Archive for June, 2008
Sunday Business Post – Communications 2008 Supplement – June 22 2008
Aware of the importance of non-verbal cues in communication, more firms are harnessing the power of video, writes Dermot Corrigan.
The idea of video phone-calls may have a certain science fiction ring to it, but internet protocol (IP) technology is enabling businesses to provide inter-office video communications in an affordable and uncomplicated manner.
Oliver Hunt, unified communications specialist with Cisco, said most organisations using IP networks for their voice and data traffic already had the capability of hosting video calls.
“Video is very much being bundled in as part of the IP product,” said Hunt. “From Cisco’s point of view video is just another medium from a conferencing perspective. People think bringing video across the network might bring the whole thing to a standstill, but if you are just using a traditional webcam on the top of your PC, or built-in to your desktop, it puts no real strain on the network.”
John Crowley, director with Diacom, said many organisations were rolling out video conferencing capability to allow colleagues based in different locations to communicate more meaningfully with each other.
“If 55 percent of communication is determined by non-verbal cues, like tone of voice and body language, how many important details are you missing in an email exchange or teleconference?” said Crowley. “Face to face communication is more personal, builds higher trust, reduces confusion, and makes people more accountable for their actions. That is why the ability to communicate via video is the driving force behind much of the IT convergence we are seeing today.”
Many larger companies now use video conferencing technology that enables management to communicate effectively with staff, according to Eoin Gallagher, senior solutions consultant with Cable & Wireless in Ireland.
“Within corporates the demand is very strong as you can get regular weekly updates from your chief executive, who could be located anywhere in the globe, using a video conferencing solution in each regional office,” said Gallagher.
Hunt said it was not just big multinationals that were interested in the practical use of video over IP technology.
“We have seen uptake across all sectors and verticals, everything from SMEs to the larger enterprises, and also in the public sector,” he said. “For example we have worked with people from the learning hospitals in Dublin, allowing clinicians to set up ad hoc conferences on the fly and share images such as X-rays via video. Collaboration like that, from desktop to desktop, is becoming fairly standard.”
Paul Hourican, managing director of PFH, said that many companies were making a business case for implementing video over IP systems that eliminated the requirement for expensive and time-consuming travel.
“Given the security implications of travel and associated costs, coupled with the fall in bandwidth costs, this is becoming more and more attractive for companies as an alternative to business travel between sites and indeed customers” said Hourican. “The return on investment is very compelling with systems, in some cases, paying for themselves with the savings from a single international business trip.”
Hunt said organistions that had successfully rolled out converged IP networks already should have already found that video traffic does not require significant further investment.
“If you have put your voice over your data network, it is likely that you will have gone through that process and investment already,” he said. “You will have upgraded your network and have quality of service. Rolling out other applications on top of that is relatively straightforward.”
Hourican said the recording hardware required to enable video conferencing depended on the quality of call experience sought.
“If you are having a one to one conversation, then a web camera or internal camera in your laptop, should be sufficient,” he said. “If you have two or three people involved in the meeting then you do need the plasma screen version with good quality cameras and microphones. Equipment costs go from less than €3,000 up to €6,000 or €7,000 if you are putting in a good quality product.”
Organisations who want to ensure good quality video conferencing will generally require a software solution that enables the video calls, according to Hunt.
“The cost is dependent on the numbers you need, the type of solution you go for,” said Hunt. “If you have made an investment in the core IP infrastructure, most vendors will give you the option to either buy a collaboration tool or point solution.”
After that, all actual IP video-calls, just like IP voice calls, are free, unlike traditional per-minute costed ISDN video calls, according to Crowley.
“With an ISDN network, you will have local and long distance charges involved,” said Crowley. “Video users switching from ISDN to IP can reap as much as 50 per cent savings as soon as deployed.”
Crowley said network settings generally had to be tweaked as video over IP required plenty of bandwidth.
“You may wish to restrict the bandwidth for certain users or applications, but allow higher bandwidth for your most critical video meetings,” he said. “You will want to choose a solution that allows you to adjust the bandwidth or one that automatically balances the bandwidth based on the application.”
Hourican said users relying on public, contended broadband networks to carry their video traffic could have occasional problems with call quality.
“When you are going over broadband at the moment you cannot guarantee that you will get enough quality, therefore the end of your meeting might be not as good as you hoped,” he said.
Hunt said most video calls up to now had been between branches of the one organisation, however video conferencing with customers and clients was about to take off.
