Last week both Vinnie Mirchandani and Dana Blankenhorn commented on subjects related to the reach of and dynamics for technology channels. While Dana's post mentioned open source software directly and Vinnie's didn't, both cited points which are directly relevant to a key topic amongst the open source software marketplace: monetizing the channel ecosystem.
On a related note, I recently added my thoughts on a recent announcement from OrangeHRM which mentions some of the challenges that managing a rapidly expanding global product community can entail. Since there should be little doubt that community is a significant portion of the open source equation, the intersection of that community and the entire ecosystem is indeed notable. Accordingly, from the perspective of open source software companies, strategies for monetizing channel ecosystems have their fair share of reasons for being of paramount importance. Yet considering the nature of open source software (open development model, flat distribution process, etc.) the opportunity to establish new forms of revenue generation is very much promising. The point being, traditional forms of partner engagement tend to not scale well with the current realities of open source software.
Operating a successful commercial open source software operation requires maintaining the delicate balance between enabling the free user and flat out making money. It's a topic which has been kicked around more than once as it is, quite frankly, the essence of building a company whose business model is dependent on open source software. Yet the focus on the relationship between free user and revenue base tends to perpetuate a harmful generalization of the composition of open source communities, one which obfuscates their inherent diversity. The question of who exactly is a 'free user' remains to be answered with any authority. As a result, I've proposed methods for better quantifying and reaching what amounts to a rather nameless/faceless entity and I'm sure others have done the same, but there has yet to be much in the way of demonstrative progress.
Dana made the point that VARs remain the vehicle for entry into the Small Medium-sized Business (SMB) marketplace, a statement which undoubtedly rings true across the globe, and the sizable intersection between the open source value proposition and that market segment isn't a new phenomenon. However, what often goes unnoticed from a high-level, surface view is the continued growth of third parties (VAR's, S.I.'s) who participate as conduits for open source technology to the SMB market. A reality which benefits them quite well as conveyors of ready-made solutions to an often time and resource constrained crowd who finds itself increasingly dependent on IT. The fact that channel participants derive a tremendous amount of value from high-quality, freely available software assets is intuitive at the least, and is also precisely the reason commercial open source companies need to investigate how to extend this relationship.
More can be done for both sides by encouraging the growth of a different variety of relationships. Partner programs are a start, but they don't always reflect the diverse set of dynamics brought into the picture by the open source model. Dana made a reference to making sure to reach VARs and I agree, but what does that entail and how can doing so be made viable for all parties involved. Taking the time to hammer out commonly agreed upon implementation standards might be a decent first step, or encouraging the practice of giving back through shared ownership (as a risk mitigation technique) could be another. New programs, incentives and business relationships (none or all of which have to necessarily be free-of-charge) must be explored to find a proper balance between anonymous use and the duties of for-profit enterprise. In fact, integrating these relationships into the revenue picture for the commercial open source side will do nothing but boost its capacity to provide such at a high level. The result would be better suited options for interaction with open source software vendors for third party channel members and a potentially larger revenue base.
At the current moment, it is my opinion that the prevailing perspective held by the majority of the open source crowd about channel driven business, is one which holds the latter as very much appreciated in many regards, but still somewhat of a side-effect of the latter. As a result, the effort put into cultivating more innovative paradigms for channel participation has suffered. Ironically as more we witness more commercial presence within the open source marketplace it will become critical to evolve the perception of what a product ecosystem, a community and the aligned channel can mean to enabling stronger companies, technology and collaboration.
great point - with open source software pricing how do you attract an integrator channel - one reason I think the bigger SIs have kept away from it. Also another reason for industry to move away from simplistic 1:1 ratios of software to implementation services...
Posted by: vinnie mirchandani | July 21, 2007 at 10:00 AM
Thanks for the comment Vinnie. You're right the larger SI's have stayed away, and the open source software industry is going to have to find ways to actively engage this crowd in order to stimulate more growth and revenue. Although Unisys is one which bucks that trend.
Alex
Posted by: Alex Fletcher | July 25, 2007 at 06:54 AM