What do Open Sources Apps and MGs have in Common?
I've not had the chance to speak with Dave Stephens since he launched Coupa officially this week, but I'm looking forward to digging deep into the Open Source eProcurement application in the coming weeks, and reporting my findings on Spend Matters. Michel Lamoureux has posted a great write-up already on Sourcing Innovation which I strongly recommend you check out. In general, I must say that I have some hesitations with Open Source applications, not because of the concept, but because of the willingness of companies to devote themselves to the cause, especially when traditional On Demand solutions are coming down in price, and SAP and Oracle are getting religion about reducing traditional implementation costs and headaches (now all you need is Imitrex to stop the pain rather than a full frontal lobotomy).
Now, don't get me wrong. Certainly, like MG enthusiasts who love going to gatherings with fellow rag top geeks, there's a market for Open Source business applications. But most organizations would still prefer a boring but reliable Honda (or maybe a Jaguar is a better metaphor given the actual total costs of maintaining the application over its lifecycle). And moreover, since so much of the cost of application deployment is tied up in customization, configuration, and business process modeling -- not to mention the costs of technology integration and supplier on-boarding -- the "free" side of Open Source becomes even less of an attraction when you consider the relative low cost of the application, database, and the rest of the middleware stack in the overall equation, at least today. If I were SAP, Oracle, and Ariba, I'd be very afraid over a 10 year time frame. But for now, Open Source applications are a novelty -- not a serious threat, merely eye candy. Still, one reason I'd bet on Coupa over Open Source CRM, HR, and other app areas is that Dave and company are targeting the cheapest and most impossible people to sell expensive applications to on earth: procurement professionals. It's a ready made audience if they can get it right.
- Jason Busch
Now, don't get me wrong. Certainly, like MG enthusiasts who love going to gatherings with fellow rag top geeks, there's a market for Open Source business applications. But most organizations would still prefer a boring but reliable Honda (or maybe a Jaguar is a better metaphor given the actual total costs of maintaining the application over its lifecycle). And moreover, since so much of the cost of application deployment is tied up in customization, configuration, and business process modeling -- not to mention the costs of technology integration and supplier on-boarding -- the "free" side of Open Source becomes even less of an attraction when you consider the relative low cost of the application, database, and the rest of the middleware stack in the overall equation, at least today. If I were SAP, Oracle, and Ariba, I'd be very afraid over a 10 year time frame. But for now, Open Source applications are a novelty -- not a serious threat, merely eye candy. Still, one reason I'd bet on Coupa over Open Source CRM, HR, and other app areas is that Dave and company are targeting the cheapest and most impossible people to sell expensive applications to on earth: procurement professionals. It's a ready made audience if they can get it right.
- Jason Busch
Most new software has a free entry product (including ebdex) - I do not think it is right to call this "open source"? I assume in Dave's case he may be giving away his code to developers - not sure about the licensing arrangements. In our case, we will offer our API free to others to build add-ons.
Its interesting that you selected two British (ok! jaguar is owned by Ford!) and one Japanese car manufacturers for the analogy. What happened to American cars? I used to drive a Dodge Intrepid when I was stationed in the Middle East. Loved to bits. Only thing I did not like was the automatic speed restrictor.
I agree with Manoj though about implementation. As we know - automating procurement is a BIG process change issue though, I'd argue, with far more likelihood of early value than anything CRM can deliver.
To explain to those not familiar with OS software:
Open source does not equal "free of charge". Open source means that the source code is made available for access and modification. There are many different open source software licenses, each of which has different rules about how to make the source code available, what you can or can't sell (for money), etc. The most well-known open source software license is the GPL (GNU General Public License), under which the Linux kernel is distributed. Under GPL, the source code must be made available, but 1) a vendor can charge you money for the distribution - whether they choose to charge you for the downloaded software or for the CD they ship to you; and 2) any modifications to the source code (derivative works) must also be released under the GPL license. The GPL does not preclude an open source software vendor (such as Red Hat) from charging for services, integration, updates to the code base, etc.
Thanks for all the points and clarifications. My usual comment time (PM) has been curtailed by a screaming infant the past few nights who does not yet understand his dad's blogging obsession. But everyone raises some valid points here. Dennis, I think you're right about the bedfellows with finance comment. And given what Manoj is selling (EIPP), I'm sure he would agree as well! I think Coupa, if it works, is a natural for middle market accounting firms and integrators to latch onto. That segment of the market is ripe for eProcurement penetration, and an accountant/SI signing onto Coupa is a way of insuring against any of the perceived risks of Open Source.
The one thing to think about open source enterprise software is the fact that when you buy a license of SAP or PeopleSoft (I'm not sure about Oracle eBS), you get the source code of the applications to modify and customize on the CD. People running packaged ERP applications already have the ability to change it to their hearts content -- and better yet, they aren't tied to some religious doctrine like the GPL to release all their changes to the community.
This makes the dynamics of how open source will impact enterprise software a bit different than in other spaces. It will be interesting to see where this goes