This document discusses strategies and advantages of open source software for small and medium sized businesses during an economic crisis. It notes that SMBs are important for employment and innovation but often struggle with the costs of proprietary software. Open source allows SMBs to customize software as needed, avoid vendor lock-in, and lower costs. The document advocates for open source as an economic enabler for SMBs.

1. Strategies and Advantages
of Software Livre In An
Economic Crisis
by
Jon quot;maddogquot; Hall
Executive Director
Linux International
Copyright 2008

2. Who Am I....
....and Why Should You
Listen?
● Thirty-nine+ years in the computer industry
– Mainframes 5 years
– Unix since 1977
– Linux since 1994
● Programmer, Systems Engineer, Product
Manager, QA, Technical Marketing, Educator,
Consultant
● Large systems to very small ones
● Vendor and a customer
Copyright 2008

3. The World Is In Economic
Crisis!
● Financial Institutions failing
● Large Manufacturing and Retail
companies failing
– “Big Three” auto
– Sharper Image
● Companies laying off people
Obama keeps talking about SMBs and “spreading the wealth”
Copyright 2008

4. Small and Medium
Business
● In USA:
– Small business – less than 100 employees
– Medium business – less than 500
employees
● Globally, 40-50% of all GDP is SMB
● Major advantages:
– employment potential and low capital cost
– innovation
– higher growth rate
Copyright 2008

5. More USA Statistics on
SMB
● 99.7 per cent of all employer firms
● 50% of all private sector employees
● Almost 45% of private sector payroll
● 60-80 per cent of all new jobs
● 40 per cent of high tech employees
● 52% are home-based
● 97.3% of all known exporters
● 28.9% of all goods exported
Copyright 2008

6. Survival Rate of SMBs
● 66% more than two years
● 44% more than four years
● 31% more than seven years
SMBs employ people, make products, create services!
Copyright 2008

7. Are Large Companies the
Only Ones Sustainable?
Sure! Just ask....
● Apollo
● Wang
● Data General
● Digital Equipment Corporation
● Compaq Computer Corporation
● Enron
● General Motors
Copyright 2008

8. Large Business
● Monopoly potential
– Hard to have competition
– When they fail, they fail badly
● “Big Three” car makers
● Wall Street
– Government often “held ransom”
– Consumers often “held ransom”
Copyright 2008

9. Computing In The
Beginning
● Hardware expensive, computers few
– Software hand-tailored, from beginning
– Not “computer science....computer black
magic”
– “Punched cards and FORTRAN all you
need”
● 1980s – Hardware was becoming less
expensive
– Software was manufactured
● 2007+ Hardware is incredibly cheap
Copyright 2008
– Software should be tailored again

10. The Economics of Mass
Production
● Meets 70-90% needs of 70-80% of
market
– .70 x .70 = .49, less than half!
● Create commodity products
– What is a commodity?
● Corn?
● Cars?
● Money?
– Are business situations a commodity?
Copyright 2008

11. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008

12. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008

13. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008

14. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008

15. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008

16. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008

17. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
● Source Code allows you to sand the
corners of the square peg
Copyright 2008

18. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
● Source Code allows you to sand the
corners of the square peg
Copyright 2008

19. Sometimes I Speak To
Hundreds
Of Businesspeople....
● Who has ever had a problem with
closed source programs?
● Who has turned in a problem report?
● Who has gotten a good answer back?
● Who has had to change their business?
Copyright 2008

20. Wall Street Loves
Production Software
● High Profits, low investment
● Few jobs, non-local
● Production software is like printing
money
– Who calls the treasury for assistance?
– Who calls a farmer?
It is in “their” best interest.
Copyright 2008

21. 80% of All Software
Written...
...is NOT prepackaged, production
software
● Systems Admin software
● Embedded Systems Software
● Manufacturing Software
● Other
Copyright 2008

22. Software In 1977-1980
● Economies of scale made “shrink wrap”
software possible
● Companies Started up
– 100 engineers
– 1000 customers
– 2000 reports
– 20/engineer
No problem!
Copyright 2008

