Sunday, December 9, 2012

Business Models & Open Source

A  quick Google search on "BusinessModels for Open Source" brings up numerous articles and studies on the topic that proclaim there are anywhere from five major business models to over eighty examples.

While we would like to come up with as short a list as possible, the truth seems to lie somewhere in between. We have ended up with a list of approximately 20 business models for open source , depending on the mission, goals, licensing, context, and numerous other factors or variables, e.g. geography, competition, market.

Matthew Aslett, from the consulting firm “The 451 Group.” Aslett authored a report  entitled “Open Source is not a Business Model.” One of the key conclusions of the report is that 'open source' is a business strategy or tactic, not a business model.

Quite often the number of business models related to the development and deployment of open source software solutions depends on the profit motive driving particular individuals and organizations. For example, consider the following. There are:

  • non-profit organizations or communities that are not interested in making huge profits from their  free and open source software (FOSS) solutions, but are more interested in simply creating and distributing high quality, free software and solutions that will be of benefit to as many people as possible.
  • then there are those individual or organizations that want to profit from the development, distribution, and retail sales associated with various open source products and commercial add-on modules they have created and released using somewhat restrictive licenses; and
  • there are also numerous individuals or organizations that want to make a living and generate profits by offering a wide range of services in support of the open source solutions, e.g. installation, training, maintenance.

Over the past decade, numerous entrpreneurial individuals and organizations have tackled the idea of how to make money out of open source software. The idea that the only way of generating revenue from open source software is by providing support services - has become outdated.

There are now a wide variety of business strategies, tactics, or business models being employed by to generate revenue from open source software. For example:

  • Many non-profit organizations obtain funding to support the development and distribution of their free and open source software (FOSS) solution from membership dues, subscription fees, donations, and/or grants.
  • Many for profit organizations are paid for producing enhanced professional or enterprise versions of an open source product governed by very restrictive licenses. They may also offer add-on modules or bundle the open source software within other hardware and software products they offer.
  • Other for profit organizations charge for a wide range of services, e.g. consulting, installation, documentation, training, system enhancements, software maintenance & patches.  
Many other innovative companies are emerging and learning how to profit from the open source marketplace, e.g. news organizations, marketing firms, hosting, software-as-a-service (SAAS), open hardware, etc.

For more articles and information about Business Models & Open Source in the Healthcare sector see Open Health News.

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