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SAP sells proprietary enterprise resource planning software used to track corporate finances and manage relationships with customers, but the German company faces competition from OpenMFG, SugarCRM, Compiere and others.
But those rivals are too immature to make it, said Peter Graf, SAP's executive vice president of marketing, during a speech at the Open Source Business Conference here. When major changes occur--as is happening today with customers retooling computer systems to adapt to the Internet--customers want to bet on known quantities, he said.
"We believe that open-source business applications do not have enough time to mature before this huge consolidation wave matures," Graf said.
Graf is not the first from a proprietary software company to dismiss competition from companies that employ the collaborative, sharing methods of open-source programming. But changes of heart are not unknown: IBM bought an open-source Java application server company called Gluecode, despite having a successful proprietary competitor; and database giant Oracle considered buying open-source MySQL.
SugarCRM Chief Executive John Roberts, unsurprisingly, adamantly disagrees and said his company's technology is mature enough today for use by major customers. "We relish the opportunity to compete with them any day," he said in an interview. Avid Technology is one customer that converted from SAP's products to SugarCRM's, he added.
Another voice of dissent came from Compiere's top executive, Jorg Janke, whose software is used by, among others, a French manufacturer and seller of beauty products with 2,000 stores. However, he acknowledged that some criticism of open-source business software is warranted.
"There are lots of people who think open source is a quick way to form, so they put out marginal business applications and try to get venture capital funding," Janke said.
SAP isn't solely a proprietary software company, though its core products are. When it comes to open-source projects, "We're both a consumer and a contributor," he said.
SAP uses several open-source programs, including the Eclipse programming tools and Java application server software components such as Apache's Struts and JBoss' Hibernate. Many open-source projects are widely used enough to maintain their influence, he said.
"When the market consolidates, people (put) their investments into the biggest pile," Graf said. "Which open-source technologies are mature enough to survive the wave that's coming? Linux--absolutely. Eclipse? Yes. Mozilla? Most likely."
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Don't mistake Firefox's success as a market driven success story. Firefox has about a 10% share of non-enterprise browser usage. Not all of that 10% came at the expense of Microsoft. And most of it occurred, not because Firefox was so good, but because IE fell behind in quality.
(Contrary to the hype, FF has its own problems)
Now that MS has seen the light (thanks to FF), they are about to release IE 7. You can rant and rave it sucks and blah, blah, blah blah, but it will succeed in true MS fashion and FF will probably drop down to 5-7 percent of the market. Right now, it's just the way it is...
Don't mistake Firefox's success as a market driven success story. Firefox has about a 10% share of non-enterprise browser usage. Not all of that 10% came at the expense of Microsoft. And most of it occurred, not because Firefox was so good, but because IE fell behind in quality.
(Contrary to the hype, FF has its own problems)
Now that MS has seen the light (thanks to FF), they are about to release IE 7. You can rant and rave it sucks and blah, blah, blah blah, but it will succeed in true MS fashion and FF will probably drop down to 5-7 percent of the market. Right now, it's just the way it is...
As to big purchase buys, sure, bet on proven track records, but given that there are big companies with proven track records sharing development risks and costs through open source, open source as a business model will continue to thrive.
This isn't bigGuy vs littleGuy (Have no need to fear! Underdog is Here!): it is bigGuy vs bigGuy where one has found a differentiator based on open source. Price is only one part of a procurement; it isn't the most important part until the differences of cost vs quality and features is too large to ignore. Little guys will have to scramble in the shakeout, but that is no different in any business regardless of the model given players of differing sizes. What is interesting about the web is that for reasons the MBAs don't get because they believe in pop psychology models like the 'tipping point', deep pockets and big companies don't always win.
You can put a lot of nitrates on unhealthy soil or soil where big trees are taking up all of the water and the grass still won't grow unless it thrives in the shade. Small startups aren't lugging big legacies. The differences start to even out. Also, some markets will not commoditize and unless they do, the big companies are at a distinct disadvantage.
As to big purchase buys, sure, bet on proven track records, but given that there are big companies with proven track records sharing development risks and costs through open source, open source as a business model will continue to thrive.
This isn't bigGuy vs littleGuy (Have no need to fear! Underdog is Here!): it is bigGuy vs bigGuy where one has found a differentiator based on open source. Price is only one part of a procurement; it isn't the most important part until the differences of cost vs quality and features is too large to ignore. Little guys will have to scramble in the shakeout, but that is no different in any business regardless of the model given players of differing sizes. What is interesting about the web is that for reasons the MBAs don't get because they believe in pop psychology models like the 'tipping point', deep pockets and big companies don't always win.
You can put a lot of nitrates on unhealthy soil or soil where big trees are taking up all of the water and the grass still won't grow unless it thrives in the shade. Small startups aren't lugging big legacies. The differences start to even out. Also, some markets will not commoditize and unless they do, the big companies are at a distinct disadvantage.
Open source continues to make big inroads worldwide. Look at MySQL, look at PostgreSQL, look at China's adoption of Linux, look at the increasing penetration of OpenOffice and Linux in European governments and schools. It's just a matter of time, perhaps 10 or 20 years, but open source is going to continue to challenge companies like SAP. If they embrace it they'll probably do ok, if they go into denial or fight it they'll go the way of companies like SCO.
Open source continues to make big inroads worldwide. Look at MySQL, look at PostgreSQL, look at China's adoption of Linux, look at the increasing penetration of OpenOffice and Linux in European governments and schools. It's just a matter of time, perhaps 10 or 20 years, but open source is going to continue to challenge companies like SAP. If they embrace it they'll probably do ok, if they go into denial or fight it they'll go the way of companies like SCO.