The round-table about “Open Source for CIOs” was co-led by Carol Rizzo from Kaiser Permanente and Michael Gallagher from ABN-AMRO. Both have successfully brought some open source software in their organization. This round-table was the right occasion to actually give some feedback on this experience and explain what’s the main issues with the current state of the open source industry, from a CIO point of view.

This talk was really enlightening about what we might be missing in our market approach, as an industry. And was pretty funny, too. Read on if you’re interested by the main topics for me and some personal opinions, of course.

Michael Gallagher, SVP Enterprise Architecture, ABN-AMRO

Michael Gallagher started as Chief Architect in a subsidiary of ABN-AMRO, and begun to introduce some open source in the development strategy of his team. He is now SVP – Enterprise Architecture of ABN-AMRO.

What has been achieved:

• An Open Source policy to define a framework to use open source software in the IT environment

• A managed central repository with all approved open source components available for developers. The repository is managed and a team is now in charge of updating packages, monitor new interesting components that might qualify to be added, etc.

• Related processes for risk management and adding component to the repository

Executive, while no being direct sponsors, supported the project and enabled the change.

Open Source is now widely used by the development at ABN-AMRO and is bringing a lot of value: more agility and flexibility in the developments process, cost reductions, etc.

ABN-AMRO IT dept is now going up the stack, onto the applicative level.

Carol Rizzo, Chief Technology Officer, Kaiser Permanente

The project started for a simple reason: many tactical apps were developed by the users with a variety of unapproved and unsupported proprietary products;   products that were not scalable or supportable, thus making the applications difficult to support.  The IT dept and the management must be able to support the applications and direct the technology environment future to assure cost efficacy and supportability. This needed to be balanced against the users desire to build innovative decision support systems they believe they need. Those tactical apps, often play a major role in the organization's mission. But it was time to assess the risks (legal, maintenance, legacy) and be able to support users.

Hence, those achievements:

• Defined a OSS policy that defines how OSS can be used and under what conditions.
• Negotiated an agreement with a vendor who will provide the OSS library, assure there is community support for the OSS, test it, send us notifications of updates, provide tools for discovery and asset management and indemnify the company if there is a legal action.
• Library of open source components that can be used to build applications
• Got a support service and indemnification for this stack (from [OpenLogic](http://openlogic.com) in this case)
• Created a training program for people interested in creating those apps

The operation is now fledgling success: users are adopting the tools and feedback has been really positive.

Unfortunately the dev teams for the central IT dept are slow to embrace the open source world.  Much more communication and training is still required to convince them, but there's hope.

Personal note: I think the acknowledgment of the importance of those "tactical apps" is very interesting. Might be a new market for OSS businesses: help IT to control those apps, while enabling people's creativity.

Now here is some key quotes I’ve selected from the roundtable. They are not straight quotes, but it should reflect the general arguments. (note: I’m not a journalist

Market approach: “get a marketing pitch!”

First major point: OSS need a better marketing pitch, understand what CIOs are looking at and how they buy it. Stop explaining what is OSS. Explain what it brings and what are its benefits.

Excerpt:

Stop thinking that CIOs understand tech aspects! Most CIOs understand business cases, budget management and cost control. Get a marketing pitch, guys!
— Carol

Moreover, procurement dept prefers public company because "the vendor's financials are known and the vendor's ability to sustain and grow the software is still the risk". Procurement want to assess the financial viability of the vendor. And it's easier when the company is publicly traded.
— Carol

A don't tell me about not being locked-in: as long as I have the software installed on my servers and my users have been trained and are using an application, I'm locked in. That's all!"
— Carol

CIOs need to understand what open source actually is and what it can bring to them. Moreover, OSS can be a good way for large corporation to taste Agile, and introduce Agile in their IT dept.
— Michael

OSS is very subversive for IT processes: it bypasses easily all IT firewalls. But that could be damaging for OSS. Find a way to get in with the processes. Help IT to use you. Explain the dynamics explain what you can do for us. Explain why your approach can change things.
— Michael

Even if a bit provocative (but I like it), I think it touches the right points. I agree on most of this and this matches a position we’re defending at Nuxeo since a long time: focus on your business and “open source” is as much a business as “proprietary”. ECM is our business. OSS, our development and distribution model.

