Open Source as IT and Business Strategy

(CC) Prof. Karim Baïna, ENSIAS at « 4ème Journée Open Source ENSA Marrakech », March 31st, 2012

Open Sourceas

an IT & Business Strategyfor emergent countries

Prof. Karim Baïna

Responsible of Alqualsadi research teamon Enterprise Architecture

ENSIAS, Mohammed V Souissi University, Rabat, Morocco

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« no national government, if it had alternatives, would have chosen during the 20th century to accept

dependence for steel or petroleum on single or small number of

suppliers based in another nation » Steven Weber, 2003.

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Outline

1. Introduction

2. Opportunity study of open source adoption

3. Open source as a IT strategy

4. Open source : an IT strategy leveraging for Business strategy

5. Open source as a Business strategy

6. Emergent countries and open source software adoption

7. Current state of Morocco in terms of open source

8. Brazil – a Model to follow

9. References

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Introduction –IT/Business Strategy

Adapted by Preston Coleman et al., 2006 from Henderson & Venkatraman (1990)

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http://www.strategic-alignment.com/

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Introduction – Business/IT Alignment Perspectives

Adapted by Preston Coleman et al., 2006 from Pap (1995)

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Alqualsadi research team Enterprise Architecture, Quality of their Development and Integration

Alqualsadi* research team stands forEnterprise Architecture, Quality of their Development and Integration

* Abou Al Hassan ibn Ali ibn Muhammad Alqualsadi (1412-1486)Arithmetics, Algebra, Astronomy (father of X and √ symbols)

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Open source as a Business opportunity for governments & private sector (1)

● Equity : Strengthen brand and Build brand equity

● Education & Human ressources :

– Develop Regional HR capacity building more qualified than off-shoring point of view

– To raise mind share

● Governance

– Improve effectiveness, efficiency

– Minimise country/enterprise IT business model dependence to commercial monopoly of an elite group of suppliers (for IT sector : e.g. proprietary software retailers)

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Open source as a Business opportunity for governments & private sector (2)

● Economic development

– Develop a local software industry in the IT sector with new business opportunities & models

– Develop Regional markets (local language support – not just English, French etc.)

– Exploit indirect revenues of OSS services

● Budget economy

– Reduce IT budget (CAPEX) in the cost model

– Make software affordable

– Save foreign currency

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Open source as a Technical Opportunity for governments & private sector

● IT Governance

– Handle definitely IP rights & licences (GPL, LGPL...) establishing open source strategy rather than tolerating software piracy

– Let the licence price (if applicable) a secondary decision criteria for the « build-versus-buy-or-integrate your self » questions

– Minimise country/enterprise IT infrasctructure dependence to commercial monopoly of an elite group of suppliers

– Share IT risks, ressources/knowledge, value/successes, performances with the world wide open community

● IT Reliability

– Keep faults/bugs correctable by the users

● IT Security & autonomy

– Keep algorithms tranparent to the users

● eg. governments, such as China, perceive proprietary software’s hidden protocols as threats to their national security, Nir Kshetri, 2003

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Open source as a Technical Opportunity for governments & private sector –

Introduction to IT Cost Model

Total Cost of Ownership may be computed as follows

1. Capex : The "purchase price"* of the system (hardware & software licence)

2. The cost of switching to the new system (« In-Transition » - entry ticket)(deployment costs, training costs, project management costs, adaptation/development/integration costs...)

3. Opex : The cost of maintaining the system (operations staff, help desk, staff who fix problems, technical staff on supporting the live IT, technology upgrades and refreshes, operation and support management costs)

4. The cost of switching away from the system (« Out-Transition » - exit ticket)(cost of dependence on black box system not based on standard/open formats/protocols)

David Chisnall, 2006

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OSS Capex

● When labor costs are high, as it is in developed countries, the Capex is a small fraction of the TCO. However, when labor costs are low, as it is in developing countries, the license fee can easily be the dominating factor of the TCO.

● OSS of course typically has little or no license cost compared to proprietary software.

● NB. * WinXP (+MSOffice) Cost (normalised with US$ cost of live 2003) =

– (Cost in USA) $560 * (U.S. GDP p capita / Country GDP p capita)

Sanjiva Weerawarana et al., 2004 & Rishab Aiyer Ghosh 2004

In Morocco, Piracy is about 60%(Dounia Essabban, 2006)

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Does open-source reduce the cost of IT investment in developing countries?

● Quite possibly. We already see just having the choice and the competition offered by open source being used to reduce costs.

● However, I think that if the developing country is serious about not just seeing IT as a cost center, but as a requirement for national development, the real advantage of open source ends up being able to build up your own knowledge base.

● And that is not cheap in itself – you’ll likely pay as much for that as you’d pay for a proprietary software solution.

● The difference being that with the proprietary solution, you’ll never catch up, and you’ll have to pay forever, without ever learning anything yourself.

