A serious challenge: Open Source
A serious challenge: Open Source
ECM vendors face the open source challenge
The comparison between Microsoft and open source, according to Alex Lee, director of Lateral Minds, is popular but dated. “People always take this perspective of Microsoft versus open source which is a gross generalisation of the whole thing and actually it is irrelevant.”
Lateral Minds is the sole distributor and integrator for Alfresco, an open source enterprise content management suite which many analysts believe presents a real challenge to license-based ECM software vendors. It was founded in 2005 by John Newton, co-founder of Documentum and John Powell, former COO of Business Objects and it has some serious US financial backing.
Although Lee comes across as a mild-mannered man, there is sharp edge to him that belies his placid exterior. Not only does he believe that Alfresco’s open source model is superior to current license-based applications, but that the whole license-based system is heading towards collapse.
Now that organisations are happy to spend on ‘business value’ and considering how far open source software has evolved, its appeal goes beyond open source fans.
“It used to be that you had to have the IT expertise to use it, and they had to spend heaps of time customising it,” says Lee. “The return on investment and the risk associated with using open source was generally always too high.” Lee believes the advent of packaged open source solutions is changing the market space, “as they allow the business guy who doesn’t really know anything about open source to see the value in its difference.”
Lee sees open source moving up the “value chain from the database and operating system level and the libraries of bits of code that people that people wire themselves to completely consumer-able business applications. We’re going to see more and more applications come up with open source alternatives that make it more consumerable… ERP and CRM, I think open source will offer something there.” Presently there are alternatives but, he says, “they’re not packaged and consumerable yet”.
Don’t spend money on licenses, spend it on development and customisation…You know, to suit your business’ needs.
This tune is being sung across the world by open source solution providers. Of course, these companies are in business too, which to some extent tarnishes the altruistic message. But should open source’s origins limit the possibilities of its future? As a business operator, this question is probably irrelevant. The key to its acceptability in business, as Lee points out, is that it works and that service levels are met, which is where companies like Lateral Minds fit into the picture. As Lee points out, “We provide support to our customers because we support a solution, not a product.” If customers don’t want the ‘solution’, they can opt for Alfresco’s free version, but Lee says “we just won’t support you. So the support option is purely risk management nothing else.”
A sign of the times is the different way organisations are managing risk around IT acquisitions. Lee says, “Now more and more organisations are used to using Linux at the operating system level because IBM are doing it for them and manage their risk, or Sun, or whoever. In other words the risk management is being handled by the outsourced vendor, so they
don’t have to manage it. The business idea is irrelevant because it’s not business for them anymore. No one really cares.”
Haunted by the past, future dilemmas
Another issue related to implementing a document management system is that it is complex. You can’t just do document management argues Lee, which is something that caused problems when they were first being released over fifteen years ago. “Suddenly organisations were realising that document management was a lot harder then they thought it was going to be. Now, the second time round, a lot of organisations are looking in to open source options such as Alfresco.”
Now says Lee, “People are trying to go from an applications-driven environment to a processors-driven environment. They’re trying to pursue organisations who understand their business processors and use those who can map out their requirements…They can’t do that with legacy built solutions. Most of the document solutions are there are legacy solutions, they were built 15 years ago…they’re not truly services oriented.”
And it is this history of failed implementations that Lee believes has encouraged organisations now looking into document management to seek out alternative models. “There’s this huge cost issue going on that says, ‘document management didn’t work before, or it was too hard and didn’t work properly, how do we mitigate those risks?”
Lee says it is for this reason that Alfresco’s founder, John Newton left Documentum and set up Alfresco. On this, he believes that the license-based model is doomed for failure, which he argues is “this is more true in Australia than it is elsewhere” because of the size of the market and its maturity. On the other hand, companies like Documentum won’t fail; not because it’s product or licensing model is superior to competitors, but rather due to its thousand-pound gorilla of a parent, EMC. But even with Documentum, Lee says they are getting less work through this channel and more through Alfresco.
“As a result, there is a lot of convergence going on where companies are buying companies and they’re not buying them for the products they are buying them for the customers to support that maintenance model that they have to survive…It’s nothing to do with product features because it would be cheaper for them to build it themselves. It has nothing to do with time to market, they key driver is to find customers to support their failing financial model. If you look at in this way, you see that these companies have spent traditionally 20 – 30 percent of their revenues on sales forces, marketing and probably less then 2 percent on that support organisation so they’re running their business on those customers loyalty end yet the have a very poor support function. So that’s creating a huge church where customers are saying, ‘where’s my support, I’m not getting it, so why should I choose you?’”
And it is not just Australia’s market that can’t sustain this model. “In Europe and America there are enough people that it’s going to survive a little longer but fundamentally, that is the problem with all the vendors….What that’s doing in the market is driving the push for commercial open source, that only do service we don’t charge you for stock and you don’t have to pay an upfront cost because we only do service…
So why are organisations looking at document management today? Believe it or not, compliance is more than a vendor beat-up; it is an inescapable driver for document management in many organisations in Australia.
Lee says, “In a lot of organisations I’m talking to, the reason why they’re interested in document management is because they failed last year’s audit. They couldn’t prove the evidence for review, they didn’t have a central repository and they couldn’t show a process of how they control access to documents.”
While Sarbanes-Oxley came into effect a few years ago in the US, these regulations are now washing up on our own shores via passed-on penalties from head-office for those who fail audits. “There are a lot of regulations now that are rolling out to Australia and New Zealand where people have got to react; they’ve got no choice. I get called up by CIOs who say ‘you’ve got to implement this by December 31st, or I’m dead.’
Lee says that Australia distance is the reason why it has taken a number of years to respond and organise their own processes. “Some of these compliance issues were a little ambiguous in the first place and they weren’t so strict in the first place because they wanted everyone to have an easy path to take it on themselves.”