We use cookies and other similar technologies (Cookies) to enhance your experience and to provide you with relevant content and ads. By using our website, you are agreeing to the use of Cookies. You can change your settings at any time. Cookie Policy.

Why do customers embrace open source software? While mythology says it's all about getting access to source code, reality is a little different. Most enterprise IT organizations have little time to mess with somebody else's code, not to mention their own.



So when you pop the question, the answer you'll usually get is "price."

But is open source actually cheaper?

The first answer is that open source vendors have a different pricing model: unlike proprietary software, you don't buy a perpetual license up front because you can download the software for free. But if you want support or upgrades, you pay with annual subscriptions.

That's a nice proposition for customers who can eliminate the need to ante up comparatively huge sums up front for so-called "perpetual" licenses. In many case, they can expense rather than capitalize the software.

But for any vendor with more than 5 years in the business, the notion of shifting from licensing to annual subscriptions makes cash flow dicey.

That's because, when customers pay as they go for annual subscriptions, they can theoretically pull the plug at any time. Conversely, for vendors, eliminating upfront license sales places in question how to finance product development. Although software development never stops (look at the rate by which most vendors issue patches), the bulk of development cost should occur up front.

Nonetheless, because customers are increasingly demanding subscriptions, subscriptions they will get.

Yet, are subscriptions necessarily cheaper? Over the long haul, they shouldn't be. Otherwise the software industry couldn't afford to stay in business. Vendors need to earn a profit, while customers require affordable software. In other words, the laws of supply and demand should produce a price that the market will bear.

Are subscriptions anything new? Not necessarily. When you peer under the hood, subscriptions start looking a lot more familiar.

  • 1. By imposing annual fees with no obligation for renewal, subscriptions look a lot like paying for software by utilization. If you don't use it, yank the subscription.
  • 2. The annual fees clearly resemble the 15 - 20% annual "maintenance" charges that always accompanied perpetually licensed software.
  • 3. Most open source licenses under which code is downloaded do not convey ownership. So when open source support is offered by subscription, it starts looking a lot like the software leases of yesteryear - a model that SAS still uses to this day.
  • 4. Subscriptions are becoming common for non-open source products, like Salesforce.com.

-1-

1  2  

   Next Page

Explore Our Topics

  • EDITOR'S BRIEFING
  • Virtual Conferences
  • Webinars
  • Roundtables

BPM in Action

March 10, 2011

The sixth annual BPM in Action 2011 Virtual Conference will explore cutting-edge market developments in BPM and describe how to leverage them for improved business operation and performance. More

View All Virtual Conferences

Smart Case Management: Why It's So Smart.

Date:Nov 05, 2009
Time:12:00 PM ET- (17:00 GMT)

REGISTER TODAY!

Date:Oct 29, 2009
Time:15:00 PM ET- (19:00 GMT)

REGISTER TODAY!
View All Roundtables
  • Research Library
  • Podcasts
  • News

Joe McKendrick: Part II of II: Designing Evolve-ability into SOA and IT Systems

In part two of Joe McKendrick's recent podcast with Miko Matsumura, chief strategist for Software AG, they talk about how SOA and IT systems need to change and grow and adapt with the organization around it.

Listen Now

Phil Wainewright: Helping Brands Engage with Social Media

Phil Wainewright interviews David Vap, VP of products at RightNow Technologies, and finds out how sharing best practices can help businesses understand how best to engage with online communities.

Listen Now

Peter Schooff: Making Every IT Dollar Result in a Desired Business Outcome: Scott Hebner of IBM Rati

Scott Hebner, Vice President of Marketing and Strategy for IBM Rational, discusses a topic on the top of every company's mind today: getting the most from IT investments.

Listen Now

Jessica Ann Mola: Where Will BI Fit In? Lyndsay Wise Explains

In BI, this tough economy and the increasing role of Web 2.0 and MDM are certainly topics on people's minds today. WiseAnalytics' Lyndsay Wise addresses each of them in this informative podcast.

Listen Now

Dennis Byron: Talking with...Deepak Singh of BPM Provider Adeptia

Deepak Singh, President and CTO of Adeptia, joins ebizQ's Dennis Byron in a podcast that gets its hand around the trend of industry-specific BPM.

Listen Now
More Podcasts
  • Most Popular
  • Quick Guide
  • Most Discussed

Quick Guide: What is BPM?

Learn More

Quick Guide: What is Event Processing?

Smart event processing can help your company run smarter and faster. This comprehensive guide helps you research the basics of complex event processing (CEP) and learn how to get started on the right foot with your CEP project using EDA, RFID, SOA, SCADA and other relevant technologies. Learn More

Quick Guide: What is Enterprise 2.0?

A lot of people are talking about Enterprise 2.0 as being the business application of Web 2.0 technology. However, there's still some debate on exactly what this technology entails, how it applies to today's business models, and which components bring true value. Some use the term Enterprise 2.0 exclusively to describe the use of social networking technologies in the enterprise, while others use it to describe a web economy platform, or the technological framework behind such a platform. Still others say that Enterprise 2.0 is all of these things. Learn More