Linus Torvalds, Father of Linux

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Open source as IT strategy

Sanjiva Weerawarana et al. 2004

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Implementing OSS IT Strategies

● At a high level of generality there are three sets of policy implementation options to be considered by governments:

– Formal approaches (such as legislation or a government strategic plan) versus more informal, flexible approaches to letting OSFS use evolve.

– Level of involvement : subnational, national, regional collaboration.

– Mode of development : public sector adoption of OSFS versus private sector adoption, and collaboration among various users.

Country Formality National sub-national

regional anti-dependence

Security & autonomy

IP Rights

Brazil High ** ** * **

Argentina Medium-High

** **

China Medium ** * ** * **

India Low * *

Steven Weber, 2003

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What kind of policy frameworks are appropriate to enable the success of

open-source in developing countries?a) Hold off on Internet tariffs, licensing, and control until the industry is mature enough that one

understands its dynamics. As I understand it, Ghana is having problems right now with cybercafes providing Voice Over IP technology, which is seen as being contrary to the stateowned telecommunications company. Since open source only works over the Internet, policies that favor the use and spread of the Internet are essential to building a healthy open source community.

b) Give strategic weight to IT vendors or internal solutions that incorporate open source technologies, but don’t mandate that all IT solutions are open source !

c) Create a “CTO” for Open Source technologies in government who reports at a very high level. Have this person be responsible for staying on top of the use of OSS in the government, establishing standards, encouraging different groups to work together on common solutions, etc. Such a person may communicate very frequently with those outside the country as well.

d) Have public education facilities that teach technologies focus on open source technologies as much as possible. That is, when someone takes a class in Operating Systems, have them learn about how they work by studying Linux.

e) Provide some funding, not a huge amount but enough for a dozen techies plus a manager or two, whose job it is to ensure that the popular OSS software in the world is localized for the language of the developing nation. Most OSS these days have a good story with respects to support for alternative charsets and encodings, but simply need the manpower to provide and maintain the translation bundles. Doing this legwork helps ensure the OSS tech. remain available for this nation citizens.

Brian Behlendorf, Co-Founder Apache

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Open source as IT strategy – obstacles in emergent countries

● Power of software industry lobbies

● Free software Capex & Psychological price : « expensive is better »

● Globalisation & Agressive marketing : « brands obsession »

● Inferiority complex : « foreign is better »

● Confidence in Companies more than on Communities : « tailored & customised technical support »

● Absence of Open source in government IT policies

● Government IT policies are more off-shoring oriented

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Open source : an IT strategy leveraging for Business strategy

– alignment map exampleSanjiva Weerawarana et al. 2004

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Open source as Business strategy – business models


Global marketsDomestic markets

Wilfred Dolfsm, 2006

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Open source as Business strategy business models for open innovation through

OSS development

● 4 “Open Innovation” models for OS as a Business Strategy

– Pooled research : Pool resources to innovate in a common platform, exploit results (e.g. Linux, Mozilla)

– Spinouts : Release some non-core innovation in a separate body, but stay involved (e.g. Eclipse, OpenSolaris, Jikes, Beehive)

– Selling complements : Income from complements, shared innovation in a common OSS core (e.g. Oracle Http Server & IBM WS/Apache, Safari/Konqueror, Android & Apps /Linux)

– Donated complements : Income from a proprietary core innovation, seek donated labor for valuable complements (e.g. Early BSD Unix, Matlab Central)

Joel West et al. 2006

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OSS development Business Strategyvs off-shoring/outsourcing

Business Strategies● environment the country is well suited to exploit outsourced and

offshored manufacturing and services of OSS products

● OS provides a unique opportunity to build software development skills in areas of the software stack, which do not form part of the bread and butter off-shoring/outsourcing work, which developing countries are typically exposed to.

● It is likely that the off-shore model, rather than the outsourcing model, will be the first approach in these businesses, as that allows businesses in developed countries to retain a degree of control and for the developing country to yet have a viable business model.


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Open source as Business strategy – some conditions for success

● High level sponsorships : governments, companies, communities, niche, donnors

● High IT infrastructure development

● Inexpensive technical manpower

● High IT skill developers & developer communities– one of the most successful open source software foundations of the

world, the Apache Software Foundation, uses community strength as the litmus test to decide on whether to embark on a project

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Developed countries and OSS adoption

Jean-Jacques Gauguier et al., 2005adapted from Dravis (2003) and Weerawarana & al. (2004)

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Emergent countries and OSS adoption

Jean-Jacques Gauguier et al., 2005adapted from Dravis (2003) and Weerawarana et al. (2004)

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Current state of Morocco in terms of open source (1)

● Annual National Open Source Contests

– Innov'IT (ex-CMOS) since 2008 sponsored by the Association of Information System Users in Morocco (AUSIM)

– Apps Challenge (ex-Android Development Challenge) since 2010 sponsored by a telecom operator

● Annual National Open Source days

– Software Freedom Day at Casablanca (since 2009)

– Each Engineering School or Science Faculty has its own Open Source day & Linux Install Party (since EMI 1999)

