PLM Prompt: What will be PLM Open Source secret sauce?

Interesting prompt in my view. I was reading Stephen Arnold’s post Open Source Dust Up“. Some interesting facts, thoughts and questions behind success of open source companies. This is about money, not technology. Big surprise…

opensourcemoney
So, my question today is simple. Is there “silver bullet” for PLM Open Source? Is it something we’ll love because the current financial climate? And most important - will companies focusing on open source in enterprise (and PLM) be able to make enough money from service, consulting and implementation?

Best, Oleg

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22 Responses to PLM Prompt: What will be PLM Open Source secret sauce?

  1. vuuchclient says:

    Every PLM product today has some open source components in it | I would bet anyway… I think the issue is companies buy from companies. While customers want to customize (and sometime stretch the definition) they do not want to be developers. So if somoene can offer a better solution that happens to use open sourced tech then people will buy it. The question comes down to solution/value.

  2. Chris, Thanks!… Definitely solution/value sauce :)… Best, Oleg.

  3. Dave Opsahl says:

    I understood the question differently, in essence asking if, rather than using open source in PLM applications, there was a “silver bullet” visible that would make an open source model for the acquistion and deployment of PLM applications themselves as open source.

    Certainly, the currennt economic situation places a premium on “cheap” or “free”, but I don’t think over time that’s a factor. What matters is, does what I have available in open source present a viable solution (meaning cost vs. risk vs. ROI) over what’s available commercially.

    If one were to look at the O/S “open source” movement, and assume its merely a function of cost, we would all be running Linux now, but we’re not. In the enterprise, on the desktop and in the server room, the trade-off between building a functioning infrastructure based on open source components that would a) support all my hardware, b) provide a full messaging environment, c) integrate with my MSOffice clients, d) have plenty of support resources available, e) support mobility – when compared with simply using the MSFT stack, it makes no sense. That, and the cost of the O/S was in the hardware, eliminating it from the equation. Its not to say that you can’t do it open source, just that its not a smart business decision.

    I don’t think it will be any different for PLM applications. If an offering meets the criteria such that it represents a smart business decision for enough manufacturers, it will take off. If not, it wil simply be a “niche” product, only working in certain situations.

    Just my .02

  4. Ed Allwein says:

    Open source is not simply a legal construct, but significantly influences your software development process and business execution.
    The best OS software must be architected from the ground up to be open source, because a viable OS community won’t want to tie very much code to any one contributor. An OS product must start with a sparse framework into which the community can plug their components.
    At the same time, an OS business plan must either secure consistent, ever-growing revenue or position the company for acquisition by an entity that views the community as sufficiently large and lucrative.
    Keeping these in mind, the “free software, paid services” model is fundamentally flawed:
    1. There’s an obvious conflict of interest: If you give away the code & make money on the services, where’s your incentive to simplify the installation and configuration, minimize the training burden, or provide security fixes and service packs essential to the entire community? In many software products, 90% of the support effort occurs in the first 90 days — whatever the official company policy, a sharp sales team recognizes that community self-sufficiency “robs” them of recurring revenue.
    2. There’s a clear lack of strategic control: To succeed, the community has to be substantially invested in the product and provide significant value. Yet, if you’re relying principally on the “community” to advance your product, then those community members with the most development resources may take the product in directions that disenfranchise organizations with little or no development resources to spare. You’re left with a product that’s increasingly responsive to your largely self-sufficient, already-installed-and-trained customers, while neglecting everyone else.
    The first reason means that your short-term incentives are out of sync with your new customers’ goals, and the second says your long-term goals are irrelevant.
    Neither of these is fatal, just highly constraining. For example, you can develop specialized domain knowledge that reduces your reliance on product complexity. You can also add software architects and developers to work on those aspects of the product that are unrewarding to your community developers. But these are difficult and expensive decisions that move you away from the original cost-cutter rationale for adopting (or converting to) an open source business model.
    Across the entire software industry, there are only a handful of companies making significant revenue from open source, or that have grown to a sufficiently attractive size for acquisition. The vast majority of OS revenue is derived from products with broad appeal: operating systems, databases, web servers, browsers, office suites. Interestingly, the major OS projects spring from two distinct, opposing sources: as a demonstration of principle by “free source” advocates (Linux, MySQL, Firefox, Apache) and from commercially-disappointing closed-source products (Solaris, OpenOffice, JEE).
    If there’s a “silver bullet”, it’s likely pointed in the wrong direction. Creating and sustaining an open source business strategy in a broad market is difficult and rare; doing so in a relatively narrow niche like PLM may be suicidal.

