I want to welcome Stuart Sim and thank him for agreeing to contribute to the Impact of Open Source Software and Open Educational Resources on Education series on Terra Incognita. Although his post was scheduled to appear on April 1st, 2008 (eastern U.S.), Stuart has run into problems that have delayed the posting. We will delay the posting by about a week. Stuart will be sharing some of his experiences with open source software from the perspective of a system architect and his activities in the business of supporting and growing open source applications.

Figure 24.1. 

Stuart Sim

Stuart Sim serves as the Chief Technology Officers and Chief Architect of Moodlerooms, which provides comprehensive technical support services to the Moodle course management system open source software. Stuart has spent the past 15 years developing enterprise solutions around the world in the education and financial sectors. His core expertise is in the design and delivery of large-scale implementations using combinations of classic and innovative development methodologies in distributed multi-disciplinary environments.

Prior to joining Moodlerooms, Stuart served as the Chief Architect of the Education Business Solutions group at Sun Microsystems. At Sun, he was involved with the development and promotion of open standards in education systems design to drive down the barrier of adoption of practical technical solutions using open source projects.

I met Stuart while I was working at the SUNY Learning Network and he was at Sun. Since then Stuart’s work has started to addresses some of the traditional concerns at universities about deploying an open source learning management system, opening opportunities for schools of varying capacity. Please feel free to comment (early and often!), ask questions, build on the conversation, and enjoy.

First off let me state the obvious and say that building a business that depends on open source is not an easy thing to do. If it was, there would a great deal more success stories out there.

Offering services around Intellectual Property (IP) you own, manage and control that no one else can replicate - or not easily any way, is a well understood model if not always executed in the best way. Grabbing hold of ‘free’ software and wrapping services in a completely transparent way means really understanding operational risk. Given that the same IP is available for anyone to do exactly the same thing and compete in your marketplace means your always fighting to innovate faster than the next guy and that can only be a good thing.

Personally, I love the idea of forcing my competitors to innovate.

The goal of course is to build a value proposition to the market that provides the highest quality of service at the lowest cost. The transparent nature of open source projects allow you to develop your own risk model where you can identify exposure and price your services competitively.

Visibility into the underlying source code is the first step. Those organizations that participate in the project community gain a much greater advantage than those listening from the outside. By contributing to the development of the code and gathering feedback from both the software users and fellow developers, a more refined risk model can be developed with lower risk premiums and therefore a greater competitive pricing model can be offered to the market.

The more obvious benefits that are more widely presented include reduced internal costs in two significant areas: research and development and support.

There are companies that invest nothing in R&D and, generally speaking, history has not been kind to them. This is especially true of software companies where very tight competition forces constant innovation. In a closed model that innovation has to be paid for by the customer and is often non-transparent so the true value is hard to assess.

The other major cost in a closed environment is the end user support where the model has to be developed and maintained internally and paid for entirely by the customer. Without the ability to share any proprietary material, the market is forced to accept whatever inefficient support model the supplier can offer.

Thankfully, we’re rapidly moving from the old days of having two extreme options. The first option is working in a world with locked down commercial licenses and no access to source code, while the second option on the other side was having all the code to play with and no support number to call for help or guidance.

Many companies sell software solutions under a commercial license where their customers get access to the source code for analyzing performance issues using their own profiling tools. For any organization that has their own technology team capable of compiling the application from source and inserting monitoring hooks, this can be a nice compromise where infrastructure risks can be managed internally but with the safety of external support should things go wrong.

It comes down to decomposition and transparency. The winners will be the ones that understand the market will reward companies offering choice of platform, services, support and leadership - none of which are dependent on each other.

Again, I love forcing people to innovate through disruption. If the game is not working for you then simply change the rules of the game.

“The Business of Open Source,” the twenty first installment of the Impact of Open Source Software Series, was posted on April 11, 2008, by Stuart Sim. Stuart serves as the Chief Technology Officers and Chief Architect of Moodlerooms, which provides comprehensive technical support services to the Moodle course management system open source software. Thanks, Stuart, for a great posting!

In his posting, Stuart raises some of the challenges of building a business model for wrapping services around intellectual property (IP) that is open. He points out that providing services for IP that you own provides an element of control that you do not have while supporting OSS. Your success with open IP is based entirely on the value proposition of your services.

Stuart clearly communicates that there are significant benefits to providing services for OSS as well as challenges. First, working in the OSS space provides a strong impetus to innovate and manage risk. For example, code visibility provides an advantage to commercial service providers who become part of the development community, spend time understanding the code and community, and contribute to the code. It is through this type of involvement that a service provider can better refine its risk model, reduce its risk premiums, and pass them on to customers.

The “punch line” of Stuart’s posting is that transparency leads to efficiency, efficiency to lower cost, and lower cost leads to more and happier customers/users. While code transparency provides opportunities for efficiencies, the inefficiencies associated with proprietary (closed) IP come, at least in part, from the non-competitive nature of how R&D is conducted and services are provided in closed software environments. The development of comprehensive and commercial service providers such as Moodlerooms, has eliminated, for some OSS products, the problem for end users of having great low cost software, but no options for external software support. The economics of open code allows smart service organizations to provide low-cost high-value services, and smart software users to take advantage of both low or non-existent license fees, and low cost services.