The Size of the Opportunity



The consensus estimate in the industry is that the overall software market was about $250 billion in 2007, growing to near $300 billion in 2010-2011. The dotted lines in the following illustration indicate ebizQ estimates for the size of the OSS portion of that revenue. As discussed above, the two pieces include:

  • The value of OSS built into traditional software licenses (left-hand side of pie) such as the imputed value of Apache HTTP server included in the IBM WebSphere Application Server and Oracle Fusion middleware
  • The value of OSS-based maintenance revenue (right hand side of pie) such as the service revenue Red Hat recognizes from subscription contracts for Red Hat Enterprise Linux (RHEL) and JBoss middleware

Although imprecise, it is clear that the two dotted-lines are moving towards each other and the rate at which they move will increase in 2008 and beyond.

Figure. Graphic Representation of the Software Market Revenue Flow Showing OSS- and Closed-source convergence

Conclusion

The market will see a convergence of closed and open source software such that the terms will eventually become meaningless from a research perspective. Competing for the two pieces of the software market pie that is OSS-related are the leading traditional software suppliers (almost all of which have become OSS/proprietary hybrids as described above); classic providers of both IT and business services such as outsourcing or payroll processing; and the small remaining group of OSS pure plays. Over time, these divisions by types of revenue and suppliers providing the software will become less and less relevant to IT users: they just want good software that doesn’t break often but when it does, a substantial company is available to fix it. That is probably the most important research finding relative to IT users.

About the Author

Dennis Byron brings three decades of analyst experience to his role as ebizQ's Community Manager for Improving Business Processes. This community covers Business Process Management (BPM), Process Modeling, Process Analysis, and Business Alert Monitoring (BAM), among other topics.

As Community Manager, Byron will blog and podcast to keep the ebizQ community fully informed on the latest news and breakthroughs relevant to enterprise BPM. Byron will be responsible for bringing you breaking news on BPM daily, writing feature articles and sourcing content from other analysts, industry associations and vendors for publication on ebizQ. Finally, each week, Byron will compile the most important news and views in an e-mail newsletter for ebizQ's ever-growing BPM community.

Byron is ideally suited to the job, as he has researched and analyzed all areas of IT and information-systems use for the past 30 years. Byron looks at BPM market dynamics backed up by facts, while taking into account the perspective of the IT and business person. He is a frequent speaker and moderator on business processes, which will also be one of his roles as Community Manager.

Byron was the ERP and Middleware Analyst with the Datapro division of McGraw-Hill and IDC from 1991 to 2006. In these roles, he was the primary analyst for Business Process Management. He has conducted over 500 specific information-systems case studies. He has contributed to Application Development Trends, IT Business Edge, Research 2.0 and other publications.

Byron is also the principal of IT Investment Research, which is aimed at institutional and individual investors in IT, or anyone who enjoys peering under the covers of "the financials," where large companies and emerging IPOs like to bury their most interesting facts. His main area of interest is investment opportunities in enterprise software.

More by Dennis Byron

About ebizQ

ebizQ is the insiders guide to next-generation business process management. We offer a growing collection of independent editorial articles on BPM trends, issues, challenges and solutions, all targeted to business and IT BPM professionals.

We cover BPM standards, governance, technology and continuous process improvement, as well as process discovery, modeling, simulation and optimization, among many other areas. We follow case management, decision management, business rules management, operational intelligence, complex event processing and other related topics. We closely track important trends such as the rise of social BPM, mobile BPM and BPM in the cloud. We also explore BPMs use in functional areas, such as supply chain and customer management, and in key verticals, such as financial services, health care, insurance and government.

ebizQ's other BPM-oriented content includes podcasts, webcasts, webinars, white papers, a variety of expert blogs, a lively online forum and much more.

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