Monday, April 16, 2007

Alternatives to Commercially Licensed Software

Last week, I was in San Francisco at the Gilbane Conference on Content Technologies. Like all Gilbane conferences, I enjoyed attending the sessions and getting together with my friends in the industry. My panel was on "Different Approaches to Purchasing a CMS: Open Source vs. SaaS/ASP vs. Licensed." (my slides). Speaking with me were Kevin Cochrane (VP of Web Content Management at Alfresco) and Jim Howard (CEO of CrownPeak). If you didn't make it, here is what you missed....

I lead off with a presentation saying that commercially licensed software, SaaS, and open source software all have their strengths and serve different kinds of customers doing different kinds of things. I got a good amount of head nodding some good note scribbling but I didn't change anyone's world. (If you were there, tell me if I changed your world.)

Then Kevin got up and the man was on fire. His presentation was about how traditionally licensed proprietary software was dead and open source was the wave of the future. He was banging on the podium (so much so that the moderator whose laptop we were borrowing was concerned for her computer) talking about the corruption and arrogance of commercial software. Kevin was one of the early guys at Interwoven and recently left to join Alfresco so he had the authority of an insider whistle-blower. He even pulled up a picture of a Gandhi and the quote "First they ignore you, then they laugh at you, then they fight you, then you win." Kevin got the audience pretty fired up and lots of people were asking how to get Alfresco.

I think one of Kevin's best points was the different economics of open source software. Commercial software is a sales driven business. Sales people stand in between the customer and the software (sometimes creating a barrier) and earn big commissions on every license that they sell (maybe not the $1MM bonuses that Kevin talked about but they can be pretty high because the variable cost of a license is very low). The open source model uses open source licensing to distribute the software. Anyone can download it and form their own opinion of whether it is a good fit for their business. Customers can also decide whether they would get value out of a support and maintenance package that the open source vendor sells. That said, not all companies are well positioned to participate in this kind of sales process. Many customers like having sales guys and sales engineers to bring the information to them. They like someone to do demos for them and to fill out their 30 page request for information (RFI). I would say that this kind of company would not be a good candidate for open source. To realize the benefits of open source, you need to be more proactive and can't rely on a sales team to bring the product to you.

Jim talked about how content management vendors should take more responsibility in customers overall success with content management - not just focus on the success of the implementation. He talked about how companies succeed or fail with content management after deployment when they are trying to use and adapt the system. I agree with his point that SaaS is very well positioned to facilitate ongoing success with content management. They can, for example, monitor who is being naughty and nice with the system or whether the software is being used at all. Of course, different SaaS vendors are going to provide different levels of hand holding. Not all customers want or would be able to afford someone observing every action, poised to intercede at the first sign of user confusion.

I think open source and proprietary software companies could do a better job providing this support as well. My old colleague Nathan Rawlins and his employer, Serena Software published a book Web Content Management for Dummies. Aside from the fact that all the screenshots are of their Collage product, the book is product-neutral and has some very good advice. Open source projects do their part with community generated add-on modules. Plus, the absence of license costs frees up resources for things like training and coaching. There is also an opportunity to build communities of business users that might derive a similar benefit to what the developers enjoy. The Drupal and Plone communities are talking about these opportunities and are having mixed success.

Jim also raised the very valid point that managing content management systems are expensive no matter what way you slice it. In addition supporting the infrastructure (servers, rack space in a data center, bandwidth), you also need people who can monitor the system and correct issues as they arise. Some companies already have these resources. For example, at Optaros, we already had the infrastructure and the staff who knew the technology. Those kinds of companies tend to derive less value from the SaaS model because they need to make the investment in people and infrastructure whether they host their CMS or not.

Those who were hoping to see contention between the panelists were probably disappointed. No Springer-style bouncers were needed. Kevin said there are many customers that would do better on a SaaS model than to use open source. Jim said that SaaS is not for everyone and some companies want the control and responsibility that open source allows. If they do this session again, I hope that the Gilbane folks put someone from a commercial proprietary software company on the panel. Put Kevin up there with an Interwoven sales guy. That would be fun.