IBM has been extremely active in Open Source, but you have to realise that IBM is immense, it is into Hardware, Software, services and support; so something that works for IBM because of our size, and our revenue models do not necessarily work for smaller companies. So it is important to understand this hybrid Opensource and Proprietory world. The entire world is not going to be open source tomorrow, so how do we live with both worlds? So if your Venture Capitalist comes and asks you, "Show us your Intellectual Property, show us your patents.." it very important to know how to operate in this hybrid world.

A standard is like a blueprint: it tells you what you must do if you actually get around to building something. I happened to interact with a company which was planning to launch a software product, and I know this company is not going to last long. They do not have a fundamental understanding of where their value is going to be in. They were spending too much time convincing people to take risks on their particular product. Instead they should be trying to sell the concept of Open Standards on which their products are based.

People want to know how things are developed and how they are used. Particularly when you are talking about partnership type of environment, and they even go down to the code level. They are concerned about security problems and you probably do not want to hear"Trust me, we have the code and we will make sure it is secure." An open standard is one that is developed and maintained in a particularly transparent way with community involvement, and is "freely" available and implementable.

Standards allow systems made by different people to work together. It's taken a long time for the industry to figure out. We (IBM) also realised this in 1998, that customers, whom we serve are going to buy systems from multiple sources and one question that they always have but don't necessarily ask is ‘What is special about your software that will allow me to rip it up and put it on someone else's software?' The typical response would be "Don't worry, it will be good for ever, we will be here and take care of any problems." It does not work out that way. Customers have become very savvy. So while it very important to make software which is very reliable, secure, innovative... what is going to protect your customers is usability.

We have a product Websephre (enterprise server) a very successful product. It contains major chunks of opensource code, and lot of that code supports standards. What we want is that everyone uses the best enterprise server in the world, because then we can talk to everyone else in the world. So if we have a base of customers, that has implemented standards in a good way, we can then offer them more customized services.  Lets say the customer has so much money to spend; would he rather spend it on the plumbing or on things which are closer to him.  So open source allows you, a much faster time to market, with the important features that your customer needs.  Very rarely is everything open and there is a range of what can be open. (See diagram One )

From a vendor perspective Closed is very good, "We can then have the customer locked in" But this is  1980s and early 1990s thinking. Customers are smarter now and from their perspective it is our responsibility to make a better product at the right cost.  So that is why (See Diagram one) we need to push all these elements here as much as possible to the left (open). We also need to look at issues like what about after version one, and backward compatibility. There are some major industries which have sprung up because the later versions of a product do not support the earlier versions, customers do not like that. From a government perspective there a serious concerns about maintenance and here is where open standards become very important, and they need to look into whether they have a choice of vendors large or small.

IBM is not an open source company. Yet we spend a tremendous amount of resources for Open source, we have 800- 1000 employees working full time on open source code. So why do we do this? We do identify the product categories for which open source make sense.  We provide Linux a lot of support and it has been a tremendous success. We estimate that it costs US$500 Million to create an enterprise class operating system. IBM has invested about US$100 Million on Linux, which is a tremendous amount of money, but we have got an operating system that is worth five times that much, so if you are thinking like an investor in terms of what you are getting and what you are paying, this is great. So we constantly ask ourselves where else should we use open source.  Popular open source projects can become the common implementations, have wide distribution, deployment and also accelerate SOA (Service Oriented Architecture) adoption, which is very important for IBM.

OSS (Open source software) can be a major source of Innovation which can happen anytime anywhere and might be downstream. Development through "open communities" leads to potentially broad ideas and creativity.

OSS is a source of competition and disruption in the marketplace, be it in Office productivity applications or Operating systems (Linux for servers, desktops).

Earlier Information was closely linked to the application that created it. The control is with the software developer. The new style is, information is represented using real open standard, and not under the control of any single vendor, and multiple applications can create and access information interchangeably. Control is with the customer and not the software provider. The idea is to control software development and not the customer.  The web is about open standards, there are millions of web-pages and they can be accessed from different systems, and this model is going to be replicated in other areas. Open Document standards is another example.  If you are a novelist and have written something on one word processor you should be able to read it in any other word processor, after all they are your thoughts.

Coming to Business Models, nowadays you hear Software developers say ..."We should do services - there's a lot of money there." and  Service providers say ..."We should develop and sell software - there's a lot of money there."

The fundamental question to ask is  where and when do we make money. So it is possible to give away something here if we can make more money there. Its like taking Rs.10,000/- and investing it in the stock market instead of putting it in the Bank. Some people might say this is a stupid thing to do, since you do not have access to the money. But then if you end up with more money in the end by doing this, it makes perfect sense. So the same type of thinking applies here, even though I may not get paid any money on the actual product, it might be an investment encouraging other types of revenues to come my way, things like support, maintenance, services. ( See Box)

Think of some of the big successes today, and how Service Oriented Architecture (SOA) has been used. Do you know how the Googles and the Amazons of the world run their systems? Do you as a customer, care whether they run on open source or not? So you could be open sourcing your software at the same time providing a service over the open source software, or may be you are not providing the service but are networking with  service providers and partnering with them or doing a profit share.

There are billions of minds doing open source code, there are a hundred thousand open source projects in the world. It might be easy to say that lot of them are junk and  insignificant. May be a bunch of them are, but look closely and you will see that there is a tremendous amount of extremely high quality stuff that you will ignore at your peril. Particularly if you are trying to sell something that your customers could get for free otherwise. So you got to keep that person down, and have to do things like web services etc.  You will have to look at your business models closely, the old ways are not going to work any more. So you could increase the amount of proprietary code and innovate on top of the open base. Change your business model or move into new product areas, or buy a few open source companies. 

The next aspect is to define open standards specific to each vertical industries, like health care and education. Because if you have these open standards as a customer, you do not have to worry about the how people implement your solutions.  The industry is seeking a new equilibrium. So the three key words are going to be  Transparency, Community, Certainty.

(These are excerpts from the speech given by Dr. Bob Sutor Vice President- Standards and Open Source- IBM, at an event organised by TiE  in Bangalore.)

 
Issue BG64 July06

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