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It isn’t exactly the falling of the Berlin Wall, but a study by research firm IDC shows use of open source enterprise applications is on the rise in Europe. IDC surveyed a total of 515 Western European IT decision makers on their use of open source applications and found a surprisingly high penetration rate.

The survey showed about 9% of respondents currently use an open source back-office application, while 7% of respondents were using an open source CRM application.

While that means mainstream vendors still control 90% or more of the market, IDC European enterprise applications research director Bo Lykkegaard, says it is cause for companies like SAP, Oracle and Microsoft to take notice. At a minimum, increasing open source penetration rates will put downward pressure on prices.

“Of course, (open source) usage can mean anything from departmental use or niche use to enterprise-wide deployment,” says Lykkegaard. “Despite this reservation, the survey results show that open source adoption in ERP and CRM has reached a critical threshold and should now make a ‘bleep’ on every vendor’s radar screen, particularly those in the midmarket.”

Lykkegaard says a by-product of this trend is that open source vendors should attract increased interest from venture capital. Some of the leading open source companies, such as SugarCRM, Openbravo, Compiere, xTuple, and vtiger, are experiencing growth rates above 20% per year.

“We do not expect a religious war between an open source community on one side and commercial proponents on the other,” says Lykkegaard. Rather, he adds, it will likely come down to who can provide the most bang for the IT buck.

On a side note, I was surprised to see that SugarCRM Chief Executive John Roberts has left the company. Roberts resigned in early May to “pursue other opportunities” according to a release on the Cupertino, Calif. company’s Web site. He has been replaced by Larry Augustin, another well known figure in the open source community.

In addition to his new role at SugarCRM, Augustin serves on the boards of Appcelerator, Compiere, DeviceVM, DotNetNuke, Fonality, Medsphere, and Pentaho.

Comments (2)

	1. 06-20-2009 10:47
	If enterprise IT decisions makers make the right choices in terms of open source packages, they likely have little to worry about regarding the open source vs. commercial debate over the long term. The emerging model for open source initiatives with traction seems to be acquisition by one of the enterprise system vendors; ie. MySQL was purchased by Sun, which now is owned by Oracle. Another example would JBoss, now owned by Redhat. I think it's too soon to tell whether the hybrid open-source/commercial model will work over the long term without stifling the innovation that made these products popular. It seems to be working well in Redhat's case in regard to Linux, and I do think they are smart to have acquired other products to be able to offer a robust 'open-source' stack. Registered

Frederick B. Kauber

	2. 06-22-2009 14:07
	I have a dumb question: How do open-source software providers make money? I understand that they sell licenses, but why would users pay for them if the code is available for nothing? Presumably, it's cheaper to buy a license than to develop the software oneself. But that brings the question full circle: How can the developer make money under such a scenario if license sales don't cover his costs? Registered

Ronald Fink

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