Business & Technology Nexus

Dave Stephens on technology and business trends

The Problem with Procuring Open Source

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Say you’re a senior strategic buyer, in charge of software. You’ve worked with the business to nail the requirements & now you’re ready to issue an RFP. You’ve found 3 vendors who seem like great candidates – but 2 are traditional firms and 1 is, gasp, an open source outfit.

You issue a 50-page document with 275 questions to the 3 parties – but only the traditional firms respond. Sound familiar? Or how about this? You call up the 3 vendors and try to set up dates for them to come visit. The traditional, closed source firms with their large direct sales force say “no problem,” while the open source firm says “no thank you.” You are left in a fog about how to proceed.

The plain truth is Open Source is proving to be just as disruptive to the enterprise buying process as it is to enterprise software markets. And understanding how to adapt procurement processes to fully evaluate open source options has become a “hot topic.”

The simple reason behind the disruption is that open source firms make up for their low-to-no license fees by dramatically reducing sales & marketing expenditures. See p21 of this Larry Augustin presentation for a wild guess of an income statement comparison between closed an open source firms.

So, let me offer some practical advice… Here are a few suggestions for how to include open source in your next evaluation:

1) Try, try, try before you buy

Open source firms typically expect you will have used their online service or downloaded and installed the application & kicked the tires before you contact them. They expect buyers to qualify themselves. Naturally, when the open source vendor is receiving nothing in upfront license, sales costs need to be zero too! And don’t just try the open source software early, try all of them. If some prove too costly to even install, well, that’s a good early indicator that TCO will be a problem. And SaaS vendors will love the bake-off, their whole premise of existence is how easy they are to use.

2) Replace fly-in’s with Webex

Don’t expect open source vendors to fly to your main government office or corporate headquarters to meet you & do a sales pitch. It’s so rare it might as well never happen. Instead, ask for virtual meetings and get together remotely. Viva la webex! (or Glance, etc)

3) Evaluate solutions on TCO, not upfront costs

Just because open source might offer you a “free pass” on license does not guarantee it offers the lowest TCO for your business. Evaluate projected TCO at the 1-year and 3-year mark. Is the open source vendor on an expensive technology stack? Is the software so complex to install and manage that a closed source SaaS vendor is a better value? Choose the solution that fits best and keeps costs down.

There’s a lot more ground to cover here, but hopefully these 3 suggestions will get you pointed in the right direction. And good luck!

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Written by Dave Stephens

07/8/06 7:26 AM at 7:26 am

Posted in Coupa, Open Source, Opinion

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