special report In the first of a three-part series, we offer a comparative look at how firms in the U.S. and Canada decide which software model works for their enterprises
Open source has always been the underdog on the software scene, but it continues to draw intense interest from users and vendors alike in North America. Users want to avoid vendor lock-in and are attracted to potential cost savings. And vendors and value-added resellers see opportunities for innovation in the software marketBecause of differences in the two markets, what works south of the border may not work here, at least in some respects, according to Michael O’Neil, managing director of Info-Tech Indaba. In a survey of 1,180 respondents in the U.S. and 557 in Canada, the research firm found that, in general, Canadians are more likely to leave the door open for open source software (OSS) than their American counterparts – though only a small few in either country would be willing to rule it out completely.
Only 15 per cent of Canadians and 19 per cent of Americans said they would never use open source. In specific industry sectors, Canadians appear much more willing to consider OSS than Americans. In business services, for example, some 60 per cent of Canadians are willing to consider OSS, compared to only 45 per cent of Americans. Canadians in the education, transportation, utilities and communications sectors are also more receptive to OSS. In other sectors, such as manufacturing and other primary industries, there isn’t much difference between the two countries. And, when it comes to open source, they’re both equally concerned about copyright and stability issues.
But there was a reverse gap in health care, where Americans were more willing to adopt open source. “On the one hand, health care itself is administered differently in the two countries – it’s the one sector that’s most different compositionally between the two countries,” said O’Neil. “On the other hand, health care, from a Canadian IT market perspective, has always been a tough market.”
For the most part, however, North American organizations are not rejecting OSS and, in fact, many see a place for it within their organizations. Vendors promoting open source may find a receptive audience in certain verticals, said O’Neil, and down the road we’ll likely see more open source integrated into solutions by value-added resellers.
This could particularly apply to government, which, in Canada, was substantially more receptive to open source than in the United States.
The Canadian government will play a role in the development of open source in this country, said Russell McOrmond, an open source consultant and policy coordinator for Canadian Linux Users Exchange (CLUE). He’s also the private sector coordinator for Getting Open Source Logic Into Government (GOSLING), which is a voluntary, informal knowledge-sharing community.
The Treasury Board Secretariat, for example, is creating a source code repository for the federal government so it can release and work on open source projects. “The Government of Canada is going to be a big player in creating, not just using, open source software,” said McOrmond.
GOSLING is also working on a project to coordinate open source software for report automation and statistics on expenditures, and turning all those spreadsheets into a single database. “All of that is being done in open source, but that’s not very well-advertised,” he said. “With bureaucrats (in Canada), part of their whole motivation in life is to make sure they’re not ever mentioned in a press release.”
But because this “knowledge-should-be-charged-per-copy” philosophy originated in North America, we’ve been slower to move forward with OSS than the rest of the world. “In Europe, there are cities that are switching all their desktops to Linux,” said McOrmond. “Outside of North America, it’s just happening and governments are getting actively involved.”
One reason for this, he said, is because more than 50 per cent of worldwide royalties are going to the U.S. “There’s a reason why the U.S. is the slowest to move forward,” he said. “It’s in a lot of ways trade-dependent on the way things used to be.” As a result, you’ll see one government department in the U.S. touting open source software, while another is going to trade bodies trying to mandate marginal cost-based business models.“Probably the fastest-growing part of our knowledge economy is business models based on recognizing that knowledge doesn’t have a marginal cost, unlike tangibles,” said McOrmond. “If you’re used to a business model where you count copies of software, you have a hard time comparing that (with OSS) because it’s not apples to oranges – they’re not even in the same category.” With Linux, for example, it’s perfectly legal to have one CD and 300 people installing it on 300 different computers.
And this is where the challenge lies: in North America, there’s a perception that if you’re using software and not being charged for copies, then somehow it’s illegal. So where OSS has been adopted, said McOrmond, really depends on the individual decision-makers and their perceptions about open source.
Another barrier to adoption is the labour market, since open source tends to rely on internal talent to lead that transformation. “When you move to OSS, you tend to draw more on internal talent requirements, so that is a potential barrier,” said John Reid, president of CATA. “And there you have to debate between outsourcing and developing in-house.”
Questions around standards
Open source also raises questions around standards, ownership and legal issues. “They get into a fair amount of complexity, but those are some of the things you have to work through as part of a Canadian strategy that doesn’t put us out of synch with boosting trade sales and exports,” Reid said.
Open source is of interest to Canadians because it’s considered an attractive way to open up systems and boosting Canada’s creative talent. “Since we’re a culture of entrepreneurship,” said Reid, “any platform that can accelerate innovation is good.”
From a public policy perspective, CATA is doing a lot of work around public sector procurement. “When you look at any of these platforms or architectures, it’s important that government takes a role in providing a level playing field or fair market opportunity in terms of government procurement practices,” he said. “You don’t want to be locked in or fixed.”
But, for Canada to be successful in the high-tech world, he said, we have to be highly articulate about the strategies we’re employing. “From government, one of our expectations is that there be a very clear and well thought-out OSS strategy,” said Reid. “And that really hasn’t come to light yet.” That strategy should consider practices of competing economies to make sure everything we do in Canada is in synch with or ahead of our trading partners, he added.
Bringing alternatives to market is a good thing, he said. Even if an organization decides not to go with open source, that organization can have better price negotiations with proprietary software vendors.
In any market, there are three positions: cost leader, value leader or quality leader. As a value proposition, open source stirs up positive reaction on both sides of the border, said Info-Tech’s O’Neil. But when survey respondents were asked if open source delivers the best value overall, the level of agreement dropped by half (from roughly 40 per cent to roughly 20 per cent).
When asked if open source drives superior quality and innovation, 25 per cent of Canadians and slightly more Americans believe that to be true. “That would be the hard-core true believers, the people who believe this is the way to drive the very best software into your organization,” said O’Neil. “Although there’s relatively more open-mindedness in Canada, there are relatively more true believers in the U.S.”
Ultimately, the evolution of open source in Canada is likely to be different than in the U.S., said O’Neil, because the sources of demand are different. Trying to force a U.S. strategy onto Canadians, therefore, isn’t the best approach, he added. Instead, we should consider vertical markets that are receptive to OSS.