  5. I’d like to propose another way of understanding Open Source. Everyone jumps first to the development model; armies of ‘free’ developers around the globe reducing the cost of development. The problem with this model is that this turns the end-users into developers, and as Vuuchclient points out, they don’t want to be developers. In PLM, the end-users manufacture Widgets for a living, and time spent developing software is a distraction. Given a choice, they’d rather get their software from a company that supports it (and they want out-of-the-box that fits their custom situations… but that is another discussion topic).
    The other down-sides to open source (end-user’s perspective) are the uncertainty about where source code comes from (IP lawsuits, rogue code), and the obligation to give back source code changes. I propose that it is the upfront costs, the sales engagement model, and the absolute lock-in that are wrong with the current enterprise software models. These are what make open source so intriguing, it has nothing to do with who is doing the development.

    There’s another view of what the open source communty has done for software, that I feel is even more compelling, then the development model. Open Source is about re-writing the rules of software distribution. End-users can download, evaluate and deploy enterprise software at their own pace, without having a salesman in their face threatening to jump two levels up the org chart to force decisions. Open Source is about hands-on evaluation of software, un-supervised, no PowerPoint smoke & mirrors, to allow informed decision making. And most importantly, the decision is easier (less risk)… because the end-user is not committing millions in upfront fees. The benefit to the end-user is clear.

    Why are software vendors moving to the model? Open Source (distribution) is about low cost of marketing and near Zero cost of sales. This is a reasonable (and profitable) trade-off against software license fees.

    So maybe we don’t call this Open Source; it uses open source methologies, but doesn’t necessarily use open source technology. What do we call the suite of Google offerings from Gmail to Search. No cost distibution. great quality products distributed without a sales force, they provide value to end-users, and are building value for Google,

    How about Craigs List? They’re killing the newspaper classified business by providing a no-cost software service that is valuable to end-users and at the same time creating value for the developers of the site. They’ve figured out how to distribute without sales costs and with a very low cost of marketing.

    We (Aras Corp) do distribute source code and do receive excellent code contributions from our community, but the most compelling part of the open source business model for me is not the development model, rather it is the near zero cost of sales, short sales cycle times, and the vastly better customer-vendor relationship based on mutual value, not lock-ins.

  6. Dave, I think PLM Open Source can be different. Actually, Open Source is always different and depend on community. So, question if PLM community will be able to feed up PLM Open Source to make it successful. So, taking your example, will PLM Open Source have enough resources to support all hardware, messaging environments, integrate with Office and have lots of resources…. All these elements need to be either supported by community or built on $$$ from consulting and maintenance. Regards, Oleg.

  7. Ed Allwein says:

    I completely agree: “So maybe we don’t call this Open Source.”

    Google is a red herring; the revenue-generating business — AdWords and search — are totally closed source. Google makes no revenue from free software, which it uses merely to weaken its major AdWords competitor. Likewise, Craigslist has never been about revenue.

    Let’s not try to redefine what “open source” means. Open source was conceived assuming a very specific development and licensing model. The creation of an OS product has natural consequences for its sales and distribution model, but simply adopting a similar sales and distribution strategy can’t make the product “open source”.

    Instead, let’s consider a software business model that has Peter’s valuable characteristics:
    - Low cost of marketing
    - Near zero cost of sales
    - End-user download and evaluation
    - End-user payment (1) opt-in to receive on-going software upgrades, and (2) opt-out if the “as is” product is acceptable

    Without any definitional gymnastics, everyone recognizes this as “shareware”, which has been around far longer than the term “open source”.

    For example, in 1994 our company developed the ASI Number Machine, a simple auto-numbering “engine” that had text-based configuration files (.INI). Although.INI files pre-date XML, they provided a similar mechanism for conveying application-specific rules for part and document identifiers. The .INI files could be shared with other users in the ASI Number Machine “community”, and in fact two different files (for engineering and for accounting) came with the product.

    Like Aras Innovator, the ASI Number Machine was a proprietary engine; the configuration files were freely distributable (fortunately, we didn’t have Ms-PL back then); end-users could download (or request a floppy) and evaluate the software; and they could then decide whether to use the software “as is” or purchase a license and expect to get patches and technical support. No salesman called demanding the sale. Although the business model of the ASI Number Machine had many similarities to what Peter prefers to call “open source”, I don’t claim any pioneering credit for what was common shareware.

