In-Depth
Is Open Source BI at a Tipping Point?
Open source BI vendors believe their value proposition looks even better at a time when buyers are cinching up their purse strings.
Even in the midst of today's manifest uncertainty, open source BI and DW vendors are surprisingly upbeat. It isn't that they welcome economic tumult or disruption (what journalist Naomi Klein pejoratively calls The Shock Doctrine), of course. It's just that they believe the open-source software (OSS) value proposition -- which combines a comparatively low (but by no means free) price tag with flexibility, at the expense (most observers concede) of some feature or functionality parity with closed-source offerings -- shines ever brighter at a time when buyers are fastening their seatbelts in a bumpy global economy.
As a result, open source BI proponents anticipate a sharp uptick in customer interest, from new and existing buyers alike. "I think open source is attractive in economic downturns. JBoss, MySQL, and Red Hat hit their strides in the sort of downturn during the 2001 to 2003 time frame. I think they were receiving significantly increased consideration by companies that might have passed them by before," says Nick Halsey, vice-president of marketing and product management with OSS BI specialist JasperSoft Corp.
"People still have the business imperative to get their job done, but now they're being told to do more with less. For example, how can they build that supply chain solution and [simultaneously] make sure that they're focusing on their most profitable products without BI? They can't -- but wouldn't it be good if they could also take a couple of hundred thousand dollars out of their IT budgets at the same time? The logic from there just flows, and that's part of the [open source] value proposition."
Halsey -- whose grandfather was Admiral Bull Halsey of World War II fame -- downplays the idea that low (or even rock-bottom) cost is OSS' only value proposition.
"I always say to people that they will often find us because they perceive there's a price advantage to open source software, and that's what causes them to look at [JasperSoft] in the first place. That's why I do think that if there's an economic downturn, people will more actively consider open source," he concedes. "I also think [customers will] buy us because we're based on a modular, J2EE architecture with a Web 2.0 interface, not just because the cost is lower."
Vincent Pineau, general manager for the Americas with OSS data integration specialist Talend, frames the issue even more starkly.
"We definitely do not feel that open source should equate to free. Yes, we are lower [in price] than our competitors, but we also do not want people to think that cheap in price or cheap in features. We believe that the right features are what people should focus on," Pineau says.
"Yes, we are very affordable. We come in at a fraction of the price of what you would typically pay in maintenance [for competitive tools], but what's more important in this [economic climate] … would be the flexibility of the licensing [options]." Talend, Pineau argues, lets customers license its ETL and data quality (DQ) technology on a subscription basis, which he says is both more affordable and more flexible -- insofar as it drastically lowers the bar for quick uptake and (should things not pan out) quick divestiture of its ETL technology -- than competitive offerings.
"We allow [customers] to do it on a subscription basis, which really allows them to do two things: first, right-size their investments. For example, today you have a need for 10 [ETL developers], tomorrow you might downsize to five, but next month you might upsize to 15 -- so they get that ultimate flexibility," Pineau continues. "Second, the subscription license alleviates the need for an upfront commitment. Instead of making a huge upfront commitment, they can go in at whatever level they're comfortable with."
OSS doesn't equal free, but according to JasperSoft, Talend, and other OSS vendors, it typically does come in at a fraction of the cost of competitive, closed-source offerings.
"Price can be a big factor in the ultimate decision, yes," agrees Halsey. "We typically come in at about 15 percent of our [closed source] competitors." In today's climate, advocates argue, cost savings of that magnitude will almost certainly translate into an uptick in interest and adoption.
"We recently had a large Fortune 50 industrial services company where we went head-to-head against [a prominent BI platform provider]. Their initial bid was $1.4 million, including product and services," Halsey recounts. "Our initial bid was $170,000. What was fascinating was that the customer went back to [the vendor] and said, 'You're up against an open source competitor that's literally coming in at one-twelfth of what you want to charge us.' They [the competitive vendor] ended up dropping their bid to $250,000, but the customer picked us because they got so upset at that price. They felt [the vendor] was trying to rip them off."
The FUD Factor
OSS vendors have typically decried the use of fear, uncertainty, and doubt (FUD) whenever it's been employed against them, and with good reason. Closed-source competitors (or open-source skeptics) have raised concerns about OSS intellectual property liability, OSS quality, and OSS security, among other issues. Ironically, some of the messaging from open source proponents smacks -- if only just a little -- of FUD itself, in today's climate.
Call it poetic justice, of a sort. It all has to do with longevity. In a milieu in which even venerable bellwethers -- including banks and Wall Street investment houses, among others -- have been gobbled up by larger firms, longevity or viability is an indisputable concern. That's one OSS advantage, according to proponents: unlike closed source alternatives, you don't have to worry about an OSS vendor -- or its publicly available and non-proprietary source code -- going away.
