The 451 Group: Ignoring Open Source May Expose Enterprise Software Vendors to Significant Risk and Result in Missed Opportunities.NEW YORK New York, state, United StatesNew York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Exploiting open source strategies can help enterprise software vendors and their investors achieve competitive advantage; Software licensing models that are a hybrid of open and proprietary approaches will proliferate pro·lif·er·ate v. To grow or multiply by rapidly producing new tissue, parts, cells, or offspring. The 451 Group believes that enterprise software vendors can no longer afford to ignore open source. It is a powerful force of change with both upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside and downside Downside The dollar amount by which the market or a stock has the potential to fall. Notes: You might hear someone say that the downside on stock XYZ is $10. What that means is that the stock could fall by this amount if things got bad. potential. In the worst-case scenario worst-case scenario n → Schlimmstfallszenario nt , open source can do severe damage - to licensing schemes and to legal definitions of intellectual property - if used improperly. The potential benefits, however, are also massive - making it important to clearly understand the critical path to finding upside in the commercial adoption of open source. Plus, as the lines between what is 'open' and what is proprietary blur, licensing models will increasingly contain hybrid approaches to code ownership and permitted use - meaning that nearly every piece of enterprise software will eventually contain open source elements. These findings are contained in a report released today by New York-based The 451 Group, a technology industry analyst company focused on the business of enterprise IT innovation. This report provides analysis of the market opportunity for companies that are building or investing in open source technology, or are using it in the software they deliver to enterprise organizations. "Potential adopters of open source software - whether investors, established software vendors, entrepreneurs or enterprise IT organizations - must weigh the risk and burden that open source imposes, in terms of choosing the right license, effectively managing communities of open source developers, assigning liability and other considerations, against the potential benefits of exploiting this development resource," said Martin Schneider Martin Schneider (* 1964 in Bad Homburg vor der Höhe), often just called "Maddin", is a German comedian, cabarettist and actor. Biography Martin Schneider grew up in Burgholzhausen, a district of Friedrichsdorf. Today he is living in Marburg. , Business Applications Software Analyst at The 451 Group. The 451 Group has found that software vendors, enterprise IT managers and investors all face four common obstacles to adoption of open source software, which are: --Software quality (or the lack of it) --Availability of commercial-grade support --Deliberately disseminated fear, uncertainty and doubt Fear, uncertainty, and doubt (FUD) is a tactic of rhetoric used in sales, marketing and public relations.[1][2] FUD is generally a strategic attempt to influence public perception by disseminating negative (and vague) information. --Confusion related to different license regimes. "Software vendors and investors can gain a sound competitive edge by exploiting open source business strategies - but too often the pragmatic benefits of development and dissemination dissemination Medtalk The spread of a pernicious process–eg, CA, acute infection Oncology Metastasis, see there of the software are obscured by irrational fears rooted in outdated ideological battles," said Schneider. "Since open source projects encompass every sector of the enterprise software industry, any vendor that isn't aware of the strengths and weaknesses of open source efforts that affect its products is placing itself at significant risk or may be missing out on a tremendous growth opportunity. Moreover, both enterprises and vendors alike will increasingly run across open source code in software that is proprietary - making it impossible to develop infrastructure tools and applications without open source elements as part of a hybrid approach." 451 analysts believe that the successful commercial adoption of open source strategies is likely to require technical, cultural, legal and commercial changes. Open source approaches are being adopted most readily where prevailing organizational culture  This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . is most amenable to it - a vendor that is already generous about revealing its code, or a company with a large proportion of open source contributors on its programming team, for example. The 451 Group found that risks and benefits also exist for investors and venture capital firms Name Location Founding date Managing Partners/Directors Specialty Capital managed 5AM Ventures Menlo Park, CA; Waltham, MA 2002 John Diekman, PhD (managing partner), Scott Rocklage, PhD (managing partner), Andrew Schwab (managing partner) life sciences $200M [1] considering or actively participating in investments in open-source-based technologies. Standard assumptions about valuations, revenue models and business plans will need to be reassessed before pursuing investments. And soon all software companies will have an open source element in their business plans. When that happens, the distinction between open source and traditional companies will blur - as part of an overall trend toward hybridization hybridization /hy·brid·iza·tion/ (hi?brid-i-za´shun) 1. crossbreeding; the act or process of producing hybrids. 