the-shelf packaged code
  21. 21. Companies use business model #2 software vendor We have already coded and shipped a software that does many things. Adjust your needs. We will help. • Product Ware, Share Ware (buy the box or license) • Cloud Ware (buy the functionality set) • SaaS Ware (rent the license) • Open Source Ware (buy the license, fix and service the code yourself)
  22. 22. lucrative and robust model software vendor universal, up-front customer cheap, costs, immediately quality available isn’t detailed scaling, up-front no depen- investment, vendor dency on a many eye- single cus- balls track tomer quality
  23. 23. A buyer wants customization or on demand fixed code
  24. 24. Vendors think business model #3 free, free open source We have a software that can do some things. It is delivered to your door and free to try • Free Ware (use it or leave it) • Share Ware (take it, pay for updates and support) • Free & Open Source Ware (take it, adjust it or pay us to do so)
  25. 25. easy to enter model free & open source no up-front limited or customer investment, expensive quality is features, granted or hassle no payment scaling, huge up- simple front vendor shipping, investment, cheapest return is foot in the not granted door
  26. 26. WTF http://www.flickr.com/photos/mrtruffle/140233293/
  27. 27. How can I eat my
  28. 28. three options to bite #2 #1 #3
  29. 29. bake it
  30. 30. Buy all ingredients progress bar time costs quality
  31. 31. let them mix & put it in stove progress bar time costs quality
  32. 32. pull out and eat progress bar time costs quality
  33. 33. buy it
  34. 34. Figure out what kind of cake progress bar do you need time costs quality
  35. 35. go to the store. does it smell progress bar like cake? buy time costs quality
  36. 36. eat progress bar time costs quality
  37. 37. junk yard feast
  38. 38. sneak to the buffet at a late night progress bar party time costs quality
  39. 39. grab what likely has been a cake progress bar time costs quality
  40. 40. mix it with salt, sugar and pepper progress bar to taste. eat time costs quality
  41. 41. get a drink progress bar time costs quality
  42. 42. Seriously! http://www.flickr.com/photos/mrtruffle/140233326
  43. 43. HOW can I eat my
  44. 44. There are three options #1 #2 #3
  45. 45. #1 If you know what you do…
  46. 46. #1 …and can afford it
  47. 47. #1 Go ahead. Buy a locomotive
  48. 48. #1 your custom built wagons are complimentary code delivery use time
  49. 49. #1 so you can reach your destinations
  50. 50. #2 If you are short of money or time
  51. 51. #2 Buy ready-to-ship solutions delivery
  52. 52. #2 Buy ready-to-ship solutions One ticket to Choo-Choo City!
  53. 53. #2 Your wagon is meant to be there delivery use
  54. 54. #2 But don’t expect much
  55. 55. #2 It is one size fits all somewhere
  56. 56. #2 The trouble there: it is hard to find right train One ticket to There is no such Choo-Choo City! destination
  57. 57. #2 You know it after you bought software. Media reviews don’t consider your specific needs I’m sorry, we’ve sold you a ticket to Cha-Cha One ticket to Choo-Choo City!
  58. 58. #3 Outgrown it?
  59. 59. #3 Can’t stand it? Wait!
  60. 60. #3 or no money to invest now?
  61. 61. #3 Here you are. Free software code delivery use
  62. 62. #3 …if it moves the wagon won't be roomy
  63. 63. #3 Free and open source software enables you any wagon size
  64. 64. #3 …but eventually you will need to spend money & time code delivery use
  65. 65. #3 More likely like this some day
  66. 66. #1 Then you start to think about this
  67. 67. http://www.flickr.com/photos/mrtruffle/140233345
  68. 68. Basically the entire spectrum of business models can be placed on a line
  69. 69. pick yours by setting up a screen
  70. 70. Project Ware Program Ware Cloud Ware Product Ware SaaS Ware Share Ware Support Ware Open Source Ware Free Ware Ad Ware Beg, Mascot Ware Sponsor Ware
  71. 71. line is looped
  72. 72. A software product drifts the cycle over time
  73. 73. …following business sense for a consumable value that The idea is picked up. the product contains Mass product A text editor is created 1 2 as custom built code 4 The editor’s functionality 3 is integrated in other products as a component Cheaper and adjustable replicas of the editor
  74. 74. From an innovative code to a standard component. New loops continue the life cycle pervasion inception Text editor’s life cycle as a product component Text editor’s life cycle as a stand-alone product
  75. 75. So.. do I really choose? http://www.flickr.com/photos/mrtruffle/140233326
  76. 76. Do I choose how I get my ?
