By: David Postel, Partner & Alliances Leader, Red Hat Middle East and Africa
Open source is no longer just another industry buzz word – whether it is Hadoop for big data, OpenStack for cloud computing or Contiki for the Internet of Things (IoT), open source now drives technology innovation to the point where even traditional proprietary vendors are (reluctantly) beginning to participate in the open source world.
As awareness grows and we continue to debunk the myths around open source software, particularly around security, adoption levels are rising among both large corporations and small-to-medium-size businesses (SMBs). In fact, according to the 2015 Future of Open Source Survey sponsored by Black Duck and North Bridge, 78 percent of companies today run part or all of their operations on open source software. Another notable statistic from the same survey is that for 66 percent of respondents, open source is the default approach when it comes to hardware.
Given the growing popularity and importance of open source, one could argue that partners without an open source practice are already at a disadvantage, not to mention losing out on an extremely lucrative revenue stream. While the old adage – ‘better late than never’ – definitely holds true, simply putting a sign out front that reads “Open Source Sold Here” won’t cut it. Building an open source practice requires a different business model, skill set and sales approach.
Embrace a new business model
The fundamental difference between proprietary and open source software solutions lies in the development model. In proprietary solutions, the source code remains the sole property of the original authors, the only people legally allowed to make changes to it. On the other hand, in open source solutions, an organisation creates a piece of code for its own needs, and proceeds to make the code available for others to view, copy, learn from, alter or share.
While this might be stating the obvious, it is the economic implications that are important and relevant for partners. Organisations that sell proprietary software need to recoup significant development costs and to that end, sell their software using a one-time license model. In this model, a significant portion of the solution cost is accounted for by the hardware, which doesn’t leave much for spend on services. On the other hand, open source solutions are sold using a service-based subscription model where the subscription fee accounts for less than half of the cost while support services account for the balance.
Given the difference in how the two solutions are monetised, partners choosing to sell open source solutions will need to change their business model and switch from the traditional reseller approach to a consultative, service-oriented approach. While this is not an easy transition for most partners to make, those that do will not only have a competitive advantage, but more importantly will be able to capitalise on high margin service business and up/ cross selling opportunities.
Specialise, specialise and then specialise some more
While the (seemingly) obvious choice for any partner looking to build an open source practice appears to be to acquire expertise and skill-sets across all open source solutions, this approach is actually sub-optimal for the current business climate.
Enterprises these days would rather work with partners that they consider ‘trusted advisors’ rather than ‘resellers’. This is even truer for open source solutions given that the concept is still foreign to many enterprises and that services are such a big part of expenditure. To that end, I would advocate that partners would be better served to start small – pick just one open source technology and then build a complete skill set around it to include implementation, integration, support and maybe even development. In parallel to focusing on just one open source technology, I would also suggest that partners focus on just one or maybe two industry verticals – this way they can develop a very thorough understanding of the market and business challenges facing most enterprises.
Dispel myths and communicate value
For most enterprises, the biggest roadblock to adoption of open source solutions is scepticism around security. One frequently cited misconception is that open source solutions are more vulnerable to security threats than their proprietary counterparts, in large part because the source code is openly available. However, the opposite is in fact true – open technology allows entire industries to agree on standards, encourages their brightest developers to continually test and improve the code, and ensures that the best patches are released quickly and proactively in the event of any vulnerabilities.
For other enterprises, the roadblock is inertia. Enterprises are often reluctant to switch to a new technology for technology’s sake. Partners need to be able to articulate both the business and the economic benefits. One of the biggest business benefits is that open source solutions are ‘vendor agnostic,’ increasing flexibility and interoperability as enterprises are no longer ‘locked-in’ with a vendor. From an economic standpoint, open source solutions have a much lower Total Cost of Ownership (TCO) than their proprietary counterparts.
All vendors are NOT created equal
Partnering with the right vendor is critical to building a robust open source practice. From a product standpoint, partners need to pick vendors that offer the solution sets that align with their choice of specialisation.
For example, if you choose to specialise in cloud solutions, then pick the leading OpenStack vendor – this will ensure that you will always have access to the latest solutions and technologies. From a capability standpoint, the vendor needs to have an effective and efficient critical response system and have the ability to provide troubleshooting support and patches on extremely short notice to handle vulnerabilities.
Secondly, the vendor needs to have a robust partner program, as well as a comprehensive training program to support the partner ecosystem. Finally the vendor should provide sufficient sales and marketing support, be it joint customer visits or joint participation in trade shows and other industry events.
In today’s hyper competitive world, enterprises are turning to IT solutions to gain the smallest (and in many cases fleeting) edge over the competition. The answer lies in cloud computing, big data, IoT, social and mobility technologies, and the way to effectively leverage these emerging solutions is through open source. Building an open source practice today will ensure you are relevant tomorrow.