Chronicles of a Wandering Mind

At iFountain, we’ve embraced the open source business model since the beginning of 2008.
Since then, we’ve been working on not only moving our code but also our development practices to open source. We’ve established a separate site for open source development, ifountain.org, where everything is out in the open, source code, documents, discussions, project plans, issues, etc. We’ve also defined what we mean by “open development“  and we try to live by it.

So far, the development is still done by iFountain employees. It should be no surprise to anyone, it wasn’t to us. Building a community is not easy, and takes time. Int he foreseeable future, we don’t expect a lot of external developer help (though it would be more than welcome) but we hope that we can establish a community that would guide where the project is heading. Most IT management folks (including this one) are not software developers, hence they may not be able to contribute code, but they are the subject matter experts, have first hand knowledge of what is needed in the field, hence can help the project immensely by guiding it with suggestions, feature requests, evangelizing etc.

The importance and value of the community for a project, even one supported by a commercial entity, is well explained and understood, so no need for me to repeat it here, needless to say, we will continue to build our community as the project takes shape. Sooner the better.

Netcoolusers is a lively mailing list based community and I started following it after I got my NCC back in 2000. There has been several discussions on the list about alternative web based interfaces that take advantage of web 2.0 technologies, etc. in the past. Several people had were interested in alternatives, stating that Webtop does not meet their requirements and some had to build in-house solutions themselves. I had not mentioned RapidInsight in the list at the time, even though it was such a solution since it was a commercial product.

Today, I’ve sent an email to netcoolusers mailing list announcing the RapidInsight open source project in the list, as it is directly relevant to the Netcool community.  Email had brief summary of the motivation for the project has come from, gave some highlights and included a link to the open source site, where interested parties can learn more about the project and take a look at the demo, download the software etc.

Next think I know, I was kicked out of the mailing list by the administrator (Jim Popovitch) for “unsolicited commercial solicitation”. You can take a look at the email and judge yourself. I certainly don’t see it as such. There is well established precedence where open source projects are mentioned freely including ones by the mailing list admins. I replied to Jim’s email explaining my point of view and left it at that. As much as Netcoolusers is a “community”, it is controlled by two people afaik, and there is no mechanism for due process. They make the rules and they are the judge and the jury.

Just sigh and move on… But it didn’t end there.

Others responded to my email, asking questions, naturally unaware that I can no longer respond to their emails, as there is no indication that I got kicked out.  Then came this email from another list admin, Jacob Steinberger.  Now hold on a minute! How about distorting the facts, and spreading misinformation. Is that not against the TOS of the mailing list? No? How about just plain decency?

Jacob writes: “While the email initially looks like a great thing to help the IBMuse Netcool GUI move in a direction that we have longed for the last half of his email and Blurry’s forwarding of his private email, shows that he (and iFountain) are out to make a buck.”

The last half of my email lists some of the RapidInsight features describing why it may be off interest to users, and asks for feedback and participation. That somehow suggests that I have evil intentions to “make a buck”? Oh no, iFountain will offer support for an open source project, run for the hills! bad, bad boy!

What I described to Blurry was that we plan to follow what’s referred as the JBoss model, as it is well established in the market. The product will be available with GPL v2 license and we will offer support and professional services. Having said that, bear in mind, I did NOT even mention any of this in my email to the list.

“Trying to sell something, whether it’s a product, consulting services or support, is strictly against the TOS of INUG. Any violators of this  policy will be removed from the list.”
There is nothing about a sale of product or services or support in my email to the list. Just the announcement of availability of RapidInsight as an open source project, that’s it. Announcement of an open source project is not a sales offer. The information on our intend to offer support was in a private email to Blurry as he asked about it directly. He chose to forward the information to the list when he found out I got banned from the list.

If that’s not bad enough, he did not stop there:
“Additionally, when a potential vendor’s website (iFoutain’s) states …

Thou shall have unrestricted access to the software. The software products will be available for download from the website without barriers. The community will be able to download and start using the software right away.
… yet requires you to create an account to download software, you have to sit back and go “humm”.”

My email to the list included one link to the ifountain.org site. From there, there is a link to download the mentioned software directly, no user accounts needed. And as I mentioned above, not only that, the source code and all its revisions (subversion) are also available directly from the site without any user restrictions, as it should be for any open source project. Why all the haste to judge?

Banning someone from the list based on rules and interpretation of those rules you’ve defined yourself is bad enough. Bad mouthing someone with false information when they can no longer respond is simply wrong. I’ve emailed Jacob before I posted this to give him a chance to correct himself but have not heard back from him.

This week HP has announced to acquisition of EDS for $13.9 billion. Naturally, the acquisition of such size got fair bit of attention in financial circles, talking heads analyzing the numbers and speculating what it may mean for two companies in very broad terms.

With this acquisition, HP becomes an IT services behemoth, second largest only after IBM, and going forward, competition between IBM and HP is expected to be fierce, especially for large outsourcing deals. Obvious enough.

