A heterogeneous software model

Three aspects differentiate proprietary and open-source models: development, licensing and business models. Licensing and business model differences have far greater impacts on an enterprise than how the software is developed. Proprietary software is traditionally licensed for a cost to the user. These licence fees are the predominant source of revenues in any proprietary software business model. Although a vendor may offer consulting and support services when selling proprietary software to customers, these may not be necessary to use the software.

Unlike proprietary software, open-source discloses the human-readable source code. Open-source software is sometimes available for free on the Internet. Although open-source developers also view their software as intellectual property (protected as a copyrighted work,) it is typically distributed for free and frequently licensed to allow users to modify the software provided the modifications are also licensed for free. However, some open-source licences allow for proprietary customization and sale of the modified code. Although an enterprise may have the internal expertise to customize the software to make it useful, it’s more likely the enterprise will get its open-source software from a vendor that also provides the needed consulting, customization and support services. These services comprise the most significant source of revenues in the open-source vendor’s business model.

The differences in approach were once far greater than today. Proprietary software is developed “in-house" by programmers paid by their software company employer. Open-source projects were once commonly developed by volunteers working for free in an ad hoc online collaboration. Today, major open-source projects are developed by paid programmers who work either for a non-profit open-source organization (often funded by proprietary software companies), or for a proprietary software company that supports internal open-source development. Proprietary companies historically built their software around proprietary formats and interfaces. In the modern heterogeneous IT marketplace, these companies pursue far greater interoperability using popular open standards.

In terms of business models, one of the greatest distinctions from the user’s perspective in choosing proprietary or open-source software is that the cost of the former is typically front-loaded, with the major cost being the initial software purchase. Open-source software typically must be customized and maintained, so where the initial software cost may be insignificant, these other costs may be substantial and distributed over the life of the software.

To meet the changing needs of enterprise chief information officers (CIOs), vendors have become more closely involved with both approaches. For example, although a typical IBM system today will consist predominantly of proprietary software, IBM has long been a leading commercial proponent of open-source software, funding numerous open-source projects, including early Linux development, and releasing a portfolio of patented code as open-source. Their early support, along with that of Sun’s, was significant in the growth of the open-source community. IBM has also provided proprietary source code to corollary open-source projects, for example, the Lotus Notes code to the OpenOffice project. Microsoft has sought to bridge its proprietary software with open-source. Starting with a novel approach to disclose code, their Shared Source Initiative provides the source code for Windows to many partners and customers. The company also created the Open Source Lab to participate in and support the open-source community. In 2008, Microsoft published “Interoperability Principles", committing to better ensure interoperability with open-source and other IT, and the company works with Novell and Red Hat among others to enable use of Windows and open-source servers in the same environment.

Over the past 20 years, proprietary software companies have learnt much from the open-source world. At the same time, the open-source world has matured, learning from those in the business of selling proprietary software. Indeed, IT companies once exclusively working in one domain are now active in both. For the CIO this means there is more choice in software and hardware solutions. For the procurement officer or policymaker, this means it is more important than ever to avoid procurement preferences based on development or business models because preferences could preclude the best technical solution available to meet enterprise needs.

CIOs choose technology that best fits their requirements, and increasingly, such choices include a mix of proprietary and open-source software. Public policymakers know that enabling mixed IT is good for continued growth in the IT sector and their economy as a whole, whether in the US or India. Proprietary software and open-source vendors alike recognize the importance of both approaches to their customers and to their businesses. IBM supports open source projects that enhance their consulting and services business, complements their proprietary offerings and best competes with the products of their major competitors. Microsoft works with open source vendors, particularly on interoperability, to assure their customers can build the heterogeneous IT environment they desire. Novell and Red Hat have drawn on proprietary development techniques and entered agreements with proprietary vendors to assure stable and interoperable enterprise architecture. No single approach is the right approach, and rightly, CIOs are now drawing from both worlds to meet their needs.

Stacy Baird is former advisor to members of the US Senate and House of Representatives.

Comments are welcome at theirview@livemint.com

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!