I would disagree on one point: vendor lock-in. If the software is actually open source, it does not reduce the “software-lockin” but it actually reduce the vendor-lockin, especially if the later fails. If the software is mature-enough (importance of the community), you will have alternatives to change the vendor / service-supplier. This is maybe the biggest benefit when using OSS: you have an option which is not even remotely available with proprietary software.

And on “publicly traded” and vendor viability I would say that it’s not related to open source but more to large software corp vs. small ones. And if we take our field (ECM), a strong balance sheet does not really gives any inssurance of stability: vendors can be acquired by larger ones. And in that case, you’re lock-in depends on the acquirer… Except if you choose open source, where you’ll have options anyway, thanks to competition.

About IT Department

IT dept are struggling maintaining a diverse jungle of apps, while trying to cope with new users’ needs and staying up to date on the tech innovation front. They will face huge transformation and open source might help in the mix.

Excerpt:

80-90% of IT budgets are assigned for maintenance. You can’t innovate with this. And existing apps are already paid, they don’t cost so much. Change means more money. Hence, often IT can’t deliver fast enough.
— Michael

“Shadow” IT departments are created within the organization and deploy apps, because they need it. And IT doesn’t like this. But, there here for a reason. Understand why and adapt the service delivered to answer those needs. Don’t fight them blindly. IT has to change to deliver more innovation to their users.
— Michael

The fact is many IT departments are focused on control instead of focusing on enabling. Tech is clearly enabling, IT dept should adapt themselves to become an enabling organization inside the company, and drive change. Not fear it.
— Carol

Technology has come to organizations and people understand its power. Thanks to Microsoft with Excel and Visual Basic, people have started to innovate and create interesting business applications, everywhere. Don't prevent this, it's a huge advantage for an organization. IT needs to be able to support and catalyze those tactical apps, that can be very powerful to improve the organization's performance.
— Carol

This one was really enlightening because I didn’t see all of this this way. But it makes a lot of sense. I think I’ll have more to say on this later:-)

That’s all for the excerpt of the roundtable. A lot more has been said, of course. I just captured was I thought was most important.

Thanks a lot to Carol and Michael for sharing their (deliciously irreverent?) views on IT role in organization in general and open source in particular.

One of the outcome of the Open Source Think Tank 09 was the ignition of a “Open Source Trade Association”. This might be an answer to some of the issues and advices Carol and Michael gave us today.

*To come: Business Case III — Proprietary software vendor: to switch or not to switch?*

Hope this helps,

EB.

Image by The Library of Congress via Flickr

This business case was really interesting as it’s involving an actual software user and a critical environment of deployment.

Company “A” is a medium-sized manufacturing company who needs to upgrade their enterprise software to better conduct business with partners, vendors and customers through a more seamless sharing of data and user friendly interface. Company “A” would like to remove a large dependency on a single vendor and is willing to take some risks to lower costs and reduce vendor lock-in, but is not sure how to weigh the risk vs. rewards of a different approach using multiple smaller open source vendors or how to direct/influence their principal integrators or solution providers to support that route. Company “A” wants to keep control of the solution, and therefore has decided to keep the solution in house, not hosted at a remote 3rd party vendor site.

Our group was pretty diverse: two large vendors (open source and proprietary), three small ones (open source) and a "top-CIO", which made the discussion interesting…

First recommendation: don’t start with this!
It’s pretty tough to start implementing Open Source with your ERP when you’re a manufacturing company. Start with less critical systems to get skilled, refine and assess the process.

But well, the business case is here, so okay… let’s take the challenge.

