Open Source Business Models – a great primer for our CEO Tales Open Source Business Models discussion.

The CTO of Morgan Stanley Europe said earlier this year that increasingly the company was using Open Source software as they moved away from ‘turnkey solutions’ delivered by the IBMs and Accentures of the world. The reasons he gave were compelling – as a customer of a software company, they get to choose what they use and get support for which reduces costs as well as enabling them to take more risks with smaller companies that may or may not be in business in a few years time. (Big companies buy from big companies because they don’t want to make technology decisions that are embedded in the business only to find the small company fails and they don’t have rights to use it. Open Source software means that they are less constrained).

Most people will think of Red Hat and MySQL as the poster children of the breed but companies with Open Source business models are appearing every day now and some of them have got to a considerable scale. This is a neat list of 50 or so.

For many people, Open Source means, ‘free’ and it can be hard to understand how a company can give stuff away and make money. This is a great post from Kirk Wylie at Open Gamma, about how they make money as a company.

Basically, they give the software away for free and charge for an ever expanding set of services starting with a simple all-inclusive fee that offers their customers four things they can’t get for free:

  • Proprietary components;
  • Confidential support (rather than in open chat room environments);
  • A commercial license (mainly to keep procurement and finance happy rather than the techy crowd who are quite used to ‘free’);
  • ‘Proactive configuration and maintenance advice’.

“Given the cost of staff at banks and hedge funds, we’ve never had an unfavorable ROI story; in fact, quite the opposite.” Kirk Wylie, CEO, OpenGamma

While they focus on a specific larger enterprises in the financial services sector at the moment, they are also planning additional revenue streams in other market segments but there seems to be plenty of opportunity in the sector OpenGamma is targeting now.

This post is particularly timely because Kirk just agreed to speak at our forthcoming┬áCEO Tales on 6th February, 6-9pm, in London to consider some of the huge challenges and opportunities in growing an Open Source based business. He speaks as well as he writes. ­čÖé

We have some brilliant perspectives from some of the leaders of the Open Source tribe:

  • Nigel Beighton, CTO of Rackspace and their Openstack initiative
  • Jack Lang one of the principle people behind Raspberry Pi who unveiled their Pi Store yesterday
  • Kirk Wylie, CEO of Accel and ICAP backed Open Gamma
  • (Couple more to confirm, watch this space…)

We will also be giving the first 75 people to register here a FREE RASPBERRY PI because we think they are great.

Eventbrite - CEO Tales: Open Source

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