Yet this deal will likely to have massive impact on IT industry in general, not just outsourcing sector. Following IBM closely, as a strategy, HP has just created the second vertically integrated one stop IT shop for customers, providing everything from hardware to software to services. To appreciate the importance of this acquisition, I believe we need to consider this deal along with other acquisitions HP made recently (Mercury Interactive, Opsware, Peregrine,Trustgenix,Tower Software, SPI Dynamics, Bristol, etc.)

With these acquisitions along with already substantial Openview family, HP has a large portfolio of IT management software and now a large services organization that can deliver solutions using these tools. Naturally, HP services organization will still have to collaborate (when it has to) with 3rd parties to meet the requirements of their customers and not just push HP software, just as IBM professional services do, at least in theory.

In practice, experience suggest that it’ll become increasingly harder for other vendors to compete with internal HP products. Projects will have to justify why they need to use 3rd party products instead of internal ones and often the path of least resistance will be to use internal ones unless the customer explicitly dictates otherwise.

I think this is a major problem for any player that is not a one stop shop IT services provider. Software companies without substantial IT services organizations as well as independent IT services companies and systems integrators may find themselves cut off from significant portion of the market.

HP has a large and effective ecosystem. The mutually beneficial relationships HP has with its channel and integration partners has long played a significant role in HP’s success in the IT management market. With this move HP is no doubt jeopardizing its relationship with its ecosystem. It is not surprising however that HP thinks the risk is worth it, and the gains that will come from becoming a one stop shop will more than compensate for the loss of business it generates through the ecosystem.

Enterprises have long been working on reducing the number of suppliers and work with handful of preferred ones and the allure of one supplier that is responsible for everything seems to be too hard to resist for many.

The impact of loosing the channel may be greater than anticipated. Independent services organizations that partner with software companies acquired by IBM in the recent years have been finding themselves competing with their old partners and some of them have been making moves to alternatives. With HP adding a large services organizations, it also becomes a competitor for any services organization that may previously be a partner that sells and implements software products from HP’s or IBM’s portfolio of products.

BMC CEO was quick to move in to take advantage of the coming conflict and characterizes EDS acquisition as “declaration of war” by HP to its ecosystem. BMC also has been in an acquisition binge lately, acquiring BladeLogic, Emprisa Networks, RealOps and Proactivenet within the last year but BMC does not have a large professional services organization so it makes to position itself as the supplier of choice for professional services companies that will be alienated by the HP EDS acquisition. CA may also make a similar move having assembled a solid set of tools through acquisitions (Concord, Aprisma, etc.).

However, if HP’s strategy works out and HP software products starts to gain marketshare, it will not be surprising to see further consolidation in the market in the form or pairing between services organizations like Accenture and software companies like EMC, CA and BMC.

IT market is more and more looking like a Highlander movie. There can be only one a few.

As it is in many market segments, companies in IT management industry are looking for an open source business model that works.  The prevailing approach seems to be the hybrid model. In this model, the companies offer both open source and proprietary versions of their products and proprietary versions typically provide additional high end features that is not available in the open source versions of their products.

This business model is only available to the companies that have the IP ownership of the open source code and not an option for more traditional open source projects where IP rights are distributed among many people and there is no single holder.

The model is a win win for both the vendors and the customers provided that the open source versions of the products are viable solutions that stand on their own and not just a ramp that requires every user to upgrade to the paid versions. Customers get access to open source software that solves their problems and vendors get well established benefits of having an open source community.

Not everyone agrees with the above statement.  There is a discussion that started with cote naming the open source IT management companies “little 4″ as contrast to the proprietary “big 4″ (IBM,CA,HP,BMC), and heated up again with QClusters exit from the openQRM project, hence little 4 becoming “Little 3″ .

openQRM was not really in the same category with the other 3 in little 4 anyway, and its exit provided an opportunity to reevaluate the open source IT management companies. John Willis took a more minimalist approach, coming up with his own name, calling Hyperic and Zenoss the “mighty two“, others suggested Groundwork and OpenNMS should round up the new Little 4.

John states that Hyperic and Zenoss has a better chance to succeed in the enterprise as they are software companies with significant funding and solid infrastructure. Not surprisingly opposing view comes primarily from the OpenNMS camp (read the comments in John’s post).  Tarus is not a fan of the hybrid model. He has criticized the hybrid model (and hence Hyperic and Zenoss), claiming it to be flawed, several times in his posts and comments. He advocates the OpenNMS group’s professional services only model as the superior (and even the only viable) model and states the success of the OpenNMS project as the evidence.

The hybrid model is not an option for OpenNMS group as (unlike hyperic/zenoss) they don’t own the IP rights for the code.  OpenNMS apparently has an active developer community that contributes code (surprisingly rare as more and more open source code is developed by few individuals or companies) and OpenNMS group has one or two people who may be dedicated to development rather than services.  OpenNMS folks seem to be content with their position, but I wonder why they don’t aspire for more.

