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A Merger of SaaS and Open Source

Posted by Bob Warfield on September 20, 2007

Ben Kepes has some fascinating ideas about how to merge SaaS and Open Source.  I’ll admit, I posed the question to him in response to another post he’d made, but his answers are well worth thinking about.

One of the things Ben asks is why there can’t be a SaaS Open Source company?  In other words, why not open up the source of the SaaS offering?  Given that a tremendous amount of what SaaS provides is Service not software, that’s an intriguing proposition.  Perhaps they could afford to give up some source and open it for others to play with. 

Some questions would have to be worked out:

–  How do we keep SaaS competitors from springing up with the open source code?  My answer would be to keep some essential part of it closed, but to open up the interesting parts to work on.  For example, if we had Salesforce to do over again, Force the platform would be closed.  It’s the razor.  The Salesforce CRM application would be open.  It’s the blade.  This would make it dramatically easier for anyone to add new functionality to the core application.

–  SaaS wants everyone to run the same version.  Open Source allows tons of versions to co-exist.  This one is a trade off.  If you want the benefits of Open Source, new versions have to be able to coexist and customers have to be able to choose which version they want to be on and when to upgrade.  I would envision each version as being multitenant, however.

There are probably a lot of other questions, but I think Ben’s brought up a new business model that may just make a lot of sense to someone.

11 Responses to “A Merger of SaaS and Open Source”

  1. […] Administrator wrote an interesting post today!.Here’s a quick excerptBen Kepes has some fascinating ideas about how to merge SaaS and Open Source. I’ll admit, I posed the question to him in response to another post he’d made, but his answers are well worth thinking about. … […]

  2. benkepes said

    Thanks Bob – always keen to talk to people interested in this sort of conceptual framwork

  3. […] different ideas have sprung up: Ben Kepes blogged about the merger of the two and Bob Warfield followed up. Anshu Sharma even touched on the topic in this post. One thing is certain from my perspective: […]

  4. […] about the business of open source.  His comments about hosted open source, which is a lot like combined SaaS and Open Source, are particularly […]

  5. damonedwards said

    Bob, I enjoy your blog and your insight but I believe that this “new business model” is a stretch. I live on a daily basis in both the OSS and SaaS worlds (as one of the founders of an OSS provider where all of our customers are SaaS or e-commerce providers). There is tremendous value in both OSS and SaaS business models, but the idea that they are somehow congruent or could be combined into one model doesn’t hold up.

    It’s true that some software vendors may operate open source software as an on-demand service that supplements their other support, consulting, or licensing revenues that comes from customers who operate their software “on-premesis”… but that doesn’t mean that it’s a good idea for pure SaaS providers to “go open source”.

    People often mistakenly think that the main point of Open Source is community. The real value of Open Source is found in its freedom, not the community. Community is just a byproduct that comes from a well run open source project, not the point of Open Source itself. In fact, there are lots of ways to foster a passionate user base without Open Source (just look at Apple’s relationship with consumers). If you take a closer look at the post from Ben Kepes that you site, you’ll see that those points he makes are all generic ways to build customer passion independent of whether or not the company has anything to do with Open Source (let alone software).

    When I say the value of Open Source is “freedom”, I really mean the abilities to: use the software however you want, modify the software however you want, and talk about / share your work with anyone you want or get help from anyone you want. (Read for more detail)

    That freedom delivers tremendous value to anyone who has to run or maintain that software. In a SaaS world that means all of the value goes to the SaaS provider. Saas customers don’t run the software so the value of the code being open source is essentially nothing (except for perhaps some auditing or disaster recovery usefulness).


  6. rnigro said

    Bob, I think that SaaS and Open Source already co-exist quite nicely – your point about the SaaS provider really being in the business of the service and not the software is spot on. However, it’s the way that software is constructed that allows them to create the value that flows in the form of a service. That is, by constructing a valuable and meaningful application on the open source standard LAMP (disclaimer: I work for MySQL), many SaaS vendors are taking advantage of open source.

  7. smoothspan said

    Rnigro, some SaaS vendors do take advantage of open source. Interestingly, many are built on Oracle rather than mySQL which increases their cost basis tremendously. I’ve been researching an article on this to understand their thinking there. We still haven’t many “strong” models, though, where the SaaS application itself is open sourced.

  8. damonedwards said

    Bob, not sure what you mean by “strong models”. Could you clarify that?

    Also, its still not clear what’s the point of a pure SaaS provider applying an open source license to its core code and allowing distribution. Why would a community form around that code? The users are looking for a service, why would they suddenly want to run the software and start hacking?

  9. smoothspan said

    Strong Models = SaaS vendor outsourcing their own code rather than just using some open source.

    Why would an open source community form around a SaaS vendor?

    I think it is very hard to generalize that, but let me try to give an example. Let’s suppose the SaaS vendor is offering a service that benefits from being extensible in some way. For example, suppose Adobe Photoshop was a SaaS product. Having all the plug-in filter effects be open source would be a very worthwhile community around that service.

    Here’s another example. Suppose the SaaS vendor is dual mode. SugarCRM is this way. You can buy it perpetual or SaaS, and it is Open Source. BTW, I had a conversation with them one time about their open source community. They said it was mostly around letting customers get features they wanted sooner. It wasn’t really hackers working for free. I can understand that, having talked to a lot of Enterprise customers who want some pet feature NOW. With Open Source, they could work on it, and it would be up to the vendor whether to fold it back into the code line.

  10. damonedwards said

    Bob, in your conversation with SugarCRM did they mention how similar their SaaS codebase is to their on-premises product codebase?

    The needs of running a on-premises CRM app and a multi-tenant global SaaS service are quite different. Just a guess here, but I can’t imagine their SaaS codebase looking much like the open source on-premises codebase after a short while.

    I agree with you on the point that encouraging customers to create plug-ins is a solid business move. But what license you do that under is a secondary consideration (look at the decidedly closed source AppForce).

    In Ben Kepes posts to which you linked he was talking about opening up the entire SaaS platform. That’s the move that I’m having a hard time understanding.

    Thanks for diving into this issue. Obviously it’s one that is on a lot of people’s minds and needs to be sorted out.

  11. […] another aspect to the ecosystem argument.  Why not Open Source the platform?  We’ve gone back and forth about Open Source and SaaS before on this blog, and it surely doesn’t make sense for a lot of things, but it seems […]

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