Coldwater Creek Inc., a $590-million retailer of women's apparel, is no open source neophyte. It uses Linux-based terminal emulation software to boost performance at one of its 500 employee call centers. It cheaply acquired open source components for spam prevention and other peripheral applications. It's even considering open source for a desktop alternative in one location.
But when it comes to critical systems, such as those for enterprise resource planning (ERP), the company isn't biting.
For Coldwater Creek, a commitment to a major vendor's technology path, namely Microsoft's .NET, meant open source wasn't a contender for the company's ERP system. Other companies weighing open source argue that the technology simply isn't ready for certain applications. Nonetheless, they "have to investigate open source for every piece of the business where it makes sense," says Michael Carper, divisional vice president of technology operations at the Sandpoint, Idaho, company.
As the experience of Coldwater Creek and other companies illustrates, the promise of open source software extends far beyond Linux. So do the limitations and challenges of using it, especially in the midmarket. Open source has caught on in databases, middleware and even enterprise applications. Affordable open source network and infrastructure monitoring tools compete with the likes of IBM's Tivoli and Hewlett-Packard's OpenView. Newly prominent vendors such as MySQL, JBoss and SugarCRM claim they offer prime-time software, with as much or as little support and customization as you want, and on the cheap. One of today's hottest development platforms is an open source agglomeration known as the "LAMP stack" (which stands for Linux, Apache, MySQL and Perl/PHP/Python).
But the proliferation of alternatives to conventional vendor offerings can pose tough choices. A midmarket CIO may have a tight budget as well as a small staff and a mile-long to-do list, factors that can offset the initial appeal of adopting open source. Hidden development and support costs -- not to mention integration challenges -- can usurp savings. Technical immaturity, coupled with a dearth of open source experts, can make open source risky for critical applications. And then there's Microsoft, which competes fiercely with -- and may derail -- the open source movement, the community-driven effort that continually develops and makes available the source code free of charge for use or modification.
Tips for Open Source Implementation
Here are some experts' thoughts on evaluating open source and, if you move forward with it, getting the most out of the software:
Know thyself. In many midmarket businesses, IT staff is already stretched thin. Keep in mind that even smallish open source applications require significant development expertise and time.
Don't place your bet on cost alone. Forrester Research analyst Michael Goulde says, "Your analysis should include ... better support for open standards, more choice and greater flexibility."
Start slow. Forrester says that because the open source platform LAMP is already widely used, applications suitable for LAMP make a great stepping stone.
Get your legal department involved before you commit. While vendors opposed to open source exaggerate its legal minefields, corporate counsel should carefully vet any contract to keep you from getting ensnared in lawsuits.
Don't expect miracles. Laura DiDio, an analyst with the Boston-based Yankee Group Research who has researched open source's total cost of ownership (TCO), says, "The biggest danger companies face is believing the hype. Whether a company manages to lower TCO and achieve fast ROI depends on its attention to basics like testing, planning and configuration deployment."
Midmarket adoption rates are hard to come by. For the granddaddy of open source, the Linux operating system, some midmarket research suggests that interest grows with organizational size. In a June Forrester Research Inc. survey, 35% of 140 respondents from businesses with between 500 and 999 employees say that it is "very" or "somewhat" important to consider a shift to Linux this year. (But an identical percentage say that it's "not at all" important.) By contrast, in 343 companies with between 100 and 499 employees, only 27% say that it's "very" or "somewhat" important to consider Linux now, while 47% say it's "not at all" important.
In other words, open source hasn't made much of a dent in the smaller, Windows-centric end of the small and medium-sized business market, though it has certainly caught the attention of midrange IT organizations.
Another study shows significant Linux penetration in the midmarket for some kinds of servers. In a July AMR Research Inc. survey of 90 technology executives, about half of whom are from companies with fewer than 500 employees, respondents from smaller enterprises name Web servers (73%) and databases (69%) most frequently as either already running on or earmarked for Linux. Mail servers are mentioned by 58%, while 49% say that application servers are running on Linux. Only 27% of IT executives from smaller companies say that they're running or planning to run such enterprise applications as ERP and CRM on Linux. The one constant seems to be that no matter whom you ask, low cost is the key to adoption. (See "Tips for Open Source Implementation," above, for other considerations.)
This was first published in October 2005