“As the technology becomes more mainstream and people get more comfortable and familiar with it, they will use it to communicate with clients and customers,” he said. “For example, we have a legal firm which has deployed one of our video conferencing solutions to interact with their clients. If they are working on a particular case, they can set up a video conference and view documents together and make changes in real time.”
Gallagher said other major vendors were introducing easy to use technologies that would bring video calls into every day use going forward.
“This is where things need to go,” he said. “Products like Microsoft OCS (office communications server) will lead us towards a place where you can have a video IP session into another company that you have no real relationship with, just the same as making a traditional phone call.”
Hunt said individuals were comfortable with video now, due to the popularity of developments such as mobile-phone video cameras and YouTube.
“We all heard ten years ago that video was going to be the killer internet application, and the reasons that did not take off was quality and usability,” he said. “What has changed in the last 18 months is that people are using video in their personal life, nearly every website they visit has video content, so when they do go into the workplace, they expect to have the option of using video as a form of collaboration. That, combined with broadband availability, means that video collaboration will become very much mainstream in the next couple of years.”
Sunday Business Post – Communications 2008 Supplement – June 22 2008
Magnet continues to grow and add new services to its repertoire, such as the recent acquisition of internet telephony provider Glantel, writes Dermot Corrigan.
Broadband provider Magnet Business’s recent acquisition of Irish internet telephony provider Glantel is part of the company’s strategy to add services and products that build on its high-speed broadband network, according to Mark Kellett, chief executive of Magnet Networks.
“We looked at the market-place and saw a big gap for a converged voice and data solution that could provide businesses with a better set and wider range of services,” said Kellett. “We looked around at various opportunities to build, buy or partner. The acquisition of Glantel allowed us to accelerate our time to market, and bring in house a very good mixture of knowledge base and intellectual property. It was actually a very simple decision to make.”
Glantel, which was formed in 2006 by Declan Murphy and Darren O’Donohoe, had built up a substantial SME customer base for its converged voice and data services prior to the acquisition.
“They had just over 100 Irish-based customers when we acquired them, and they have some customers with a European footprint as well,” said Kellett. “They had demonstrated an ability to take our network and add more value to it, by offering a voice and data solution.”
Magnet Business is the business services arm of Magnet Networks, which also includes Magnet Entertainment, a provider of broadband, telephony and home entertainment to residential homes.
Kellett, who was appointed chief executive late last year, said his current primary focus was on building the business services part of the company. He said the current Irish business broadband market was less competitive than it should be and offered opportunities for Magnet to grow quickly.
“The decision was taken to focus on the business-to-business marketplace and the business consumer,” he said. “There were a lot of issues in the regulatory environment in 2007, and there has been a substantial degree of progress made by ComReg in moving the agenda forward, but we made a very clear decision to focus on where we could be successful and demonstrate success quite quickly.”
Kellett said that most of the apparent competition in the Irish business broadband market was not real competition at all.
“There appears to be a lot of competition,” he said. “But when you peel away a very thin layer, you see a lot of pseudo-competition, which I have called ‘fraudband’. Effectively most of the players in the marketplace are simply taking Eircom’s product and reselling it. Whatever way you bundle it you are still selling a contended, shared product. There are very few players who are truly innovating and actually being competitive from a product perspective, which Magnet does.”
Magnet has built on its initial fibre-optic network with the 2005 purchase of wireless broadband provider Leap, the 2006 acquisition of internet services provider Netsource, and a total investment of over €70 million in the development and rolling out of its core infrastructure.
It now has 39 unbundled exchanges nationwide enabling the provision of advanced copper-based broadband services – including SHDSL and ADSL2+ – around the country, as well as an extensive fibre based network in Dublin, Galway, Cork, Limerick, Waterford and Portlaoise.
The company is owned by Vancouver-based Columbia Ventures Corporation, and operates from Clonshaugh in Dublin 17, where it currently employs 150 staff.
“We have well over 6,000 business customers at present,” Kellett said. “They would not be small one or two person operations, we have some very large customers to which we provide services in a global context. It is a service that goes from the small home office all the way through to SMEs and up into the large corporates.”
Magnet’s broadband is offered over its own network, so customers do not run into problems with contention ratios, Kellett said.
“Businesses want to take online software services from people like Sage or Salesforce.com using the software as a service model, or have their storage requirements maintained and managed off site, but you can not do that if your broadband connection is shared with 24 other people,” he said. “If a customer buys a line off Magnet, it is their connection, they are not sharing it.”