● Education :

– Many Universities include OSS in their curricula

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Current state of Morocco in terms of open source (2)

● OSS in Ministries & Public Administrations :

– More than 40% of use (mainly OS, Office Suites, Programming frameworks) Taieb Debbagh, at RALL 2007 - 3ème rencontres africaines des utilisateurs de logiciels libres)

– Ministries of Finance, Cooperation and Foreign Affairs

● OSS in Enterprises :

– Many OSS Service Enterprises are created (SSLL - Sociétés de Service en Logiciels Libres)

– Many Businesses adopt OSS “for practical issues not for free software ideology” : LAMP, Spring, Apache, Tomcat, Jboss, Liferay, Alfresco, jbpm, Activiti, Bonita, OpenERP, Sugar CRM, Open LDAP, Pentaho, Mule ESB, Talend, Zope, Plone, Joomla, Drupal, ...

● OSS and Moroccan IT Strategy & High Level sponsorship :

– OSS is not mentioned by the Moroccan digital strategy “Maroc Numeric 2013”

● OSS Developers & Users Communities & Associations :

– Among others : OSIM (Open Source In Morocco), Ubuntu-MA...

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Current state of Morocco in terms of innovation :The Global Innovation Index 2011 - ranking

--

HI : High IncomeLM : Lower-MiddleUM : Upper-MiddleLI : Low Income

ECS : Europe & Central AsiaMEA : Middle East & North AfricaSSF : Sub-Saharan AfricaEAS : East Asia & Pacific;SAS : South AsiaNAC : North AmericaLCN : Latin America & Caribbean0 .0 0 8.75 17 .5 0 26 .2 5

INSEAD 2011

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INSEAD 2011

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Brazil - A Model to follow

● By mid-2002, many Latin American countries such as Brazil had proposed bills mandating the use of open source in government organizations.

● Brazil is one of the countries where policies regarding adoption of FOSS have been successful, notably in the states of Rio Grande do Sul and Pernambuco. Four cities – Amparo, Solonopole, Ribeirao Pires, and Recife – have passed laws giving preference to or requiring the use of software libre, and other municipalities, states, and the national government have considered similar legislation.

● The Brazilian government is recommending that its agencies have Linux installed in all new computers from 2004 on. Also, the Brazilian Navy has been using FOSS since 2002.

● Since 2000, the Brazilian government has been funding a large-scale open source GIS project. The project is TerraLib, an open-source library for GIS and associated applications (Câmara et al., 2000). TerraLib enables quick development of GIS applications and is available at www.terralib.org. In early 2006, more than 10 private companies in Brazil developed products using TerraLib. The latest Brazilian GIS market survey estimates the total market to be US$150 million, with 200 companies and 4,000 employees (Magalhaes & Granemman, 2005). The service provider market is estimated to be US$40 million. Companies offering GIS services based on open source software form 15% of the service provider market.

Gilberto Câmara, 2007

http://www.terralib.org/

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References

1. Steven Weber, Open Source Software in Developing Economies, 2003.

2. Sanjiva Weerawarana, and Jivaka Weeratunga, Open Source in Developing Countries, SIDA, Sweden, 2004.

3. Rishab Aiyer Ghosh, The Opportunities of Free/Libvre/Open Source Software for Developing Countries, -ICTSD Dialogue on the pro-development IP agenda forward: Preserving Public Goods in health, education and learning, 29 November – 3 December 2004.

4. Nir Kshetri, Economics of Linux Adoption in Developing Countries, IEEE Software, 21 (1), 74-81, 2004.

5. Jean-Jacques Gauguier, and Rémi Douine, Local Software and Local Content Production Challenge in Developing Countries. What Can Be Learned from Open Source and Creative Commons Paradigms, Communications & Strategies, N° 58, 2nd Q. 2005.

6. Joel West, and Scott Gallagher, Patterns of Open Innovation in Open Source Software, in Open Innovation: Researching a New Paradigm, Oxford University Press, 2006.

7. Preston Coleman, and Raymond Papp, Strategic Alignment : Analysis of Perspectives, 2006 Southern Association for Information Systems Conference, 2006.

8. David Chisnall, Making Effective Software TCO Calculations, InformIT, 2006.

9. Wilfred Dolfsma, Tight prior open source equilibrium: The rise of open source as a source of economic welfare, First Monday, Volume 11, Number 1 - 2 January 2006.

10. Gilberto Câmara, Frederico Fonseca, Information Policies and Open Source Software in Developing Countries, Journal Of The American Society For Information Science and Technology, 58(1):121–132, 2007.

11. Jesus M. Gonzalez-Barahona, and Felipe Ortega, Economic Aspects of Libre Software, 2010.

12. INSEAD, Soumitra Dutta ed, The Global Innovation Index 2011, Accelerating Growth and Development, 2011.

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Merci pour votre attentionavez-vous des questions ?

Prof. Karim Baïna

@kbaina

www.slideshare.net/kbaina/

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