2. molecular hybridization 3. that The 451 Group believes is occurring - and the novelty of investing in open source models won't be so evident. "There is an opportunity for VCs to alter the way they operate. VCs should look for talented technical groups that are doing good work and proactively approach them about forming a company with funding. The rest of the open source community will be doing many aspects of due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. for free," said Schneider. "VCs must also identify what they believe the real, core asset is in an open source software vendor. When the software is being offered at varying degrees of 'openness,' core value-add and revenue streams can be very different than at a traditional enterprise software vendor." These findings are contained in a 451 Special Report titled "Cashing in on open source software." This report was led by Rachel Chalmers, Senior Analyst, Enterprise Software, with support from Schneider and John Abbott, Chief Analyst. The 119-page report examines the decisions that enterprises and vendors need to make when choosing whether to incorporate an open source approach into their businesses. It discusses how investors should view the use of open source in potential investment targets and how open source affects the value of and risk associated with investments made in this area. Fifteen case studies yield a considerable amount of actionable advice for other organizations considering adopting similar strategies. Key Companies Covered The report includes 15 in-depth case studies of companies that are building or investing in open source technology, or are using it in the software they deliver, including the following companies (although this is not a complete list of companies covered in various sections of the report): Compiere, Dresdner Kleinwort Dresdner Kleinwort (DKIB) is the investment bank of Dresdner Bank AG, part of Allianz since July 2001. Headquartered in London and Frankfurt and with an international network including offices in the financial centres of New York and Tokyo, Dresdner Kleinwort provides a wide range Wasserstein, eBay, IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , Independence Air, Index Ventures, Iona Technologies IONA Technologies, NASDAQ: IONA, began life as a campus company in Trinity College, Dublin and was founded by Chris Horn, Annrai O'Toole, Colin Newman and Seán Baker.[1][2] IONA maintains headquarter offices in Dublin, Boston and Tokyo. , JBoss, Microsoft, MySQL, Novell, Rustic Canyon Partners, Sevin Rosen Funds Sevin Rosen Funds (SRF) is a venture capital firm that was established in 1981 by L.J. Sevin and Ben Rosen. SRF was involved in the financing of ArQule, CIENA, Citrix, Cypress Semiconductor, Electronic Arts, Lotus Development Corporation, Silicon Graphics, and Vitesse. , SugarCRM and Sun Microsystems Sun Microsystems, Inc. (NASDAQ: JAVA[3]) is an American vendor of computers, computer components, computer software, and information-technology services, founded on 24 February 1982. . Report Orders To learn more about this report, or to discuss developing a client relationship with The 451 Group, contact Simon Carruthers, Vice President of Research Services, via phone at 212-505-3030 x-103, or via e-mail at: simon.carruthers@the451group.com. About 451 Special Reports 451 Special Reports provide a complete and comprehensive picture of emerging enterprise IT market segments - analyzing the technologies, the competitors, the marketplace opportunities and obstacles, and the implications for a variety of constituencies, including other vendor companies, the investment community and early-adopter IT end users. About The 451 Group The 451 Group is an independent technology industry analyst company focused on the business of enterprise IT innovation. The company's analysts provide critical and timely insight into the market and competitive dynamics of innovation in emerging technology segments. Clients of the company - at vendor, investor, service-provider and end-user organizations - rely on 451 insight to support both strategic and tactical decision-making for competitive advantage. The 451 Group is headquartered in New York, with offices in key locations, including San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , London and Boston. For additional information on the company or to apply for trial access to its services, go to: www.the451group.com |
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