Kellett said that, although Magnet was always at the forefront of pushing forward the speed of broadband available in Ireland, the real competition in the business broadband market going forward would centre on quality and service level, rather than pure speed.
“You can only move so much on speed, you have to then talk about what other services you can provide that really differentiate you from your competitors,” he said. “People want to start utilising voice and data, hosted environments, software as a service. The real competition, which you will see revealing itself over the coming year, is on the innovation of the product itself.”
Sunday Business Post – Computers in Business magazine (cover story) – June 01 2008
Read this story on the Sunday Business Post website by clicking here.
After developing a product and ensuring its viability, start-up firms must focus on the most critical part of business – the all-important sale, writes Dermot Corrigan.
All start-up companies come to a time when they have to move on from spending capital on developing and perfecting a product, to commercialising it and get a cashflow going. While ingenuity, creativity and an aptitude for technology infrastructure is useful, selling the concept is crucial to a company’s chances. Whereas the dotcom boom was awash with start-ups that attracted speculative money, today, it requires a lot more than a bright idea to get a company off the ground. So how is it done?
A technology start-up’s first sale often marks a major shift in the company’s development, according to Tom Hayes, director of the high potential start-ups division, Enterprise Ireland (EI). “For any company, the first sale reference site is critical, because that can lead to so many other things,” Hayes said. ”If you have a good first sale reference site, it is a calling card when you are looking for other customers. Other customers can see that there is somebody out there willing to buy the product, and if you are looking to recruit people it can swing it.”
Dr Ciara Leonard, manager of enterprise development at the Nova UCD business incubation centre, said that selecting the right customers to aim for could be a challenge. “It depends on the market for their product or service,” said Leonard.” There may be only one or two big customers in the world, and they want to service those, or there may be hundreds of different potential customers.”
Maurice Roche, partner with venture capitalists Delta Partners, said owner managers should think carefully about how to price their product or service. “That is the $64 million question,” said Roche. “Some people will say it should be ’cost-plus’ – if it costs €100 to make then work from that, say to go for a 100 per cent mark-up and aim for €200.With software it is very difficult to say, because it is all people costs and development costs, so how do you cost that?
“In my view, you should be looking at value-based pricing. Forget about how much it has cost to develop, and concentrate on how much value it is worth to the customer and how much they are willing to pay for it. It can be hard to figure that out though; you never know until you have had a dialogue with customers.
“You can try and see what your competitors are selling at,” said Roche.” You might decide to sell at that price plus, as you are bringing a lot more benefits, or you can decide to go around the same price.”
Leonard said that tech start-ups often used their first customers as ‘validators’, who helped them to iron out the early problems in the product or service that only come to light when a customer gets involved.
“You have to be able to validate your technology,” she said. ”A lot of new businesses benefit from having a reference customer that is in close proximity to them, where they can deal with any queries or faults or whatever else.”
Roche said many companies made their first sale before they had developed the support services necessary to support their product. “There are only so many things an early-stage company can do,” he said. “It would great to be able to say that all early-stage companies are very well organised from the start, but, in reality, they are not. They try to get the product to a stage where they can show it to customers and then they try and get the customer to pay for it. What you sell the first customer will be different from what you sell the tenth customer.”
As a start-up begins to deal with customers, the mindset of the whole company must change, Hayes said. “In a technology startup, there can be a switch from a very technical sell to a business sell, where you are selling a solution and a value proposition,” he said.” A technical person understands the technology, but selling to a customer is different. There is a fairly discernible shift required.”
It is important to get the right people in at the right time to ensure a steady growth curve, Leonard said. “The first couple of hires are very important,” she said. ”In a small start-up, you rely on these people heavily, not just for their core competency, but also to carry out other tasks that may need to be done. You need people who will be really loyal, so you can concentrate on other aspects of the business, rather than recruitment.”
Many companies add new board members or engage consultants at this time, to gain access to high-level experience, skills and contacts, according to Leonard. “It is important for an entrepreneur to think about how they can fill the gaps in their experience or skillset,” she said. ”A lot of times, these cannot be filled by just one other person; it might take a few sources of expertise.” Roche said people used to operating in large organisations, with layers of supporting infrastructure, could find it difficult to adapt to smaller early stage companies.