23. It Is Now (Almost) 2009
150 engineers, 4.5 million customers
● 9 million pieces of paper
● 60000/engineer
See the problem?
Copyright 2008

24. Closed Source
Functionality Gap
“What You Need vs What You Get”
● Unstable software
● Late bug fixes
● Not in your language
● Does not support your hardware
● Does not do what you want
Copyright 2008

25. 1977 vs 2009
1977 2009
● Expensive ● Cheap Hardware,
Hardware, Software Software
● Few computers ● Computers
“Everywhere”
● Large training
● Less training
● English Language
mostly ● Many languages
needed
● Small volume of gap
● Large volume of gap
Copyright 2008

26. Volume of Gap
● 1977 - 5 USD of loss per day per
computerized knowledge worker
● 2009 – 5 USD of loss per day per
computerized knowledge worker
● Same rate, larger loss
This is bad today with only 1,000,000,000 computers
Copyright 2008

27. Total Cost of Ownership
(TCO) vs Value
Don't be fooled!
Copyright 2008

28. Most People Do Not Want
Products
● Cars and Food
● People want service
● Making software do what people want
The “help is far away” problem
Copyright 2008

29. Not the Functionality I
Want...
....what the company thinks I want...
Copyright 2008

30. How Did We Get Here?
Copyright 2008

31. I Was A Product Manager
At Digital Equipment
Corporation
● 550 engineers
● 650 product requirements
● 50 of the top ones, 1-2 more further
down
Copyright 2008

32. Financing
● The average person in China makes
about 3 USD a day
– different financing for different economies
● Governments with long-term
vision/funding are few, getting fewer
● Investment cycles getting shorter
● Increasing value of Internet to business
one way of financing for everyone
● Micro-financing – business for everyone
Copyright 2008

33. To Start A Business Today
● $$ in computer equipment
● $$$$$$$ in computer software
– to say nothing of contract negotiations
● $$$$ in telephony equipment (PBX?)
Copyright 2008

34. Proprietary Software vs
Software Livre
● Buy software and ● Pull software from
pull software from Internet (no
box royalty)
● Install software ● Install software
and try to get it to and try to get it to
work work
● Call support line ● Find source code
and stay on hold on Internet, fix it
yourself
Copyright 2008

35. Software Livre!
● Helps with Balance of Payments
– Local jobs help local economy
● Allows you to start business with less
up-front investment
● Allows you to change parts of software
to meet your needs
– bug fixes
– particular enhancements
● Focuses your investment
Copyright 2008

36. Sustainability
● If it is not here tomorrow, it did not
really get here today.
● Long term business plan, not “get rich
quick”
● Re-evaluate ways of doing business
● Make sure everyone makes money
● Products as a managed service
– Remove complexity
Copyright 2008

37. Jobs
● Programmer
● Systems Analyst
● Systems Administrator
● Product Manager
● Technical Marketing Manager
● Teaching
– Commercial
– Public
● Consultant
●
Copyright 2008
Integrator

38. Service
● Highly trained and skilled service
– Like a brain surgeon
– Like a lawyer
● Not just packaged product installers
Copyright 2008

39. May Not Have Electricity:
Or A Different Value System
Copyright 2008

40. Open Certification...
....Linux Professional
Institute
● Certifies Linux Systems Administrators
● Worldwide
● Distribution Neutral
● Vendor Neutral
● Does not compete in training area
● Non-profit
● Advisory board
Copyright 2008

41. Free Software Is A
Business Enabler
● Your own language
● Your own culture
● No lawyers needed
● Local advertising
● Paid Free Software people
– Systems administrators
– Internal programmers
– government programmers
Copyright 2008

42. Co-Operatives
“Single person...what can you do?”
● Bring together multiple people
– Different expertise
– Shared resources
● Legal
● Administrative
● Sales
● Legal entity
– Longevity
– Professional Insurance
Copyright 2008

43. Thanks
● Koolu, Inc - www.koolu.com (Who pays
my salary)
● IBM – who helps with sustaining funds
● Linux New Media -
www.linuxpromagazine.com/pawprints
● The Free and Open Source Software
Community
● You
Copyright 2008

44. Questions?
Copyright 2008