Open Source

Open source is driving digital transformation, according to mainstream businesses

Open source is a big deal for software vendors, but mainstream enterprises derive the biggest benefits.

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Image: iStockphoto/phive2015

Many of us declared victory for open source years ago, once it came to dominate key industry trends like big data, mobile, and cloud. But the real sign of winning is when mainstream enterprises talk about open source as part of their earnings calls. Once open source becomes a key component of financial performance, the momentum is unstoppable.

Combing through the last few quarters of earnings transcripts, it's clear that open source has arrived...but to very different destinations, depending on the company.

SEE: Ebook—IT leader's guide to achieving digital transformation (Tech Pro Research)

Why deny the obvious child?

Vendors are perhaps the most obvious place to start the analysis, and here we get wildly divergent perspectives on open source. Despite almost every software company now incorporating open source software into its products, some companies clearly hold on to the idea that open source is a pesky threat.

Not, however, Hortonworks. For Hortonworks CEO Rob Bearden, open source isn't just frosting on his business model: It's the heart of how Hortonworks builds products. Coming off a strong Q2, Bearden credited the open source development model for yielding superior big data tech, even as he took not-so-subtle swipes at Hadoop rival Cloudera:

[E]very day, we're continuing to see the evidence that companies are selecting open source data platforms over platforms with proprietary extensions....And today, our open source security and governance technologies significantly outperform our competitors' proprietary IP....[T]his is making open source the safest option for enterprises....[O]ur model consistently delivers new technology to market much faster than our competitors.

However, as much as Hortonworks touted open source on its earnings call (10 times on each of the last two calls), supposedly proprietary Cloudera more than doubled that number (referencing open source 21 times on its latest earnings call). For Cloudera, open source is a critical part of its overall product, but not the whole product.

"Our hybrid open source software model combines the best of open source software with Cloudera's proprietary software that meets the exact requirements of large global enterprises and public sector entities, especially in the areas of performance, data security and compliance," Cloudera CEO Tom Reilly said on the call. "These capabilities are not available in standalone open source or from other vendors."

SEE: Why every developer is an open source developer now (TechRepublic)

For less open source-centric companies, open source is less of a focus while remaining prominent. Alteryx, for example, credits open source with changing the industry for all vendors, and talks about "addressing the trained data scientists around the world who are looking for a code-friendly platform that supports open source tools like ARP, Python and Scala to help them effectively do their jobs." In other words, "Hey, so long as data scientists want to use open source tools, we'll support them."

For New Relic, open source simply isn't good enough to compete ("[W]e have seen several open source projects in the past attempt at [Application Performance Management], but it's never been a real competitive threat for us historically").

For IBM, which offered just one mention of open source, it's primarily important as a marker for big shifts in the mainframe market ( z14's encryption advance is "the biggest reinvention of our mainframe technology since the reinvention for Linux and open source software 15 years ago"). Yippee.

As for Red Hat, the $2 billion open source leader, open source was called out just five times. For Red Hat, open source is implicit in everything it does.

Outside of tech, however, open source is also getting its due.

All the cool kids are doing it

There is, of course, blatant misuse of open source. Take, for example, Adidas calling out its partnership with Kanye West as a big part of its open source strategy. No, it makes no sense because it has nothing to do with open source...or software...or, really, anything.

SEE: Why AWS Lambda could be the worst thing to happen to open source (TechRepublic)

Much more interesting, however, is The Bank of New York Mellon's chairman Gerald Hassell, who declared: "[O]ur early commitment to an open source digital platform sets us up nicely to continue to differentiate ourselves in the global marketplace." For a large financial services company to publicly acknowledge the importance of open source to its services is a big deal.

The reason for this comes out in Sabre's earnings call, wherein CEO Sean Menke pointed to open source as a competitive differentiator: "A combination of cloud deployment and ability to integrate open source solutions will allow us to respond to our customers' demand for speed and agility, while balancing our cost." As such, "In 2017, we're accelerating our adoption of the latest open source technology."

As Google, Facebook, and other web giants know, open source (often coupled with cloud) gives enterprises the flexibility to innovate faster. To do it well, companies must invest in developers who, in turn, contribute code and develop both proficiency in a project and the ability to influence its direction. That's open source done right, and it's even better than Kanye West.

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About Matt Asay

Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.

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