Open-source software: a viable option for non-tech companies? Reply

Tech companies use OSS for a variety of reasons: the free availability of the source code allows them the flexibility to modify and improve and adapt it in any way they prefer. It removes their dependence on vendors of proprietary software, who may, for example, at any time decide to discontinue development or support for a particular software product.

But how may non-tech companies benefit from OSS and why should they consider it a viable option?

According to a Gartner survey of Global 2000 enterprise companies conducted in 2011, the majority of mission critical software will contain open-source software (OSS) by 2016.

Non-tech companies are therefore also benefitting from many of the advantages of OSS, notably the considerable cost savings associated with its use, both directly and indirectly. Direct costs are avoided by not having to purchase the software in the first instance and subsequently, by not having to pay for upgrades and support. Indirect savings occur by way of a greater flexibility in the form of greater interoperability (e.g. it is easier to use applications from different vendors together). In fact, in their survey, Gartner found that over the past few years, the perceived value derived from cost savings has gradually been replaced by the benefits associated with flexibility. Flexibility offers the ability to respond more quickly to external demands and also to the availability of new technology, thereby enabling companies to be more innovative.

Innovation leads to competitive advantage. Larger companies with more assets no longer necessarily lead the way, instead it is those companies capable of mobilizing their knowledge and skills by using (technologically) innovative methods who have been found to have a distinct competitive advantage.

The BBC’s use of MySQL to power their news web site is an example. Although their decision was also based on cost savings, the main reason for turning to OSS was performance. MySQL enables them to receive stories from hundreds of journalists spread across all time zones and to handle 35 million unique users and over 800 million page views on a monthly basis. Therefore, MySQL has the capability to process the high frequency of news submissions and requests and additionally, it offers scalability at no additional cost.

However, the performance and security benefits of OSS need to be carefully assessed, as with any software, when deciding whether to implement OSS or not.  A study by Aspect Security found OSS vulnerabilities to be more common than previously thought, but that they can be addressed by following some basic security guidelines, for example those set out in a white paper released by HP.

The use of open source software does not necessarily require in-house technical expertise. Many OSS providers such as MySQL do offer technical support, at a cost considerably lower than the support offered by providers of proprietary software.

Open source cloud computing software is becoming increasingly popular (e.g. Open Stack), once again because of the lower costs involved and the obvious collaboration advantages offered by the cloud. But, the use of OSS in the cloud (public or private) introduces the risk of intellectual property infringement, which can be addressed by using one of the available license management solutions described in a set of guidelines issued by Linux.

Conclusion: Non-tech companies should inform themselves of the potential benefits of OSS and identify opportunities to leverage it. OSS can provide a more flexible cost-effective alternative than proprietary solutions, provided it is managed carefully, the ease of integration with existing (commercial) applications is considered and the risks are understood and addressed.

 

Lesson learned from Healtcare.gov – Open Source or not to Open Source? Reply

Healthcare.gov is in the news all over these days. I have my own opinion about Affordable Care Act ( aka Obamacare) but that is not what I want to talk about. There are enough conversations on it already. I want to talk about technical aspect of Healtcare.gov. I am IT professional and feel obligated to give my opinion on this topic. There is bigger lesson to be learned here and it is important to take notice of this across the corporate world.

Healthcare.gov is built completely ground up using mostly opensource software by number of companies jointly. There are several issues with this approach that resulted in the technical disaster of Healthcare.gov. Lets discuss some of these

Some of you might remember when Airbus was making A380 jumbo jet and it made parts in different countries. When they tried to put it together wings did not fit!! It was blamed on design software incompatibility. Think about the parallels between the situations. All these different companies built different components of software and government tried to put it together as single product. Government acting as system integrator; Really!!