  77. 77. Yes! read again slide 28
  78. 78. No! You have no choice if the desired functionality is at the technology edge
  79. 79. Industry produces pies “on a conveyor belt”
  80. 80. Industry has its own dynamic and macro-sized forces you industry
  81. 81. You probably can’t pull the rope alone
  82. 82. …but at any moment you can choose the best bit #2 #1 #3
  83. 83. http://www.flickr.com/photos/mrtruffle/140233345
  84. 84. Organizational constrains theory
  85. 85. Two organizational forms as a Fn of product complexity Market exchange is more efficient Coase’s firm theory In-house production is better than procuring the product
  86. 86. Two ownership forms as a Fn of asset building costs Property is more Implementation valuable than costs are higher implementation than the value of costs property that controls an opportunity Demsetz’s property theory
  87. 87. Organizational forms as a function of relative costs Value > Costs > property costs property value exchange Cheaper goods Markets Commons in-house to build Cheaper Property Firms regimes Coase’s firm theory + Demsetz’s property theory
  88. 88. Organizational forms as a Fn of software eco-cycle Value > Costs > property Costs property value exchange Goods Markets Commons in-house Property Build Firms regimes
  89. 89. Efficient production forms as a Fn of product attributes Abundance Commodity of market product players, that serves universal significant product need Hygienic Complex, product in unique an inapt product in providers’ monopoly market
  90. 90. product-market-costs-time optimization cycle Product A buying entities Product B costs/profit
  91. 91. Break-through products pop share entities coverage demands next level infrastructure phase the tipping point “final touch” phase costs/profit
  92. 92. Mass market products pop share entities coverage demands costs/profit
  93. 93. Saturation products common base standards pop share entities coverage demands This phase delivers flavors to any taste. That makes the core functionality a common good and knowledge costs/profit
  94. 94. You can use any product form from the previous complexity cycle pervasion inception components cycle
  95. 95. http://www.flickr.com/photos/mrtruffle/140233345
  96. 96. Resources constrains theory
  97. 97. Producing software requires resources infrastructure skills money
  98. 98. Somebody has to pay to keep the talent alive train, feed work supply FOSS
  99. 99. Resources come from 1 institutions 2 individuals
  100. 100. 1 seeking an infrastructure leap in the “final touch” phase typical product is an integrated system complexity system components are open sourced
  101. 101. 1 requirements A. ambitious to wait until a system becomes ubiquitous B. creative to dare the proliferation semi-cycle C. resourceful to support the components development
  102. 102. Others 9% Asia & Oceania 7% 41% United Europe 38% North America Debian developers reside in rich countries http://widi.berlios.de/paper/study.html
  103. 103. 1 constrains A. resources B.incentive to close the source after the tipping point BOTTOM LINE: projects are rarely started, and eventually shut off
  104. 104. 2 the skilled workers bridging the gap of underemployment civilians unemployed 27+ weeks Bureau of Labor Statistics
  105. 105. 2 requirements A. critical mass, i.e. industry wide unemployment trigger B. personal resources, i.e. credit access or savings
  106. 106. 2 constrains A. industry changes B. limited personal resources can’t sustain the movement in the long run BOTTOM LINE: rare temporary opportunity
  107. 107. http://www.flickr.com/photos/mrtruffle/140233293/
  108. 108. CAN I eat my
  109. 109. Belongs to endangered species
  110. 110. Free, collectively built software is essential enabling expedient leaps into the next generation software products
  111. 111. FOSS does to software what universities did to knowledge mass production commercialization 1 2 4 ideation by individuals knowledge propagation and settle down to standards
  112. 112. today huge ”fired” IT-force seeds the FOSS US information services employees This is a life time opportunity that is not sustainable unless systemic Bureau of Labor Statistics changes occur
  113. 113. software proliferation is a fragile business process entities Customization driven development Startup driven development costs/profit
  114. 114. an overarching system is required a raw model for free software on a sustainability rail
  115. 115. Contributors Konstantyn Spasokukotskiy Mykola Dimura References Dana Blankenhorn - ZD Net publication on software business models Yochai Benkler http://www.yale.edu/yalelj/112/BenklerWEB.pdf http://widi.berlios.de/paper/study.html http://modeledbehavior.files.wordpress.com/2010/07/image5.png free to copy and reuse with proper attribution
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