    Let’s also not overlay the term “open source” with other common business practices. Our company’s current software product, PDXpert PLM, cannot qualify as open source because (like the ASI Number Machine) our product’s executable source code is not freely available. Yet end-users can download and evaluate PDXpert software at their own pace, configure it for their process and test it with their data, without ever speaking with a sales engineer. They can even define, save and exchange unique starting configurations (called a database file!) that contain system rules and supporting data attributes. There’s nothing inherently “open source” about “hands-on evaluation of software, un-supervised, no PowerPoint smoke & mirrors, to allow informed decision making.” Our prospective customers do this every day of the week.

    It’s wonderful that Aras has re-discovered shareware — a legitimate, if severely limited, business model. However, it seems rather useless to distort the plain meaning of “open source” to encompass closed source applications if this new definition is based on the incidental business effects of the OS development model.

  8. chris says:

    oleg i think you are right – the plm is really not bg enough to support an open source approach. who is there to contribute?

  9. Chris, I don’t think current in state of enterprise software we will see OSS star. I believe future move in platforms on cloud may change this status-quo. More data centers, more services on cloud… this is my guess. Best, Oleg

    oleg i think you are right – the plm is really not bg enough to support an open source approach. who is there to contribute?

  10. Peter, Key question I’m asking if after reducing cost of sale and cost of marketing, business is capable of operate and make profit. I assume everybody will agree – we are business for profit. If we are not – this is a different story. Learning from different stories (like Mozila/Google etc.), I’m asking — do we have enough $$$ for profit if we will operate with no license cost? This is regardless, on how we call it – OSS or different. -Best, Oleg

  11. Ed, Thank you very much for your observation. I liked your thoughts about OSS and strategy co-existence. In my view, nobody did it for enterprise software (not including Operation Systems and MySQL). To navigate community and company business strategy is not simple in my view. OSS likely can grow up from platforms, data centers and shared services. OSS also can be business strategy for competition. You can kill your competitors softly with OSS strategy if you have enough money and power. However, question if you can make enough $$$ from OSS in enterprise? … Regards, Oleg

  12. Ed Allwein says:

    Oleg, you truly do ask THE key question, but I believe that “how we call it” frames the answer. Asking “Can Open Source (the software development and licensing model) work for PLM?” may lead to different conclusions than “Can shareware (free software distribution and opt-in purchase) work for PLM?”

  13. Ed, Regarding your comment about shareware vs. Open Source. I think it’s valid to redefine “Open Source” to something else if it will make sense for users. So, as soon as we can understand core principles (no sales cost, low marketing cost), I think customer can be pretty happy as soon as it will work well for them. Regards, Oleg

  14. Ed, You are right. I’m sure that pure OSS definition today cannot be applied to enterprise software and PLM is one of. Actually, I see few possible answers – “open source” name is secret marketing sauce; new enterprise software development model based on lower license price; service offering based on future OSS platform out of IBM? or Google?… Thanks for your comments! Great discussion… Best, Oleg

  15. Dave Opsahl says:

    Oleg,

    My observation was not that PLM open source (open distribution, whatever we choose to call it) does not necessarily have to itself support all those things. Rather, a PLM open source solution could leaverage a platform that provides them, thereby eliminating that constrait from the decision-making process. The days of PLM applications providing their own workflow, messaging environments, etc. are over IMHO. Customers simply will not accept having to replicate parts of there infrastructure stack. It will be no different for commercial PLM or “open source” solutions.

    Dave

    Dave

  16. Dave Opsahl says:

    And someday I need to learn how to type….

  17. Dave, This is very interesting and important point. PLM bundles have certain overlap with platform/IT services. The biggest value of these services is that they integrated well into PLM functionality. As soon as you have all pieces as open sources (or whatever other name we put), you are actually have strong interest to disassemble this stuff and optimize…. This is could be interesting shift, but I still don’t see how it happens in visible future… Regards, Oleg.

  18. chris says:

    Oleg I think the question is wrong – http://blog.vuuch.com/?p=441. I think the issue is Open versus Open Source…

  19. Chris, I think “open” is very broad definition. Even in your post from today you mentioned open to mashup, open to change code, open to license… what else? My question was about open source (some combination of license and source code) just put some boundary. Since you will not find anybody who says I want be closed, I believe question “do you want to be OPEN?” have obvious 100% of YES answers :)… Best, Oleg

  20. [...] PLM Prompt: What Will be PLM Open Source Secret Sauce? [...]

  21. [...] seemed to strike at the hart – he questioned the value and opportunity for PLM to be “Open Sourced“.  After re reading the post and all the comments I was struck by the fact that NO ONE asked [...]

  22. [...] seemed to strike at the hart – he questioned the value and opportunity for PLM to be “Open Sourced“.  After re reading the post and all the comments I was struck by the fact that NO ONE asked [...]

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