A. Can open source change the way enterprise software (especially ERP) is evaluated, deployed and serviced? Suggest one approach company “A” can take to utilize smaller open source technology components instead of purchasing the majority of the software solutions through a single vendor. What are the first 3-5 things to do to support your approach?

Open Source can certainly change how the software is evaluated. Just because it opens new horizons, risks and possibilities. As any other business innovation, basically…

So here is what we think are the must-does:

1. Get someone skilled on board, be it an external consultant or an internal resources. You need someone to guide this process and avoid the obstacles. He/she needs to be knowledgeable is all aspects of the project: business case, it projects, open source. Or build a team to merge all those skill if the project if big enough.

2. Get an Open Source Policy and a Common Infrastructure Stack: either you want to start an integration work for your ERP or take an OSS platform, you need an OSS policy (licensing, contribution, etc.) and a “standard stack” (what are the core tech choices: you don’t want a tech mashup instead of a well engineered tech stack) of components to guide the RFPs and/or your tech team in their choices.

3. Take care of Open Standard and software architecture: if you start integrating components, it’s the right time to make sure you’re building on open standards and on a well-defined and well-engineered software architecture. If you choose a platform, it helps too anyway. [Personal note: it should be the case regardless the open source or proprietary nature of the software. It’s just a good practice for your organization.]

B. Typically, mid-sized companies deploy the technology their SI or solution provider recommends. What are the top three (3) things a mid-sized company could do to incentivize channel partners (SIs, solutions providers) to accelerate development and deployment of enterprise solutions based more on open source components?

Well, money is usually a good incentive…

1. Explicitly ask in the RFP to have — at least — an alternative technical platform leveraging open source software

2. Constraint the budget allowed to license fees. In the worst case you’ll get a better deal on license costs. In the better, you’ll spend less and more wisely: actually adding real value (that actually matters to your business) to the software. And the SI will think it’s good for him because he’ll get more on implementation and support.

3. Highlight that developing an open source skill in its existing practice will give him a competitive advantage compared to other SI. And other company of your field might also consider this way if your experience is positive.

C. Are the decision factors and priorities (e.g., acquisition costs, vendor lock-in, maintenance costs, risk of software failure running the business, risk of vendor going out of business, etc…) the same when comparing traditional ERP solutions vs. multiple, open-source based software solutions? If different, name the top 2-3 factors that would be prioritized differently.

Well, from a business perspective, it’s alway a balance between cost, gain and risk. From that perspective, it doesn’t change actually. But there is new factor you need to take into account:

1. Check the community size and the actual software adoption in the world. This give resilience to the open source software. This resilience is a protection from vendor failure (or acquisition) you wouldn’t hope for proprietary actors (small and big). If the main vendor/maintainer fail and there is a market for support and innovation around this software, the market will do its work and players will propose services and maintenance. The community is key here, it gives you a way to be sure of the resilience the software will have, hence drastically reducing the vendor lock-in.

2. Assess that the SI can actually deliver support for the software. Require he gets the right contract from actual maintainer of the core software. You don’t want to be stuck because the software has a bug and the SI cannot deliver the right skills to fix it. Open Source Vendors exists for a reason.

3. Benefit from the speed of innovation you can get from open source: influence the roadmap, ask for generic features to be contributed back on the main code line (hence reducing the specific code you’ll maintain), understand how you can benefit from ongoing work on the software.

D. Is a SaaS model always preferred for an SMB company looking to utilize open source enterprise applications due to the high risk integration costs? Under what circumstance would SaaS NOT be a preferred alternative for an SMB with similar dynamics?

General answer: don't seem to be interesting for the case, but would need to dig into it. And it would require a complete business case only for this.
One key point, though: do not loose the flexibility of the software and the control on your data that the open source approach is giving you.
[Personal note: using SaaS for your core ERP does not make sense to me except if you don't need customization and flexibility and that your completely trust the provider to not loose / keep your data.]

Done!

I tried to represent what was said. If I forgot something, comment. And if you have reactions to those results: same.

Happy implementation!

EB.