CTO Blog

First, good question to ask. Regarding Redhat's rev of $118, that is fairly irrelevant number when considering open source's impact on traditional vendors. Rather I think it's more important to see the hockey-stick like revenue growth of many new commercial open source vendors and the acquisitions of open source companies with ridiculous multiples like Xen, JBoss, Gluecode, Sleepycat, etc. The big vendors -are- paying attention.

Back to the original question, CaaS as you call it, is really nothing new, in traditional consulting that's a retainer, or more commonly an SLA. At the end of the day, open source is a technology that needs evaluation, deployment, customization, and support, just like any other, with a few added twists. The only reason we haven't seen more large SI's is because they follow the market, not lead, and so far the boutique's have been able to handle much of the demand, but that is changing. I believe it is EDS that has a person called a "MySQL Capability Practice Manager", and when someone invests that much in putting together a title they're beginning to take it seriously.

Andrew Aitken - Olliance Group

i can accept the 'influencer' arguement on this - after all look at the impact of Salesforce.com on the SaaS market. The 'influencer' has a disproportionate impact as it causes people to stop and think about a previously accepted situation.

btw my previous experience of this type of so called open source model consulting on a retainer was in the specialised skill are for making staff available for support purposes as and when needed

Andy ,

This is a topic I am quite passionate about and hence putting a one liner would not have done justice.

Check out my thoughts at

http://www.gandalf-lab.com/blog/2007/09/open-source-and-consulting.html

some excellent thoughts in your blog piece and urge others to read it. the thought on blurring the line between products and services is particularly interesting. thanks for the contribution!

Conventional wisdom would dictate that Open source is almost free to install but expensive to maintain and would therefore require more consultancy. That's the line MS toes in it's ad campaign.

Probaby SaaS will expedite consumption of Open Source service. If not to end clients then to SIs.

As for $118 million I wonder how Redhat is positioning itself. Being known as free software producer I believe is not a great asset for charging premium consultancy rates. That might be depressing their revenues.

The more i think about this the more i come to the conclusion that all of these elements are part of a major change in what we want to use, with whom, and how as part of the change to what ever Enterprise 2.0 really will come to mean.

I suspect that the challenge is to stop trying to match up these new ways with what we know today, and that we need to 'build it and let them come' to see how it finally shapes up.

Mixed Source Consultancy

1) Hire engineers globally to make quality hardware ( and let them use the internet as the distributed, digital enterprise it has turned out to be -- stop geolocking positions on campuses ).
2) Open source your software and make it available on your quality hardware.
3) Make your open source software available on your competitor's quality hardware ( as you innovate and make yours better ).
4) Make your competitor's open source software available on your quality hardware.
5) Make your open source available as software as service ( while remembering to give back to the open source development community ).
6) Provide both remote and on-site professional staff to help extend the software for your clients at reasonable rates. Ask your customers if they'd care to partner and sell the tweaks as a value-add edition.
8) Tap the open source development community directly for enterprise support for your clients.
9) Explain to institutional investors why company resources should be targeted at the engineers, professional staff and enterprise support folks first.
10) Hope institutional investors aren't so clueless as to miss the paradigm shift. If you happen to have your retirment funds with them, you might take it upon yourself to help educate them.

Ed ,
You are selling the SUNW (now JAVA) story.

http://blogs.sun.com/jonathan

Note that Jonathan is playing a big gamble. The strategy is not yet proven. If NASDAQ:JAVA shows revenue improvement over the next year , I would consider this strategy to be a proven model. At this point of time a lot of people are watching JAVA from the sidelines.

As of today NASDAQ:JAVA revenue is flat for more than an year and JAVA has shown better profitability by cost cutting - not rising revenue

What I am waiting for:

1. Does SUN end up monetizing Solaris via converting its "RELATIONSHIPS" from Solaris use

to hardware sales

2. OR is Solaris Support revenue a selfsustaining business in itself.

My bets at this point of time: SUN will benefit from relationship's it builds as a result

of giving solaris free to (students , startup , enterprises) . The Software insurance

policy model of Solaris support is probably not going to make the solaris business self sustaining.

open source products will end up being enablers for some other revenue stream. It could be hardware sales OR more importantly for this forum - it could be Services Sale

a good thoughtfull post. interesting that Sun are still very much pushing their 'leadership' in hardware even though this change has taken place