While it’s nice to think that large swathes of tech journalists are suddenly supporting open source, much of the reason for all this good press can be attributed to a number of positive research reports from the likes of IDC and Gartner. These industry analysts have been busy investigating open source adoption over the past year and have been publishing some really interesting results.

Open source moves to top-down adoption

As long ago as June 2008 Gartner surveyed 274 enterprise companies globally and found that 85% had already adopted open source, with most of the remaining 15 percent expecting to do so within the next year. It looks like Gartner’s prediction has come to fruition. Forrester’s April 2009 report “Open Source Software Goes Mainstream” questioned 2000 software decision makers. The report concluded that open source has risen to the top of the executive agenda, with the author noting that “the mandate’s coming from higher up” and that many bosses are now demanding “faster, cheaper, better”. This is a major step change for open source, which historically has entered organisations under the executive radar using a bottom-up approach, most likely installed by IT and programming teams and gaining traction through the organisation, often becoming widespread before the CIO even knew it existed.

In a May 2009 report by Wall Street & Technology, Accenture echoed this conclusion, saying that "financial services firms are taking a different look at open source technology now that they are financially constrained”. The article cited major investment banks contributing to open source source projects, recognising a maturity in their approach to open source that goes beyond simplistic cost savings.

IDC also found that CIOs allocated up to 24 percent of their budgets to open-source software in 2008, up from 10 percent in 2007. We await the 2009 figures and expect them to be higher still.

This all echoes our own recent experience at Kineo Open Source. Increasing numbers of our enterprise customers are saying their executive teams insisted on including open source alternatives in their software procurement. It really does seem that open source has finally moved from bottom up to top down adoption and increasing numbers of corporates are getting much more serious in their approach to open source, taking the long term view as project contributors as opposed to just taking a free ride on the reduced licensing costs.

Open source moves ‘up the stack’

The other big change in open source adoption has been in the move ‘up the stack’ into applications. Open source has gained massive popularity in server software in the past decade but is increasingly moving into end-user applications. This has become a pretty clear trend over the past year. An October 2008 study by Forrester interviewed 132 senior business and IT executives from large companies in Europe that are already using Open Source products. They found that 45% of all companies that are leveraging Open Source use it for mission-critical applications. More interestingly, they found that while open source infrastructure adoption was widespread, there was a much larger and longer term opportunity for open source applications in productivity tools, messaging / groupware, ERP, Business Intelligence, CRM and Content Management. Sounds good to us, as this is exactly where we operate!

Open source company results

So how does all this translate in real-world terms? Are open source companies actually faring better this year? We took a look around the industry and picked some of the highlights from the 2009 Q1 open source company reports.

• Enterprise content management vendor Alfresco reported 20% growth quarter over quarter in June 2009 (that’s right - quarterly growth, not yearly!)
• Open source code management company Blackduck reported year on year growth of 42 percent in bookings and 27 percent in services
• Actuate’s BIRT business analytics business showed a year on year increase of 32%, and expects its BIRT-related business to increase by 30% overall this year.
• Funambol's mobile open-source community has grown 2,000 percent, downloads are up 34 percent, and the number of active Funambol servers is up 42 percent.
• Enterprise threat management vendor Sourcefire announced 36% increase in revenue , 36% increase in gross profit and 56% increase in international revenues
• MuleSource community membership grew 350 percent in one year. Founder Ross Mason quoted “CIOs are no longer interested in doing heavyweight and expensive top-down SOA projects”
• Java application framework vendor Springsource announced year end results to April 2009 that included tripling their support revenue and increasing subscription bookings by 230%. They also acquired Hyperic in order to create a full product suite for Java application development, allowing it to go head to head with IBM and Microsoft. Blogger Matt Asay commented, “I suspect we're on the cusp of an aggressive and ambitious new phase in open-source competition.”
• Open source solutions provider and Linux company Redhat posted year end results to Feb 2009 that included 25% total revenue increase and 20% subscription revenue increase. They went on a 600 staff hiring spree through 2008.

Open source heads into the channel

Company results are all well and good, but how are these products getting to market? All the major open source vendors are putting serious efforts into growing their reseller channels. Historically, open source adoption has been left to individual companies and end users to identify and procure but more and more we are seeing open source products adopted by sales and distribution channels of value added resellers (VARs) and system integrators (SI’s).

A group of major open source players - Red Hat, Alfresco, EnterpriseDB, Ingres, Jaspersoft, Likewise, Pentaho, Zmanda, Zenoss and Zimbra – joined forces with channel player SYNNEX to launch the Open Source Channel Alliance. Open source analysts at 451 Group reckon “the initiatiave may be just the resource that’s needed to bring channel partners over to open source in greater numbers.”

Meanwhile, $24 billion industry giant Tech Data issued a two year plan to become “the voice for open source in distribution”. Industry insider The Var Guy suggested that the vendor list includes RedHat, Novell, Zimbra, Compiere, JBoss, MySQL, SugarCRM, Pentaho and Alfresco, and quoted “The list above and other planned moves by Tech Data point to a dramatic, global plan to promote open source. The strategy could  position Tech Data against Synnex”.

At Kineo Open Source we believe the reseller channel will be the focus of a great deal of open source action over the coming year, and really has the potential to drive up global adoption rates. Watch this space.