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OSS: Ripe for Enterprise Apps

SAN FRANCISCO -- Open source software is moving off the desktop and up the stack. The next wave is enterprise applications, advocates said on Tuesday.

"These applications are not just something you run on a desktop or Web server, but something you might use to go run an enterprise," said Jonathan Schwartz, COO of Sun Microsystems in his keynote presentation at the Open Source Business Conference, held in San Francisco on Tuesday and Wednesday.

Open source advocates say that Linux and other open source software (OSS) has grown up and moved beyond its roots as a free operating system alternative to Microsoft Windows.

Schwartz said there's opportunity for ISVs to get a piece of the multi-billion-dollar enterprise software market. In fact, they'd better attack that market, he said, because basic infrastructure software has become commoditized.

A report by Yankee Group released on Monday validated Schwartz' point about the commoditization of server software.

"While researching the market traction for each vendor, we discovered that server operating systems are largely commoditized. Corporate users report a high degree of satisfaction with the baseline performance and reliability of all of the major server operating systems -- Linux, Windows and UNIX. Today, applications and services are the primary drivers that positively or negatively influence TCO costs, advantages and risks," Yankee Group analyst Laura DiDio said in the report.

According to Larry Augustin, CEO of MedSphere, there are other drivers for the emergence of open-source versions of "big software," such as applications for enterprise resource planning, customer relationship management and PBX. MedSphere provides an open-source version of a clinical information system developed by the U.S. Veterans Administration.

Augustin said established enterprise software makers spend as much as half their budgets on sales and marketing, instead of research and development, leading to software that's too expensive to license. He said open source enterprise software makers could be as profitable as licensed software vendors by letting their developer communities act as their advocates. Lack of license revenue would be offset by a decrease in the sales and marketing budget.

"Open source projects have large, enthusiastic free user bases you can build off," Augustin said. "You don't have to spend a lot of time educating the marketplace. You have a lot of evangelists out there already."

IDC analyst Dan Kusnetzky agreed there was a confluence of trends leading to enterprise applications. He said that in IDC surveys of North American and European enterprises, software licenses and hardware typically account for from 20 to 35 percent of costs.

"Enterprises are interested in the lower cost that open source offers, but the real costs are in the IT staff needed to support it," he said.

Bob Gett, CEO of Optaros, a professional services firm focused on open source enterprise applications, said the driver for enterprise adoption of OSS is more choice and more control, not lower cost. While customers may perceive open source apps as cheaper, Gett said that administration and IT labor costs might equal the savings in software licenses.

"These are pretty sophisticated IT shops that tend to do more on their own," he said. "They like control over their software: when they make changes, what features they use, what feature they don't use."

Based on customer interviews and engagements, Optaros has concluded that the sectors ready for prime time are content management, business intelligence, portals, collaboration tools and identity management, while enterprise interest in open-source ERP is just beginning. Gett said there are plenty of open source components that businesses can put together to make custom platforms.

Kim Polese, CEO of SpikeSource, a new provider of testing, certification and support services for OSS, said that the availability of modular software products makes for an endless list of specialty applications. Do-it-yourself software customers will help develop a thriving, mature marketplace of open source applications.