'Do More with Less' and Use Open Source

Lora Bentley spoke with Matt Asay, business development VP for open source enterprise content management software provider Alfresco.

Bentley: Why are open source companies uniquely poised to grow even when the economy is so tough?
Asay: Several reasons. First, many open source companies, including Alfresco, SugarCRM, Red Hat, and others, deliver equal or better functionality than our proprietary competitors at a significantly lower cost. In many cases, Alfresco is 5 percent to 10 percent of the cost of a proprietary solution, despite delivering superior ease-of-use, scalability, etc.

Second, we know how to grow prudently. Open source companies benefit from improved code quality, but also a low-cost distribution model. This model means that customers will find us in the downturn, rather than open source companies spending truckloads of money trying to find those with budgets. Our sales and marketing costs are a fraction of proprietary software companies, allowing us to build and deliver better products for less.

Third, not only does open source lower the acquisition cost for software, but we also dramatically decrease risk. A CIO doesn't have to guess whether our software is going to work for her: she can download the software, try it out, pilot it, and then come back to buy support as required. CIOs have less risk of failed IT projects with open source, and efficiency is the name of the game in a downturn.

Do more with less: that's open source, and it's a winning formula for a recessionary economy.

Bentley: If companies are turning to open source to save money, how do open source companies turn customers who use free community versions of software and systems into customers who pay for services?
Asay: It's important to note that many savvy enterprises recognize that the cost of self-supporting open source deployments tends to be much higher than simply paying an open source expert to do so. Many companies gratefully pay for open source support.

But it's not simply support. Companies like Zimbra, SugarCRM, and others provide services and software that are only available to paid subscribers. So, enterprises can start with a free version, ensure that the product will work, and then go to the open source vendor for functionality appropriate to serious production.

All that said, open source doesn't need to monetize every user in order to be profitable. The goal is ubiquity, and open source ensures that even if a prospect isn't paying me, it's at least not paying my competitor. That situation puts me as the open source vendor in the driver's seat to figure out value that the prospective customer would pay for.

Bentley: Why are Web 2.0 technologies built on open source particularly attractive to companies looking to tighten their belts?
Asay: Open source-based Web 2.0 delivers a lower cost of software with lower cost of deployment, in addition to improved efficiencies from intra-enterprise collaboration. It's a win-win-win scenario.

Bentley: How is it that tech spending appears to be increasing even in the current economy?
Asay: I suspect that tech spending will slow, even if it's still growing. I think we're currently seeing an overhang from projects already scheduled, but I've heard across the board that enterprises are reevaluating their 2009 spending priorities. I think we'll be flat to negative in 2009, but that should benefit open source, as we can enable companies to innovate even as they lower their overall costs.