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Thursday, July 27, 2006

OSCON - Compiere - Building Successful Commercial Open Source Products

Building Successful Commercial Open Source Products by Jorg Janke

Background
- Compiere is an Open Source ERP solution.
- Started in 1999 - apparently when they started, there were 15-20 open source ERP projects.. Profitable since 2003.
- ERP is a $50 - 70 billion market.

- 250+ customers.
- 100 partners worldwide in Eco-system - Compiere concentrates on enablement / 2nd level support / second level support / training. Partners concentrate on end user satisfaction, sales, tier 1 support.
- Funded - $6 million recently.

Business Models
- Claims business model is more about who your customer is than open / closed source.
- Open source (free) gets you in the door but that is about all you get for being open source. Market share.
- Repeatedly, it has been mentioned this week that lots will use open source product but very few will enhance it / contribute back to it. Lots of architects / advisors but few actual doers.
- Start of open source project - either create it yourself or solves a problem for a limited set of people, or you create it for other people's needs.

He distinguishes between 3 models and the "Commercial Open Source Contract"
- customer does own pre-sales
- pay for support / docs / services
- "if you need help, pay for it"

Where Open Source is Risky
"Open source business works best where software is a commodity and the revenue is in service, insurance, and support." - open source is risky where advantge is in the process / algorithm, where there is high risk, fast changing industry, e.g., payroll.

Compiere Process
- Compiere only supports the latest version.
- Offer easy, stable, proven automatic version migration Service.
- Accepted sponsored development if only on product roadmap
- Accepted development contributors if only very experienced.

Compiere Contribution Experiences
People contribute because:
- improve the product for their own needs
- reduce maintenance effort (core team maintains)
- gain experience. you coach me and I work for free.

People don't contribute because:
- gain competitive advantage
- sell enhancements to others
- keep changes confidential

Contribution LevelsUse and tell others about it
- Evangelists
- References
Use it and give feedback
- QA
Share exactly what they need
- Requriements - "most crucial contribution"
Develop it or help developing it
- Design... code
- code is only 10% of effort for business applications.

Pilot customer
Pilot customer was a complete pull. Released incomplete versions. Customers saw it. Attended trainings. Then sold support contracts.

Why raise funding?- Previous discussions with VCs were not good - product unproven, process unproven, partner model will not work.
- Went about validating it.
- It became a question of growing steadily and slowly or recognize window of opportunity. Appears they raised money for growth and to compete with big boys.
- Customer attraction. VC money validates company / model.

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