"[In Talend], you have someone who's giving you not only a solution that's flexible and diversified, but you have access to the source code, too. You don't have to sign an escrow [agreement] with us. You're not worried about what's going to happen if we get acquired, or if [in the current financial climate] we disappear," Pineau argues.
There are cases, too, in which OSS vendors have embraced competitor-generated FUD, trumpeting their perceived limitations -- chiefly, a lack of polish, along with perceived feature or functionality shortcomings -- as selling points.
Take Martin Schneider, director of product marketing with OSS CRM specialist SugarCRM Inc., who contrasts his company's technology-centric philosophy with what he alleges are the "marketing-centric" approaches of its competitors.
"We identified a lot of the problems and the inefficiencies in the proprietary model, where you saw the best engineering trumped by the best sales and marketing, so [SugarCRM's] founders set out to change that," Schneider argues. "The idea was to use the open source model as a seeding strategy and as a market penetration strategy, with [the outcome being that] a customer can say 'I choose this product because it's a better product, not because it was marketed the best.'"
In the current climate, Schneider suggests, customers probably aren't primarily concerned with vendor staying power. At the same time, he points out, longevity does factor into their calculus -- if only tangentially.
"People are becoming more risk-averse when it comes to IT decisions, not just because of the economy but in general, too. There's an awareness [of potential risks] there and people do assessments based on different levels. The economic viability of a vendor is just one of them -- although it's an important one," he comments.
Like Talend's Pineau, Schneider also touts an inherent flexibility advantage for OSS software. SugarCRM, for example, offers both on-premises and off-premises (i.e., software-as-a-service, or SaaS) licensing. That's part of what Schneider means by flexibility. Development flexibility, and, particularly, the legendary customizability of open source software (thanks to complete source code transparency) is also important, he maintains.
"An in-house developer can take [our software] and customize it in any number of ways, and a number of those [customizations] really aren't hard coding. That's always been the case," he says. "More recently, we've offered customizability even for novice users, [via] our new Module Builder [component]. We've basically packaged up all of the core business logic and thrown these up as building blocks that even a novice user can take and use to create brand these new applications or extensions to the existing CRM modules and really extend that platform."
BI as an Investment
Information Builders Inc. (IBI), with its roots in the venerable mainframe segment, is a far cry from an OSS vendor, yet IBI officials -- far from lamenting the current economic climate -- actually see it as an opportunity for the BI industry as a whole. Ditto for officials from Teradata Corp., Microsoft Corp., Dataupia Inc., Netezza Inc., and a host of other proprietary vendors.
It isn't so much a question of cost or of cost-savings, says Michael Corcoran, vice-president of corporate communications for IBI, as an issue of spending some money (on BI or BI-related assets) to save a lot more money in other business or technology areas.
"In any downturn, you have companies focusing more explicitly on their bottom lines, cutting costs, getting more from what they have. The good news [for BI vendors] is that companies now realize that they can use BI to do that. There isn't a need to do as much education as maybe there was in the past," Corcoran argues.
"Companies realize that they need better insight into their operations, into their costs, into their profitability, [and] they know that BI gives that to them. This is a case where the industry as a whole is going to do very well, as far as [adoption by] customers is concerned."
Randy Lea, vice-president of product and services marketing with Teradata, agrees. "From a customer perspective, I don't think there's any more key technology [than BI and DW] right now," he comments.
Lea and Teradata are an interesting case study. Once perceived as a monolithic, expensive proposition, Teradata is reinventing itself as a flexible, affordable play, thanks in part to pressure from a bevy of scrappy upstarts (Netezza, DATAllegro Corp., Dataupia Inc.) running highly customized open source RDBMSes on top of commodity hardware. Its new mantra might as well be an "enterprise data warehouse in every pot" -- and that just so happens to be Lea's prescription for what ails many companys today. "We are more price-competitive than ever," he maintains, "and when you look at the value that an enterprise data warehouse provides, particularly in [a climate] like this, I don't think there's any question that we're going to see more interest from customers."
Even OSS proponents agree: what's good for open source software is good for everyone. It's just that they expect to benefit far more than do their closed-source competitors, says JasperSoft's Halsey.
"BI has remained a number-one priority in good times and bad for the last three or four years. Whether you're reading Gartner or a variety of other people who track these things, people are just trying to do everything they can to have better operational efficiency," he indicates. "They need to grow their sales and cut their staff and slash expenses at the same time. Look at Starbucks. They just said they want to close something like 400 stores. Obviously, they want to keep the profitable ones open and close the unprofitable ones. They want to know where they can best allocate resources to open new stores. Only business intelligence can give them that kind of insight."
If OSS BI can do so at a more compelling price point, Halsey concludes, why wouldn't customers adopt it?
"We're very much focused on the core BI suite: querying, reporting, analysis. That's what customers need. True, we don't have all of the bells and whistles of our competitors. Look at Business Objects: they have everything in there. They have the kitchen sink in there. We don't have the kitchen sink, but we also don't have that kitchen sink price tag."