Tuesday, February 1, 2011

Closed or Open Source

There are many ways to segment a market. One of them is based on how customers expect to run their enterprise software deployments. The definition of enterprise software implies a degree of customization - no deployment is the same. Even the same process or function in the same industry is done differently. Just think about accounting and how difficult it is to compare financial statements from any two competitors in a particular sector.

And when we say ‘customization’, customers turn out to have different expectations. There is a scale from expecting out-of-the-box functionality to in-house developed solutions. All customers fit somewhere on this scale and it would be foolish to say that one end of this spectrum is right or wrong. As a result, customers tend to flock to two distinct camps:

1. Shrink-Wrappers
Shrink-wrappers is my label for customers who expect as much functionality as possible coming out of the box (which is a figure of speech - enterprise software doesn’t come in boxes much these days). Of course there is rarely such thing as out-of-the-box enterprise software but the customers want more pre-packaged modules, pre-defined object models, and ready-to-use interfaces and templates for everything. The shrink-wrappers are more likely to lean heavily on a professional services organization - from the vendor or from a system integrator (SI) - to do any necessary integration and customization work. They don’t want to employ a team of developers for the on-going production system. These customers buy primarily software from ‘closed-source’ vendors, not least to have a throat to choke if something doesn’t go the expected way.

2. Tinkerers
Tinkerers is my label for customers coming from the opposite side of the spectrum. They know that no out-of-the-box software will ever match their needs and they would prefer to just build it themselves. But past experience with cost of maintenance of a home-grown deployment steers them towards a vendor. They do have a team of developers on staff and they intend to keep it that way. They are likely to do most of the customization and integration work themselves. These are the kinds of customers attracted by open source - software built by developers for developers. The developers on their team like to participate in the open source development community and they can whip out a solution very quickly. And then change it again and again as needed.

Customer expectations on enterprise software deployments
There is nothing wrong with either type of customers. Both, the shrink-wrappers and the tinkerers are right and most customers fall somewhere along this scale. Some are heavy into open source, some use it just a little and some don’t accept open source software at all. The only wrong would be to claim that some of these customers have made a mistake and that they will eventually switch sides. Customers are always right.

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