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Open source software lures cost-conscious CIOs

Can't foot the bill for high-end enterprise software? Some midmarket CIOs are turning to emerging commercial open source vendors. They've got the goods, they're eager for your business and the price is right. But there are some risks, so go in with your eyes wide open.

Midmarket CIOs who yearn for high-end functionality but can't foot the bill are turning to emerging open source vendors. Although there are risks, experts say it's an opportunity to get in on cutting-edge technology for a more reasonable price.

When security concerns prompted Yodlee Inc., a developer of online financial services applications, to bring its system monitoring software back in-house, Senior Vice President of Operations and Information Security Tim O'Brien looked for a vendor with a simple, low-cost solution.

It's like not having a Ferrari. You don't know what it feels like to drive one.
Cliff Bell
CIOPhoenix Technologies Ltd.
Instead of selecting an enterprise-class proprietary vendor, O'Brien went with a system monitoring product from San Francisco-based GroundWork Open Source Inc. that was based on the open source system monitoring platform known as Nagios.

"Our outside provider actually did utilize HP OpenView, so we were familiar with it and its agents were on our system," O'Brien said. "But that's when we knew we had to invest a lot more in OpenView to meet our needs because we had grown to a certain business point. Either we could continue with HP or go to another solution. I've done two HP OpenView implementations in the past… and I was very familiar with the other top products."

The difference in cost of implementation for O'Brien was substantial. He said he spent about $150,000 on customizing and implementing GroundWork Open Source's product for Redwood City, Calif.-based Yodlee. "If I did this with one of the big players, it would be $300,000 just for licensing, and I would have to tack on another $300,000 just on professional services," he said.

But it wasn't just the savings that prompted O'Brien to go with an open source solution. He said he also believed he could get an open source solution up and running faster than the proprietary alternatives.

"The larger products are very complex and make doing the simple stuff hard," he said. "So with this open source and this Nagios-based platform, it really made the easy stuff easy. I was able to start off quickly, get some monitoring done, and build in the complexity as I needed it."

O'Brien said his experience with past implementations of enterprise-class products told him to keep his initial investment low because the back-end costs always add up.

"I've spent hundreds of thousands of dollars post-product after I've brought in software, for consulting services and support, and sometimes they don't even get it right. It takes them a long time to customize things. And then you have to fix problems as they come up. It's just amazing. Every solution, no matter what you buy, you're always going to have to customize them. To me, why not start with a lower-cost solution and customize from there?"

Get in on the ground floor

Cliff Bell, CIO of Phoenix Technologies Ltd., a Milpitas, Calif.-based provider of core system software products, claims to have saved at least $100,000 by choosing open source and gives the thumbs up to other CIOs.

If a CIO finds a vendor in its early stages he could save even more money, said Bell, who uses GroundWork and also volunteers to sit on the company's advisory board. Emerging vendors sometimes look for customers who can help them establish a track record of success.

Bell said he's sure he's missing out on some high-end features by not going with the big guys, but it doesn't really matter.

"It's like not having a Ferrari. You don't know what it feels like to drive one."

Potential risks

Alex Fletcher, chief technology analyst at Entiva Group Inc., a research firm that focuses on the open source market, said open source vendors are an option for midsized firms looking for a modest total cost of ownership. But moving into open source isn't without risk, and it takes a commitment.

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"A lot of the effort has to be self-directed," Fletcher said. "These are by no means the packaged, one-stop solutions you will find from proprietary vendors. It takes a more dedicated approach to finding support, becoming a member of the [open source] community, and leveraging the open source model."

Fletcher said there are a number of quality open source-based products available. Products focused on IT infrastructure have enjoyed popular success in the past, but Fletcher said many open source-based customer relationship management and enterprise resource planning products are mature enough to help many midsized companies.

Steven Smith, founder and CEO of FiveRuns Corp., an Austin, Texas-based company that's beta-testing an open source-based systems management solution, said open source products appeal to CIOs of cost-conscious companies. However, Smith said, open source products also appeal to CIOs at companies of all sizes because the procurement process can sometimes be less of a hassle.

Bell said open source products also tend to be debugged before they hit the market.

"With proprietary companies, during beta release, early adopters debug the code," Bell said. "In the open source model, the developers debug it. By the time it gets packaged, it's leading-edge."

Bell conceded that many CIOs may have a hard time finding emerging open source vendors. He said he has an advantage since his company is located in Northern California, near the heart of the open source movement. But, he added, there are other ways to find emerging companies.

"Go to venture capital sites and see the lists of companies they are funding. Visit Find the nerds in your company."

Let us know what you think about the story; email: Shamus McGillicuddy, News Writer

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