Business

The current economic climate has created opportunities for the application of efficient IT solutions for businesses.  SaaS and cloud computing, amongst other alternative IT business models, can help businesses create efficiencies and better purchasing models.  According to Roger Burkhardt, President and CEO of Ingress, the application of open source technologies will continue to grow through 2009. 

The following are the first three of seven predictions by Burkhardt for 2009:

1. Adoption of open source software will increase as the economy worsens. As the 2008 recession extends into 2009, it will change the software landscape, as the economic "shock" forces businesses to make structural changes to their IT strategies to drive down costs. Open source software eliminates up-front licensing costs and drives down the total costs of new projects. It also introduces competition that will be used by customers to improve their negotiating position with the oligopoly of proprietary software vendors that dominate the market. Open source companies will see stronger year-over-year revenue growth than the proprietary software sector. Our company, Ingres, an open source database provider, recently announced that 2008 revenues will grow by more than 25 percent over 2007 versus traditional industry software growth rates at 7 to 8 percent annually. Growth rates for propriety vendors will take a hit despite moves by traditional companies like Oracle to actually raise prices during the economic downturn. The company's 45 percent increase on its BEA acquired-WebLogic application server, for instance, is causing customer migration to JBoss' open source enterprise application server.

2. Open source adoption will accelerate across the full infrastructure software stack and into applications. As more companies seek innovative solutions that do more with less, they will follow the early adopters who 10 years ago pioneered the use of the Linux operating system and in recent years have been using open source throughout their infrastructure stack. Areas of significant infrastructure adoption include Application Servers, Messaging and Databases, especially for Java-based applications, which are standardized and relatively easy to port to open source solutions. At the application level, we'll see accelerating adoption of Business Intelligence (BI), Enterprise Content Management (ECM), and Enterprise Resource Management (ERP) solutions.

3. SaaS and cloud computing solutions will grow and pull open source with it. Software-as-a-Service (SaaS) and open source share the same attractive economic model with lower overall costs and, critical for this recessionary environment, they both have zero up-front capital costs and variable operating costs. Companies will continue to move to subscription-based services that allow them to get a better handle on their IT costs. Moving to these pay-as-you-go services will also let executive teams re-size their technology budgets to adapt to current economic conditions, or to their company's changing revenue streams. Both SaaS and open source will see growth in new adoption. And SaaS growth will also pull more growth in open source as it delivers the right economics for the SaaS providers. As more companies integrate both forms of software into their internal IT systems, we'll see more customers push-back against yesterday's proprietary licensing models. Together, SaaS, cloud computing and open source offerings will also allow entrepreneurs to start new businesses with very little capital, even during a recession.

As an entrepreneurial law and SaaS law attorney, I am excited about the trend of open source and SaaS models and their potential in software licensing markets.