Opening SaaS for open source

At SaaScon 2007 in Santa Clara, California, last week, there was much buzz about the future of the industry with regard to open source software. One particular speakers panel session was entitled “Tapping into Open Source for SaaS” and sought to examine “how open source software and Software as a Service models are rapidly converging to create the business model of the future.”

It’s a good time to be in the open source SaaS biz, then, as panelists SugarCRM chairman/CEO/founder John Roberts, president/CEO William A. Soward of Adaptive Planning, and SpikeSource’s Joaquin Ruiz would surely agree.

And recent figures would bear out this confidence in the market, for it appears that while SaaS is growing steadily particularly among SMBs, open source programs are winning over customers in heretofore uncovered areas.

A study recently released by IDC, The Adoption of Software as a Service in Small and Medium-Sized Businesses: Perception Versus Reality, analysed results from the company’s 2007 survey of 614 small- and 418 medium-sized businesses in the United States.

Most pointedly, the study showed Software as a Service’s strong growth potential, with 5.1 percent of PC-owning small firms and 15.2 percent of PC-owning medium-sized firms planning to move forward with a SaaS solution within the next twelve months.

Survey authors caution, however, that specific solutions will be driving this growth, as few firms show attraction to SaaS in general. This is where open source programming can fill SMB needs and make a little money in the process.

Interestingly enough, open source SaaS is already making serious headway in Europe and the wedding of the two is on honeymoon in Asia (more on this momentarily), but interest in the United States lags.

In Europe, folks figure this has mostly to do with Oracle/Siebel’s dominance in the American CRM software market. With firms like SAP and Salesforce.com chipping away at that lead, however, US business are certain to come around soon enough.

Inspiration to make the challenging switch to open source software may have been provided earlier this month by Lumen. While smaller companies such as Iona Technologies and Aras have switched to an open source business model, Lumen’s size should cause more of a ripple effect toward the software biz.

Lumen hosts a SaaS platform currently used by over 200 commercial customers with 150,000 users and is reportedly the first PHP platform to focus on SaaS developers. Lumen explicitly markets its product as making possible as an alternative to proprietary SaaS development platforms such as AppSpace and Microsoft’s OfficeLive.

Lumen is targeting its platform at PHP developers (reportedly a gang of some five million-plus) wishing to provide SaaS to end-users, but want to develop with open source standard tools running on a Linux Apache/PostgreSQL/PHP server stack. The Lumenation SaaS application server and software development kit is free, and creators of web-based desktop applications are encouraged to download pre-developed application frameworks for SMB, enterprise and educational end-users to the site.

What does this mean? It means that Lumen may have officially, um, consummated the “marriage” between open source and SaaS for American audiences. It also indicates that the chief stumbling block for open source hawkers, that simply of innovation, may have been overcome despite the lack of success by ActiveGrid’s attempt to become a mainstream-level PHP application server.

The Lumen plan may well be the end result of the evolution of commercial open source software that began with Red Hat and MySQL and continued through SugarCRM to hint at becoming what more than one outlet has called “a disruptive force.”

Indeed in the Asian business world, open source, SaaS and the interplay between the two have moved beyond “disruptive force” status and into the mainstream. IDC Asia-Pacific has released numbers showing that some 83 percent of the Eastern market has exposure to open source software. SaaS penetration has seeped into approximately one-quarter of the Asia-Pacific software industry and this number is growing steadily.

Meanwhile, in Europe, proprietary software daily comes closer to a dodo’s fate, with open source blowing the traditional stuff out of the water. It seems ever more clear, though, that open source SaaS can’t fail to make headway in the United States; the only question is how quickly the inevitable may happen.

Here, that big problem of innovation comes up again but in a different sphere. Could it simply be a question of marketing? One observer remarks that perhaps open source companies should simply cease calling themselves “software companies” in order to more effectively impart the mentality of a new technological paradigm in the ‘States.

The “Software as a Service Perceptions Survey” undertaken by managed web hosting provider Rackspace shows that the Great Unknown lies between open source SaaS adoption and the SMBs who could be using the stuff. Among the revealing statistics were figures that showed that nearly 36 percent of responding SaaS customers were unaware of uptime guarantees provided in the SaaS vendor Service Level Agreement and 49 percent of enterprise Software as a Service customers do not know where the infrastructure behind their SaaS application lies.

Just as importantly, though, survey respondents showed high enthusiasm: 51 percent of respondents currently employed at least one SaaS application and 72 percent of those users were considering additional SaaS applications. And 69 percent of respondents believe SaaS is the preferred software delivery method of the future.

Without further education on such systems, the adoption of open-source technology will be stalled. But not for long: Wide-ranging adoption of open source SaaS can’t be too far ahead; its time is clearly coming and coming quickly.