“They would be used to having secretarial support, a brand that they can leverage in the marketplace and a raft of accountants to do business analysis and financial projections,” he said. ”When you take them out of that comfort zone and put them into a three or four-person start-up, it requires a different skillset.
“You have to multi-task in those areas, and grasp the elements of technology, sales, managing people and trying to convince customers that, even though you are a small company, you are a viable entity and you have the best product that suits their needs and you will be around to support it going forward. These are all huge challenges that early stage companies face.”
Hayes said that many emerging tech companies looked for support from EI. “We can provide early stage companies with a mentor, who has been there and done that, might have started their own company or might have come from a multinational environment,” he said.
“They might act as a board member or chair a company, or, in certain circumstances, they will also invest in the company, and often, that can be an ideal arrangement.” Leonard said there were plenty of support structures available to help Irish tech start-up owner-managers deal with the day-today challenges of running successful businesses.
“Human resources issues and financial issues can be a challenge for people,” he said. ”Through our training programmes, we help them to manage administration personnel or whoever, and give them financial skills as well.” The shared learning experience of incubation centres can help new companies succeed, according to Leonard.
“For an entrepreneur in a new SME, it can be quite a lonely experience,” she said. ”We would encourage a lot of networking between our companies, and organise a lot of events based on particular areas – it might be funding or product development – and they can strike up a relationship with their peers. A lot of times, a company that is a year or two years ahead of where you are can provide a lot of benefit. We find a lot of benefit comes from sharing experiences and sharing ideas.”
Roche said venture capital firms general ly built close relationships with growing companies they had an interest in. “If we make an investment in the company, formally, we go on the board of directors of the company,” he said. ”In terms of being actively involved, in the early stages we would have a heavy involvement in the company, to try and get it up from the initial start-up phase when it is raising money, to help it make some commercial progress.”
Hayes said the most important hurdle faced by emerging businesses was getting a revenue stream in place in time. “It is always a danger that an early stage company will just run out of time,” he said. ”The funds or resources will run out and their backs can be to the wall. This can be a huge burden on an early stage company, as cash is important and if you run out of cash, you just run out of runway, and you have no business.”
Existing customers should not be neglected as stretched sales teams sought out new business, Hayes said. “It is vital that you do not say,’ fine, we have done the deal now, lets move on to the next customer’,” he said. ”It is absolutely vital that an after-sales service is provided, training is provided, support is provided etc. The closer you are locked in to the customer the better. A business development person will see the need to train and skill the customer to use the product, and develop the relationship, because the customer is always king.”
Leonard said companies should be careful not to devote resources to developing a product in ways that the market did not want. “Some people find they are developing X product or service, but what the market really wants is X+1 or X-1,” she said. ”It is key for the company to engage with the market and get plenty of feedback.”
Roche said there were plenty of reasons why new companies might fail. “Sometimes, companies do not raise enough money to get through the first two years,” he said. ”They go ahead and maybe scale up with some staff and they cannot make it. Maybe the product does not work, maybe they are trying to do something that is just very difficult, and they fail.
“Or maybe they cannot get customers, or people are not willing to pay a sufficient amount for it. Maybe competitors are too strong, and will not allow an upstart to come in and take market share. Maybe they are too early to the market – sometimes you can be ahead of your time.”
Diversification and the future
Leonard advised early stage tech companies to concentrate on their primary product and service, and not stray too far from their initial concept. “In the first year, a lot of companies would focus on their first product or service,” she said. “They tend to be working on this product or service al l the time, to make it even more ready for the market. Through their customer engagements over time, they may see other opportunities, but it very much depends on the market they are in, and where the opportunities are.”
Hayes said it was generally easier to sell to your existing customer base than it is to get a new customer. “You should be looking at upgrades, but you should be looking at new challenges and new market segments as well,” he said.
“It is a balancing act, and constant re-investment in research and development is key. It does not have to be a significantly different new direction, it can be enhancement of the product.” Roche said that companies should look to fund further research and development from their own income if possible, rather than returning to a VC or private funder to seek a second round of funding.
“The cheapest source of funding for any new technology company is from its customers,” he said. “‘There is a certain level of funding most companies need to take on board to get up and running, but after that, they should be focused on generating revenue from customers.
“Maybe if they want to expand in front of the market, they will need to take in more outside funding, but companies should be encouraged to take on as little money as possible, because raising money is expensive.” The aim of many tech entrepreneurs is to build the company to a stage where it becomes attractive to a major global player, who could be tempted to come in with a huge takeover bid. Roche said owner-managers should keep these thoughts at the back of their mind during the first few years of trading.