Open source software is greatest thing happened to IT. Companies like Facebook, Google, twitter etc. really showed the world how to use these technologies effectively. All these companies have hundreds and thousands of highly skilled technologists who are encouraged for their creativity and most of the time designing things without requirements. Whenever some of these companies tried to build something with half-baked requirements, it failed. Remember Google built platform for Electronic Health Records? What happened? Open source may appear to be cheap alternative but it is not for everyone and everything. I am sure some of you remember how ERP’s came about. Before ERPs, most companies built there own systems using ‘N’ number of technologies and maintained it themselves. It worked great in the beginning but what happened eventually? It became impossible to maintain. ERP’s came and took the requirements of building and maintaining away from the corporation. Traditional ERP vendors still did not completely succeed. That is when Cloud vendors came in and fix what traditional vendors were unable to fix.  Get businesses out of creation and maintenance of software. Now with so much talk about open source, are corporation (Government being one of the largest corporation and healthcare being one of the largest department) going to restart what they abandoned years ago? Are they going to go back and develop their own software and maintain it? Is open source for Non IT focused companies? I don’t know answer. I have opinion but do not have answer. My opinion is, there is still value in working with proprietary software vendors like Microsoft, Oracle, IBM and SAP. Wit IT Focused companies continuing to pressure these companies, these companies will continue to evolve the software and reduce the margins. Think about what powers Salesforce cloud? Its proprietary Oracle Software!!! Salesforce did not rely on open source to scale. Some of you might know this, but twitter ran into scalability issue with their open source implementation and finally decided to move away from it. Now this is the company that is IT focused.  They have the talent and ability to attract top IT talent. Why does anybody think this open source movement should be adopted by corporations?

Let me be clear. Open source is one of the greatest movements against monopoly in the software industry. Firefox was first one that started chipping away market share from Internet Explorer. It was complete product and how many companies take the code of Firefox and try to build their own browsers? That is what we are talking about when we talk about using open source to build solutions. It sounds good but the hidden costs of open source over the life of software are high. Some of you remember Sugar CRM? It is not even in top ten vendors in this space, which covers over 75% of the market share. I worked for a startup company and we implemented Sugar CRM in one of our product branch. It worked great. 10 yrs fast-forward, we got successful but we could keep tool up to date. Every hour spent on upkeep of this tool was time taken away from development of core product, which was making company successful. Finally we decided to go with leading vendor product. The moral of the story is, it is very important to understand pit falls of adapting open source software. It sounds very attractive but you need to make sure you understand long-term strategy to maintain these. If you make one wrong decision today, you will end up paying now and later when you decide to finally switch over. Open source is great option for some of the companies but not for most. Negotiate well with your vendors leveraging open source as a lever. Large IT system integrators love the open source movement because that is the next new thing. Do not confuse between open source and cloud. Some of us do. Cloud is not necessarily open source.

What should government do now with healthcare.gov? It is not simple in this case. They need to make some tactical fixes for now. There is no choice but to put Band-Aids. Once it is stabilized, they must analyze the architecture carefully and start replacing components of architecture with proven technologies. Use COTS where available. Government should not be in the business of developing software. It is good business for system integrators but not for the citizens of this country. Long term these Band-Aids are not going to work. So it must act fast and in parallel. I have done similar things in my experience and it requires leadership, decisiveness, and lot of luck. It is like changing tires on moving truck. But it can be done and it must be done. Weather you are for Obamacare or not, it is irrelevant to this discussion.

So, Open source or not to open source? It depends!!!

Reinvention Reply

Daniel Burrus, best selling author, says rapid change in business and technology is the “new normal.” However, in the 21st Century, “change” is actually too weak a descriptor.

Today, it’s all about transformation. This means you can’t go backward, and you can’t stand still. You can’t sit still and you can’t keep doing what you’ve always done — even if you do your best to keep doing it better.

The only way for your company to survive, let alone thrive, is to continuously reinvent and redefine.

Reinvent and redefine what? Everything.

Harvard Business Review wrote about this back in January 2011 – Sooner or later, all businesses, even the most successful, run out of room to grow. Faced with this unpleasant reality, they are compelled to reinvent themselves periodically. The ability to pull off this difficult feat—to jump from the maturity stage of one business to the growth stage of the next—is what separates high performers from those whose time at the top is all too brief.

As Matthew S. Olson and Derek van Bever demonstrate in their book Stall Points, once a company runs up against a major stall in its growth, it has less than a 10% chance of ever fully recovering. Those odds are certainly daunting, and they do much to explain why two-thirds of stalled companies are later acquired, taken private, or forced into bankruptcy.

