Companies welcome the open source incursion

When online directory provider Yellow.ca launched during the dot-com boom, consultants advised the founders to choose best-of-breed hardware and commercial software. So the Markham, Ont., firm installed Oracle Corp. database software running on Sun Microsystems Inc. servers. “Everybody was under the impression that you’ve got to buy the best brand to be a dot-com company,” says Dariush Zomorrodi, Yellow’s vice-president of new media.

As Yellow.ca grew, Zomorrodi says, it became apparent that scaling its application on Oracle wasn’t going to be economical. Licence fees for the server clusters the company needed were too high. So Yellow.ca looked for an alternative and was soon drawn to open source database software. The IT team examined two open source alternatives, PostgreSQL and MySQL. Either could have worked, Zomorrodi says, but “we found that MySQL had a larger user base and the online community was more active, so we thought it was a better one to go for in terms of support.”

Three years later, Zomorrodi doesn’t regret that decision. MySQL’s limitations on clustered servers forced some compromises at first, he says, but the latest version solves those problems. “I would say now I don’t have anything to complain about.”

Running a business on an open source database may seem daring, but it’s not as unusual as you might think. While the Linux operating system gets the lion’s share of attention, there is plenty of other open source software, some competing with major names such as Oracle and SAP. One of its key advantages is cost.

Darcy Buskermolen, a British Columbia-based consultant at PostgreSQL support provider Command Prompt Inc. of Cascade Locks, Ore., first got involved with PostgreSQL in a previous job. “We required a very feature-rich database, but the nature of what we were doing didn’t lend itself at that time to having to pay for the Oracle licensing model,” says Buskermolen. Meanwhile Microsoft’s SQL Server would not do what Buskermolen wanted. His previous employer chose PostgreSQL, considering it more powerful than MySQL.

Many organizations from small businesses to large corporations are running Linux on servers, and Linux systems power major businesses such as Google Inc., Continental Airlines Inc. and Sabre Holdings Corp. International Data Corp. predicts that a quarter of all computer servers shipping in 2008 will run Linux.

Linux’s popularity is nothing compared to the impact of open source software that helps operate the Web. The open source Apache Web server has about 60 per cent market share, according to the November 2006 Web Server Survey from Netcraft Ltd., a Bath, U.K.-based Internet services company – though it has lost some ground to Microsoft in recent months. The open source BIND software has a similarly commanding share of the Domain Name Server (DNS) market.

From that base, open source is pushing up the software stack, into database, development tools and even enterprise resource planning (ERP) and customer relationship management (CRM).

“We’re seeing many, many customers start with Linux,” says Zack Urlocker, executive vice-president of products at MySQL, “and then once they’re familiar with it, 80 per cent want to have an open source database.”

Particularly among those developing Web-based applications and services, the LAMP stack is a popular buzzword today. LAMP is an acronym referring to building Web-based systems with Linux, the Apache Web-server software, MySQL and one of three open source programming languages – PHP, Perl or Python.

A strong hold
The LAMP stack runs well on commodity hardware based on Intel Corp. or Advanced Micro Devices Inc. (AMD) processors, and is replacing proprietary software stacks among startup technology companies, Urlocker says.

Many companies adopting the LAMP stack are startups, but they aren’t all small. Some examples, Urlocker says, include YouTube, recently acquired by Google Inc. for US$1.6 billion, and FaceBook, a popular social-networking site.

“I think the transition is fairly broad-based,” says Chander Kant, founder and chief executive of Sunnyvale, Calif.-based Zmanda Inc., a supplier of open source backup and recovery software. While multi-year licences and the sheer complexity of switching give proprietary database vendors a strong hold on many customers, Kant says, there is no technical reason the LAMP stack can’t serve most needs.

Toronto-based Insurance Systems Inc. develops software for insurance companies. Its products work with the big three proprietary databases – Oracle, DB2 and SQL Server ­- and with PostgreSQL. Michael Hornick, senior vice-president of business development at Insurance Systems, says PostgreSQL can do everything the others can, and better. “We work with a number of them,” he says, “but personally I prefer Postgres, it’s easiest to use, fast, simple and works well.”

But even their proponents admit open source alternatives are not yet playing a significant role in the largest and most mission-critical database applications. Major credit card issuers use commercial software like Oracle Corp.’s Oracle or IBM’s DB2 to process transactions, Urlocker says, and “I don’t think we would be credible there for a while.”

Nor are small businesses with limited technology know-how flocking to open source, says George Goodall, analyst at London, Ont.-based Info-Tech Research. They are mostly Microsoft shops. Open source database and development tools are more popular among larger financial and insurance businesses, Goodall says. “Those are the places where people have dedicated IT departments. They tend to be fairly advanced.”

These companies are interested in open source software not so much as a way of saving money but because, unlike commercial database, ERP and CRM tools, it gives them the freedom to tweak the code to do what they want.

ERP and CRM, the nervous systems of big corporations, might seem like the natural last bastion of big commercial software vendors. Not so, says Andre Boisvert, chairman of ComPiere, Inc., the Santa Clara, Calif., company behind ComPiere open source ERP and CRM software. “It would be absolutely foolish for me to say I’m knocking out Oracle and SAP big-time,” Boisvert says. Businesses that have those systems are mostly happy with them and sticking with them, he says, but open source alternatives like ComPiere and OpenForBusiness are catching on among smaller companies that need to replace older, proprietary software and in emerging economies such as Brazil, Russia, India and China.

Goodall says open source ERP and CRM products are finding footholds in large corporations, but rarely at the heart of the organization. Most often, he says, a large company that uses a market-leading ERP system like SAP at headquarters will install an open source product in an overseas branch plant to avoid the cost of extending SAP to that facility, and use the open source software to feed data to the central SAP installation.

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