June 27th, 2006

How open source transforms business

Posted by Dana Blankenhorn @ 12:37 pm

Categories: Applications, Enterprise Policy, General, Strategy

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CollabNet CEO Bill Portelli started our interview today bragging about CollabNet Subversion, his open source Web-based versioning system.

But we ended up talking about something much bigger, how open source is changing the way businesses of all types operate.

For CollabNet, open source was "a practical business strategy that worked." Five years ago he needed some versioning tool beyond CVS in order to make headway in the managed services business, and found only proprietary offerings from big outfits like Microsoft and IBM. To compete, he said, the only option was "to build a community and leverage it."

So yes, it was selfish. "We used open source to create a standard in the market, so we could provide other products and services on top of it, all based on open source."

But what CollabNet found in developing Subversion, other companies have learned in using it. "We can help you develop products for 20-50% less by building a community, and by using the right web-based tools. A client came back and said the model created unplanned innovation, with half-billion dollar product lines created," from the bottom-up, rather than through departmental silos.

This is a profound change. And Portillo is remarkably eloquent in describing it:

In any change there are going to be people affected. The important thing is to understand what’s going on and get ahead of the curve. That’s true in any technology transition. We need to get ahead of it.

I can see individuals losing jobs. But if you look at the rate of innovation in open source, and the jobs they’re creating, all these things are dynamics that are healthy for the business and create innovation higher up the stack. Look where open source is happening and look how to leverage it.

Open source doesn’t solve everything. Open source is disruptive in many ways. We argue internally about how much to share, what to share. But the Internet has shown it’s no longer good enough to be stuck in your own silo. You have to become part of a community and be ready to leverage it.

Don’t think of open source as just a software business model, in other words. Think of it as a new way to do business, a new way to leverage all your relationships. Think of it as business evolution in action.