“When is the right time to sell?” he said.’ ‘It is when a company is sufficiently attractive to a number of buyers so you can create an auction, or perhaps a company can come in and make an offer that is good enough to accept. There are exceptions, but it should not be in the first couple of years.
“On average, people would be looking to exit a company in years six to eight. Companies need time to develop, make a name for themselves and grow their revenues.”
Sunday Business Post – Computers in Business magazine – June 01 2008
Read this article online on the Sunday Business Post website by clicking here.
The open source method of software usage is making a strong claim to take over from the more traditional proprietary model among companies worldwide, writes Dermot Corrigan.
All Irish companies might not be aware of it, but there is a battle underway to determine how companies will pay for the software they use to run their business. The current champion is the proprietary model, where companies pay their software provider for a licence to purchase and use individual copies of office suites, e-mail systems, and accounts and enterprise packages.
The up-and-coming challenger is open source – an idea that software should be given away free to customers, and the source code that underpins it should be made freely available for anyone to see, alter and improve. The proprietary model has ruled the roost for the last 20 years or so, after gaining a hegemonic footing in the early 1980s, when desktop computers became widely available, according to Simon Phipps, chief open source officer with IT giant Sun Microsystems.
“As computers were becoming more common, the manufacturers stopped distributing the source code with the product,” said Phipps.” A decision was taken to restrict access to source code, but I would not say that prior to that all software had been free. It was described as unbundling, the software was no longer supplied automatically with the computer, and the source code was no longer supplied with the software.”
For years, the open source model was used by IT professionals to develop small applications that were generally only used within the techie community, according to Josep Mitja , board member of the Open Solutions Alliance, but the last decade has seen open source sail quietly to the forefront of the mainstream.
“Open source started with very technical things, it was mostly programmers were exchanging small pieces of code that were useful for them” said Mitja. “Then came the operating systems like Linux, office tools like Open Office and browsers like Firefox. The last frontier for open source is enterprise applications, but these are also now appearing everywhere. Everything that is software will eventually become open source.”
Mitja said the main reason for the adoption of open source software into the everyday business world was its affordability.
“Open source is not necessarily always cheaper than proprietary software,” said Mitja. ”In theory it should be cheaper, as you do not pay licence fees, you just pay for services. It depends on how much customisation you require, but most of the time it works out around 40 per cent cheaper.”
Bill O’Brien, business group lead server with Microsoft Ireland, said Irish businesses did not care if their software was open source or proprietary, they just wanted their systems to work.
“In our experience, Irish SMEs are not concerned whether their IT is open source or proprietary,” said O’Brien. ”We find that their primary concerns are ensuring they have technology that meets the needs of their business, is easy to use, easy to manage, secure, works together and enables their people to get productive quickly. An Irish customer has never asked me for access to the source code for a solution.” Phipps said that a demand for better engineered software was also leading to the adoption of more open source software solutions.
“Open source software has bugs like al l software, but in the case of open source, everyone can fix the bugs,” he said.” Typically, that means fixes for popular open source software are available very fast. Often the quality of open source software rapidly increases, if it is popular, and innovation happens a lot faster.” Steve Harris, senior sales director for open source products with Novel l, said the support available for open source software was often just as good if not better than for proprietary competitors.
“Roughly speaking, services cost the same to support licenced software on multiple platforms as it does to support open source,” Harris said.” Open source software vendors often differentiate and distinguish themselves through the capability and availability of their support.” O’Brien rejected the idea that open source software was generally better value than proprietary products.
“For every piece of technology there is a total cost of ownership,” he said.
“While some products may be offered free of charge, the total cost of owning those products is very high through the need for extensive consulting services, support and maintenance.”
Linux is an open source operating system developed by a large number of enthusiasts around the world as a freely available alternative operating system to Microsoft Windows and Unix. Most Irish businesses use Linux to run aspects of their business, whether they know it or not, according to independent IT consultant Tom Raftery.
“The industry figures show that about 70 per cent of al l the websites in the world are hosted on Linux, so a lot of Irish companies are using open source software for hosting websites,” said Raftery. Novel l support the use of Linux in both web and non-web related tasks, according to Harris.
“The Irish community has historically adopted open source technology opportunistically in marginal application areas such as edge of network, web-server applications,” he said.” Over the past few years, the Lamp stack of open source software components – Linux; Apache Web server; MySQL database; and the coder’s choice of PHP, Python or Perl – has moved beyond its position as a web developer’s creative toolkit to become a major development platform for the enterprise.”