There’s no shortage of explanations for this stalling—from failure to stick with the core (or sticking with it for too long) to problems with execution, misreading of consumer tastes, or an unhealthy focus on scale for scale’s sake. What those theories have in common is the notion that stalling results from a failure to fix what is clearly broken in a company.

Companies that have set the standard for reinvention over the last while are:

IBM – before the 1980’s only the most gadget geared person had a computer. The IBM PC brought this machine to the masses.

Ford – With just some bucket seats, a floor shift and cosmetic tweaks, the lowly Ford Falcon “magically” transformed into the wildly popular Ford Mustang.

Accenture – splitting off from the accounting firm Arthur Anderson, Accenture is one the of the world’s largest consulting firms today.

Starbucks – Before, you picked up a cup of java at a convenience store. With upscale interiors and gourmet edibles, Starbucks created a “coffee experience.”

Nike – Transformed itself from making sneakers from waffle irons to producing Nike+, which monitors a runner’s performance via a shoe radio device that’s linked to an iPod.

Allegheny Technologies – With a history going back to the Revolutionary War, Alleghany now boasts some of the world’s most advanced production capability for specialty metals.

Red Hat – It started as a catalog business for Linux and Unix software and accessories. Now an open-source company, it makes money by selling subscriptions for support, training and integration.

Apple – The reinvention king began as a desktop computer business. It now sets the bar for mass consumption of tech products such as the iPod, iPhone and iPad.

Blockbuster – You may recall Blockbuster Video — it rented out DVDs and VCRs at retail stores. Then Netflix NFLX +1.88% came along with DVD-By-Mail — and that made it cheaper and more convenient for consumers to get the movies they wanted. Blockbuster was unable to adapt and perished.

There are many different stories and paths to successful reinventions.  Great leadership is always needed.  Xerox and IBM would either be gone or be like Eastman Kodak today if Anne Mulcahy and Lew Gerstner had not come at the right time and begun to lead them down new paths. 

Some common themes of successful reinventions:

Although the execution phase of a reinvention takes many years, the decision process has to be clear and efficient.  Many companies disappear before they can reinvent themselves.  When it becomes clear that reinvention is needed, waiting until the perfect path becomes available can be suicidal.

 The CEO and the Board have to be aligned on the reinvention path, and, then, they have to communicate clearly and frequently to all stakeholders: employees, customers, shareholders and other investors, the media, and the broader community. 

The process has to be as transparent as possible, so that stakeholders with useful feedback can contribute insights as the process unfolds. 

 Hewlett-Packard is an example of a company that, during Carly Fiorina’s tenure, could not get agreement within its board about its reinvention path.  For example, the board had a public dispute about the Compaq acquisition.  The company has struggled ever since, through a variety of governance crises.

 Successful reinventions are much harder to achieve with big, transformative acquisitions or mergers, than with a combination of organic changes, combined with many small, focused acquisitions.  Large acquisitions may add assets and businesses needed for reinvention, but, unfortunately, they also add legacy assets that need to be sold or shut down.  The process of sorting out the wanted from the unwanted pieces of a large acquisition is time-consuming and distracting, and it often causes the acquisition to fail.

 The idea of moving from one business in which the company is an expert to a completely different business in a completely different industry in which it has no prior experience has about as much chance of success as going into an unrelated start-up business, which is very low.

 The company going through a reinvention has to accept the fact that it may lose shareholders who depend on the cash flow from the existing business for dividends or share repurchases, since capital has to be redeployed for growth and development in the new business space. 

 Reinvention is easier to do in a situation in which the company’s survival is at stake, like the situation faced by Xerox or IBM, when there is a “burning platform,” than it is when decline is gradual, and the conditions that precipitate the significant decline have not yet happened and are not yet visible.

 Finally, as a conclusion, reinvention is extremely difficult.  Many, if not most, companies fail at it, either because they make the wrong decisions, like Eastman Kodak did, or wait too long to make the right ones.  The reason we closely study stories like Intel and the Thomson Corporation is that successes like theirs are highly unusual. 

Sustained or transformational success is very difficult to achieve.