The Value of Open Source Software

Open Analytics Summit

Eddie Pickle

March 25, 2013

who is this guy?

I’m a geo guy working for a geo software company

As we know,

There are known knowns.

There are things we know we know.

We also know

There are known unknowns.

That is to say

We know there are some things

We do not know.

But there are also unknown unknowns,

The ones we don’t know

We don’t know.

S#!* I don’t knowI don’t know!

S#!* I don’t knowS#!* I know

S#!* I don’t knowI don’t know!

S#!* I don’t knowS#!* I know

S#!* I should know

S#!* I don’t knowS#!* I know

S#!* I don’t knowI don’t knowS#!* I should know

about open source

development search

big data nosql

not a fad

not trendy

trendtrend

etc!...

“how do you make a livingwriting free software?”

etc!...

clou

d re

adin

ess

licen

se li

abili

ties

flexibility

staff development

market power

#0: technical superiority#0: technical superiority

• fewer bugs

• more modularity

• better security

• faster release cycles

• better performance

more developers and testersthan any one companycould possibly field

#1: cloud readiness#1: cloud readinessscalingscalingrapid deploymentrapid deployment

$0 capital cost

your server

$N per core X cores

Ouch!

$N / instance X instances∗

Ouch!

#2: license liability#2: license liability(lack of)(lack of)

30 30

10 5

proprietary software licensesare a legal liabilitythat must be managed

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#3: flexibility#3: flexibilityheterogeneityheterogeneity

• “flexibility” is an attribute of components–flexible components are easy

to connect and adapt

• “heterogeneity” is an attribute of the system–heterogeneous systems use

parts from many sources

or ?

internal services external wms

corp

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ArcSDE

internal services external wms

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internal services external wms

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corporate warehouseoffline for 28 days

DatabaseDatabase

GIS ServerGIS Server

Web FrameworkWeb Framework

Data ManagementData ManagementToolTool

ArcSDE

open source is a toolthat needs to be made usefulwithin the contextof existing systems

homogeneous systems and single-vendor strategiescan be convenient

but,lack flexibilityfor fast adaptation

and,homogeneous systems can be susceptible to“population catastrophes”

#4: staff development#4: staff developmentand recruitingand recruiting

“unobvious motivationsfor adoption”

“Contrast an open-source implementation position with a ‘defined skill set’ job…”

“...where the first diagnostic action is to reboot the server...”

“...and the second is to call the vendor and wait in a telephone hold queue...”

“It is easy to understand why open-source jobs are prized.”City of Northglenn, CO

#5: market power#5: market power

• More and better web services are required

• Need to serve more users

• Need to store and process more data

• Have shrinking budgets

Many organizations are in a hole

55

When you find yourself in one…

Stop digging!

The first law of holes

56

Functionality and power

Costs

Control

Relative Value in Software Systems

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The value of software can be expressed with a simple equation, where

V = Value

F = Functionality and Power

O = Operational Costs

C = Control

Relative Value in Software Systems

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Relative Value in Software Systems

V = (F/O) * C

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How much a desired object or condition is worth relative to other objects or conditions

Value increases…As software functionality increases relative to costs

As enterprises achieve more control (market power!)

Value

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Overall software utility

Includes…– Reliability (system up-time and “buggy-ness”)– Scale (numbers of users or amounts of data) – Power (operations enabled, data or collaborators

incorporated into applications– Etc.

Functionality and Power

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Software costs include…– License– Maintenance– Hardware and infrastructure– Personnel costs to evaluate, test, deploy, operate and

maintain systems– Etc.

Organizational Costs

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The control an enterprise has in its options to access, use and maintain a given software system.

– Legal rights of access to the source code– Number of available suppliers and ability to influence– Access to the software over the desired length of use

• And the probability that access might be limited or revoked

Control

63

Relation of C (Control) to V (Value)*

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Binary log function is postulated as model

*No Control = ? Value

• (Un)reliability

• Un-hackability

• Agency

• Lock-in

• Network Externalities

Harms of Closed Source

65

Evolution of Open Source

Give users control

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1. Build out functionality

V = (F/O) * C

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2. Lower costs

V = (F/O) * C

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3. Increase Control

V = (F/O) * C

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• Ability to choose – Alternative suppliers

– Bring in-house

• IP rights– Right to modify

– Right to determine end of life

• Right to work on your schedule• If you don’t have these, you have no Control

– And that will cost you

Elements of Control

70

How does changing Control affect Value?

It’s just math…

71

Control can affect Functional Power

V = (F * C) * 1/O

V = (F * 1) * 1/O

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Assume C = 1 for two alternatives

Control can affect Functional Power

V = (F * C) * 1/O

V = (F * 1/2) * 1/O

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Assume C = 1/2 for one alternative

Control can affect Costs

V = (1/O * C) * F

V = (1/O * 1) * F

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Assume C = 1 for two alternatives

Control can affect Costs

V = ((1/O)*C) * F

V = ((1/O)*(1/2)) * F

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Assume C = 1/2 for one alternative

Closed SourceUnsupported Open

SourceCommercial Open Source

(OpenGeo Suite, etc.)

Functional Power, F

Medium highStrong Functionality offset by lower reliability and scalability

MediumReliable and scalable.

Medium highHigh reliability and scalability. Expanding functionality

Operational Costs, O

HighSoftware license costs + Maintenance costs + high Infrastructure costs due to poor scalability.

MediumNo software license costs, but all maintenance costs are left to users. Good Scalability resulting in lower scalability costs.

LowNo software license costs. Expert support lowers Maintenance costs, and strong scalability lowers infrastructure costs.

Control, C LowClosed source leads to asymmetrical relations with customers and lowers customer control and choice

MediumOffers a solid alternative to closed source. Do it yourself, or hire as needed.

HighAdds to control and choice by creating an excellent third option for enterprises, the ability to modify on your own and/or have access to OpenGeo resources.

76

Value Comparisons

Closed Source

Unsupported Open Source

Commercial Open Source (OpenGeo

Suite)

Functional Power, F Medium high Medium Medium high

Operational Costs, O

High Medium Low

Control, C Low Medium High

Relative Position on V = F/O * C

Medium Low Medium High

Comparing Value for Software Alternatives

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• Over time measures of relative value will shift

• The primary fields of contention would seem to be Functional Power and Organizational Costs

• The role of Control is central

Questions and Observations

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• Both open and closed source software may continue to increase in Functional Power, but the lead held by closed source is likely to shrink

• It is likely that closed source providers will simply lower price– They will be “borrowing” against future functionality (i.e.

today’s discount = tomorrow’s reduced capability)– They will look to maintain Control as that is the long term

lever towards shifting Value their way

Questions and Observations

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clou

d re

adin

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licen

se li

abili

ties

flexibility

staff development

market power

Keep In Touch Check out our blog at:

http://opengeo.org

Email me at:

Eddie Pickle

epickle@opengeo.org

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