Harris said larger organisations such as EBS and Beaumont Hospital were using Linux and open source technology for their data centres and mission critical applications.
“The challenge is often about overcoming perceptions and getting people to move away from the common proprietary solutions, simply because they are so prevalent in the industry and not because open source solutions are not up to the job,” he said. Phipps said that the spread of the open-source web browser Firefox, developed by Mozilla, which is used by an estimated 70 mil lion people worldwide, was a prime example of how open source software was more innovative than proprietary.
“Everyone should be using Mozilla Firefox,” he said. ”All of the key innovation in web browser technology over the last few years has happened in the open source community. For example, tabbed browsing happened in the open source community and then was copied by the proprietary browsers.” Mozilla also offers a free-to-download open source e-mail package called Thunderbird.
“There are so many email clients out there that are free,” said Raftery.
“There has to be a pretty compelling reason to pay for your e-mail software.” Harris said some Irish software development companies were offering open source solutions to Irish SMEs.
“The best example is Sugar CRM, many companies use this to manage their sales cycles and customer contacts, with a similar look and feel to SalesForce.com but no cost attributable to the acquisition of the software,” he said.
“Commercial support is available but not mandatory, and commercial extensions have grown up around it. Another good example is Turbocash. This provides everything an SME would require for accounting including invoicing without using commercially-licenced applications such as Oracle Financials or JD Edwards.”
Industry giant Sun Microsystems recently acquired open source database developer MySQL in a deal valued at approximately $1 billion. MySQL software is free, and the company charges for services such as training and support. Phipps said the MySQL purchase was an indication that Sun saw the open source model as an effective revenue generator for the company.
“MySQL does business by selling a subscription to an enterprise service around MySQL,” he said. ”If you are one of the hundreds of millions of MySQL users around the world, and you need high quality support or you need tools to optimise MySQL, you buy those from MySQL the company.
“The acquisition has had a big effect in changing the way Sun itself thinks about open source software,” Phipps said. ”I believe open source developed and maintained software will be dominant in the market within a very short space of time.” Harris said Novell was enthusiastically embracing open source technology.
“Novell has responded by embracing open source technology and sponsoring many of the prominent open source projects such as Mono, Open Office and XEN virtualisation,” he said. ”We have become a mixed source company where we see value in bringing the best, heterogeneous software technology to the market to simplify IT delivery and management of these mixed configurations.”
However, O’Brien said Microsoft had no plans to release the source code of any of its software products any time soon.
“We believe that the world of open source and the world of proprietary software will co-exist,” he said. ”By investing in research and development we can create products that do a better job of meeting a customer’s needs than open source can.”
Sun’s Open Office software is a freely available and downloadable alternative to Microsoft’s proprietary Office suite of applications. Phipps said Sun purchased the Open Office technology for its internal use, not as a potential commercial product. “Sun decided to acquire the office suite for use on Solaris, which is the desktop system mainly used inside Sun in 2000,” he said.
“Rather than developing the software alone, Sun decided to make it open source, with a view towards developing a community to work on that source code.” A large group of independent developers worked on improving the software, and then individuals and organisations started downloading it for personal and business use.
“It is in use by tens of millions of users around the world,” said Phipps. “Compared with the monopoly that the other product on the market has, that is quite a small number, but a lot of people are not aware that a fully functional office suite that will not cost them a penny to use exists.
“People assume there is a catch somewhere, because everyone has been programmed to pay for software, but in this case there is a completely free lunch.” Google has also recently launched a suite of office products that are free to use, but are not open source. Raftery said that Irish companies that used non-Microsoft office software generally discovered them on their own.
“The majority of non-technical workplaces that use Open Office know about it as they have a particularly savvy IT manager or administrator,” he said. “But it makes for massive savings.”
Phipps said Sun had not originally planned to offer for-pay services around Open Office, but had recently introduced some support packages in response to customer demands. “You can buy support on a per-incident basis or you can buy support packs through the Sun website,” he said. ”There are also other service providers who can deliver the same thing. A lot of companies have experts on staff who save them from the need to spend money on support, but the service is always available if they need it.”
O’Brien said interoperability (the ability to transfer files and information easily between different software packages) was one reason why companies decided to stick with Microsoft’s proprietary office suite.