Despite being compared to Hyperic and Zenoss, OpenNMS is different product. IMHO, it is the only true (open source) “network monitoring” product available. Hyperic/Zenoss/Nagios are primarily for server monitoring with some capabilities to monitor network devices, yet still not an option for serious network monitoring.  The paste of opennms development is slow which is understandable given the fact that there is no dedicated development team. Let’s imagine for a second that OpenNMS group also used the hybrid model and external funding to staff developers to work on opennms. Could they have developed a discovery engine that auto discovers the network layers (layer 2, 3, routing, etc.)? Visual maps to represent these layers? What is OpenNMS offered this additional functionality only in the paid version but all the functionality available now was still available. What if on top of what is currently available, foss version of opennms had gotten a package that can be installed and run on windows easily 3-4 years ago? Would having the option to pay for this additional functionality be a bad thing for the community? Would removing entry barriers such as extensive documentation and easy installation packages not help increase opennms user base?

Open source companies need to continue to innovate in the business model level to find ways to fund the projects that work both for the companies and the communities. Hybrid model is what has emerged so far as one viable option. It is not perfect but it offers an alternative that is in many ways better than pure professional services model. There does not have to be “one true way”.  The alternative may be getting squeezed out of the market. Tarus likes to compare OpenNMS with HP and the likes, suggesting that OpenNMS is a viable alternative to them. It is. but it is playing the catch up game instead of leading the field. The tougher competition for opennms (and other open source projects) is not coming from the large proprietary companies like HP and IBM, but from small, agile companies like solarwinds and adventnet with nicely packaged, easy to use products with often lower prices than the open source companies.

If open source companies cannot innovate both business model and technologically, they may get squeezed by these companies in the lower end of the market and the larger proprietary companies with massive sales forces in the higher end of the market.

Continuing the story of two groups of entreprenuers who are starting up a software company in Turkey and US. In the previous post, The American entrepreneurs have completed their legal requirements and have started developing their product, yet their Turkish counterparts are still struggling and face with the unexpected regulations and associated cost at every step of the way. Will they finally be able to actually start developing their product anytime soon?

The Turkish entrepreneurs now have a certified accountant to help them with the accounting. However, just when they thought that they were free to focus on software development, their accountant informs them that since they are working for themselves, they have to become member of a semi-governmental association that provides benefits (health care, etc.). Apparently, for self-employed people and this is mandatory! They are “touched” by the thoughtfullness of their government in ensuring that they have benefits. The fact that they have not made any money and will not make any for the next year or so is a minor detail. If they knew, their American counter parts would be saddened that unlike Turkish government, their government does not care enough about them to force them to pay benefits to secure their future! How inconsiderate of them.

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In the last entry, we’ve started to compare the experiences of fictitious entrepreneurs in Turkey and US, and found out, setting up the legal entity is much more expensive and difficult in Turkey than it is in US. Our American entrepreneurs have already dove into their work, yet our Turkish entrepreneurs are still struggling to figure out all the things they have to do. Unfortunately for them, the hassle of setting up the legal entity is not an exception but an ongoing struggle.
Our entrepreneurs will first have to develop their product, hence for the first year, they will have very limited commercial activity. They don’t plan on hiring any employees, they plan to use one of their appartments as their office, and they will not buy/sell much, may be some computer equipment.

The American entrepreneurs use one of their appartments as the business address, buy a domain name for their company and subscribe to a hosting provider. They now have a website (their virtual office), business email, and broadband internet. Their monthly cost is less than $100,an insignificant amount. They only need enough money to be able to live, nothing more (other than $100/month) is needed. The only paperwork they will have to do is to file for taxes (which they will not have any) at the end of the year. It will be a simple process if they don’t have any activity, and even if they did, they can do it easily using the resources over the web. They will not have to spend more than 2 days over the year for the paperwork.
The Turkish entrepreneurs however, just found out that by law they have to have a certified accountant, further more the “fee” for the certified accountants is regulated by some semi-governmental organization. They have to pay about $250/month to an accountant for bookkeeping. This is a big blow to them, since it is a lot of money for our budding entrepreneurs. They hear that it may be possible to find an accountant that provides the service for less (against the regulations), but doing illegal things (or working with an accountant that does) makes them nervous so they decide to do the things by the book and look for a proper accountant.

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I don’t have any concrete data based on research but I think it is safe to assume that the US has the most “friendly” business environment for high-tech/software startups. The overhead of setting up a company is very low. Many developing countries on the other hand have very complicated regulations and procedures, and it is quite expensive to setup a company. This is quite frankly insane! The reverse correlation between the economic development of a country and how long it takes to setup a company is well researched, and high quality data is available, thanks to WorldBank.

I’ll use US and Turkey as examples, as I also had the first hand experience to start companies in both countries, hence have personal experience in addition to the available research data. In our case study, we have three computer science graduates who are high on talent and ideas that can change the world, but low in cash, trying to start up a software company. We’ll go through the motions of starting up a company for these young entrepreneurs both in Turkey and in US.
First, let’s look at the research data. According to doingbusiness.org, it takes $210 and 5 days to setup a legal entity in US vs $1,040 and 9 days in Turkey. So the cost of setting up a company is 5 times the cost of setting it up in US. Our entreprenuers in Turkey are in a disadvantage. This is bad for Turkey, in fact, it is much worse than it looks.

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