Open Source Enterprise Applications: Look Out, Here We Come!

Jun 24, 2009

Market research firm IDC just finished a study of open source enterprise applications with decision makers in 515 European organizations. The result: open source is undergoing market expansion in business applications.

Open source solutions for enterprise resource planning (ERP) and customer relationship management (CRM) have reached enough of a critical mass to "make a 'bleep' on every vendor's radar screen," as the IDC study reports. The leader of the study, Bo Lykkegaard, European enterprise applications program manager at IDC, is surprised by the results, as in his comments to Linux Magazine: "When you consider that open source doesn't even come up in conversation about enterprise applications, the fact that more than 5% of back-office and CRM applications are just that is pretty amazing." The percentages for security programs (such as from Clam), system management (say, from Hyperic) or content management (from Alfresco, for example) are even bigger. The largest percentage of open source software is in operating systems and databases: according to IDC, a third of those surveyed used Linux or a free UNIX as an operating system, a fourth worked with databases such as MySQL and PostgreSQL.

Lykkegaard sees the growing deployment of open source solutions to be partly due to a sea change among enterprise executives. "Open source enterprise application vendors are currently changing gears from start-up mode to market expansion mode," he writes in the report announcement. "There are clear signs," he told Linux Magazine, "they're pulling veterans into key management roles, bringing in outside capital, growing more than 20% annually and maintaining an effective distribution network and references." IDC is anticipating a prize fight in the industry as a result of the new contestants in the ring, which is good for customers that tend to go where the money values are anyway. The enterprises surveyed especially brought out the benefits of no licensing fees and smaller total cost of ownership (TCO). The biggest hurdles for open source are mostly support level and software quality concerns. Still, users tend for the most part not to be too ideological and have no problem with mixed environments. Providers show a variety of product packaging, where IDC is slowly on the lookout for new ideas, such as for a CRM appliance on a subscription basis.

The 30-page study is available for around $4,500 from the IDC website. The study includes profiles of five of the surveyed firms: Compiere, Open Bravo, SugarCRM, vTiger and xTuple. They've been getting the most press recently, says Lykkegaard about the reason why they were chosen, "and show the best market maturity. SourceForge is also counting them among the highest download volume."

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