“A primary consideration for SMEs is interoperability,” he said O’Brien. ”Does their software work with other applications and systems? Microsoft products are designed to adhere to industry standards and ensure open connections to other products and technologies.”
Raftery said the latest open source office suites did offer such interoperability and would inevitably take over from proprietary software as the market leader.
“Open Office and Google Docs can import and export files and documents to and from Microsoft Word so you can inter-use them within an office,” he said. ”The same is also the case for Microsoft Excel. In the next four or five years nobody will be paying for office software any more.”
Open source web browsers and office suites are relatively easier to develop than more complex business software products, such as enterprise resource processing (ERP) or customer relationship management (CRM) solutions. However, more of these are emerging all the time in open source formats. For instance, Openbravo is an open source, free-to-download, web-based ERP system.
“We are the largest open source ERP company in the world in terms of people using our software,” said Mitja, whose day job is chief operating officer of Openbravo. ”Every day, 1,500 people download the software.” Mitja said Openbravo had all the functionality of its proprietary rivals.
“Openbravo enables a company to plan all its operations,” he said. ”This can include things such as manufacturing, logistics, warehouse, sales, basically all the operations in a company.
“The accounting for each operation is automatically generated by the transactions and also you can get a lot of business intelligence where you can mine the data the company generates and with this you can get executive information on your sales, capacity and other options.”
Mitja said that, while anyone can go to www.openbravo.com and download a free version of the software, businesses generally needed specialists to help them roll it out.
“It is a complex piece of software that requires a software engineer to install it and an implementation project,” he said.
“With any ERP system the software is typically customised to the needs of the customer, as business processes are always slightly different from company to company. “If you have a large organisation we could train your IT people, but typically SMEs are served by companies that help with implementation projects or system integrators,” said Mitja.
“We partner with system integrators who know the local market and who can adopt to local conditions if required. Taxes, language, etc are different in every country, but because it is open source, it is easy to localise the software.” Mitja said Openbravo was typically better value than competing proprietary ERP systems, including SAP and Microsoft Dynamics.
“The smallest project you can buy from us would be about €15,000 and can go up to €200,000 depending on how customised the software needs to be,” he said. Mitja said Openbravo’s customers were attracted by the open source model’s ease of customisation.
“If a company wants to be able to adapt the software to their own requirements, our proposition is very attractive,” he said. “The client has no restrictions and can do whatever they want with the code. There is not always the case with proprietary software.”
Some software developers and vendors have chosen to offer software to their customers using both the open source and proprietary model, and let the customer choose which suited them best. One of these is business intelligence software vendor Jaspersoft, which serve the EMEA market from its operation in Dublin.
“Jaspersoft has been around about nine years, but it changed its business model just over three years ago to an open source model,” said Tom Cahill, senior director of EMEA sales with Jaspersoft Corporation. ”We are now able to deliver business intelligence tools for everyone, at a very low cost, that are easy to implement.” Jaspersoft offer two versions of its BI tool, one proprietary and the other open source, and available for free download from Jaspersoft.com.
“They can download and implement the open source version, or they can download the professional version, which is freely available for evaluation from our website,” he said. “Once they have evaluated that they can decide whether to just go with the open source version, or whether they need the professional version, which they can then buy from us.
“The two versions are at different stages of development,” said Cahill. ”As we develop and quality assure the professional version of the software there is functionality that gets into the professional product that may not be in the open source version. Ultimately these would flow months, or quarters, or in some cases years later, into the freely available version.” Jaspersoft has partnered with Irish company Enovation to provide training and support for its Irish customers.
“Either we would provide the training, or we would enable our partners to be able to train customers,” Cahill said. ”That can be in the open source or professional versions.” Cahill said Jaspersoft’s BI products were now the most widely deployed business intelligence solutions in the world.
“We have over three million downloads of our products to date, we are exceeding 100,000 downloads per month at this point,” he said.”We have just over 90,000 production deployments globally, and over 9,000 paying customers. In EMEA we have been doubling our bookings revenue quarter on quarter.”
The open source model allows Jaspersoft to develop and innovate its product much more efficiently than if it had stuck to the proprietary model, Cahill said. “The Jaspersoft organisation is a relatively small company, but we have over 65,000 developers developing Jaspersoft products in the open source community,” he said.
“Some would be employed in IT departments, some would be employed in smaller companies, and some would be self-employed or doing this on the side. The developer community is very active and dedicated. This is what a lot of people do in their spare time.”