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The Future of Open Source Applications

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Open source technologies have been part of the software and technology landscape for quite some time.  Except for the very notable exceptions of Linux and Java which have acheived mainstream success, other open source applications have not had the same market impact.  Perhaps this is a bit unfair as Java and Linus are applications that are more globally deployed by nature, and other open source applications would by nature be more contained to a specific industry or market segment.  For example, why would I have ever heard of open source CRM code?  I have however heard of open source applicant tracking.

Traditionally, HR has struggled with technology, always being the “ugly step child” and never getting the type of IT attention that SCM and CRM got.  As such, open source applications have some serious advantages in their cost and potentially their speed of delivery as well.  I’m not sure I see lots of open source activity in the HR technology market, but it’s an interesting step in the ongoing competition for waning ERP market share.

The following is an excerpt from an presentation on open source and why the adoption of open source technologies is increasing.  You can find the full article here.

In today’s environment, there are also three catalysts speeding up the adoption of open source applications.

Transition to Service Oriented Architecture (SOA).

There’s been a fundamental change in the way we built enterprise software. Instead of building it around a database, some stored procedures, and client/server user interfaces, creating a very closed and inward-looking application, we’re now moving to building open architectures that can let different applications talk to each other. Thus, different commercial applications or open source ones can now all work together. As a result, SOA has created many more openings for open source applications in the enterprise.

Transition to On Demand Software.

I think this is just starting to gain momentum as a driver of open source applications and will become much more important over time, because open source applications are naturally suited for the on-demand environment. We have newer architectures with web-based user interfaces, instead of the old client/server architecture that could be very expensive to deploy. We have a flexible application that can be customized and adapted to the unique requirements of specific markets or niches, so an on-demand vendor can create a differentiated offering. Commercial software which can’t be modified, in contrast, force on-demand vendors into the uncomfortable position of a commoditized product offering. Finally, open source applications such as ours can be deployed on a completely open source stack, so it’s much less expensive than licensing commercial applications, databases, and operating systems.

Vendor Consolidation.

The third catalyst is a gift from the commercial software industry, and that’s all the vendor consolidation that’s going on today. What the consolidation is doing is reducing the amount of choice available to users. This is the essence of consolidation in any industry, be it airlines, telecommunications, or software: reduce choice, reduce capacity, and raise prices. Well, open source is the antidote of consolidation, because we’re about creating more choice and lowering prices. As companies find that they no longer can meet their needs with commercial packages, they are finding open source as an alternative. Just as importantly, a new breed of independent software vendors are now rising up to serve those forgotten niches, and they are increasingly doing it with open source software as the foundation of their product offerings.  ((Chen, Si, June 9, 2006.  “Why Enterprises Are Adopting Open Source Applications.”  Retrieved from http://opensourcestrategies.blogspot.com on June 9, 2006.))

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11 responses to “The Future of Open Source Applications”

  1. The Future of Open Source Applications July 14, 2006 on 2:00 am | by Systematic HR Open source technologies have been part of the software and technology landscape for quite some time.  Except for the very notable exceptions of Linux and Java which have acheived mainstream success, other

  2. Colin Kingsbury Avatar

    In terms of impact I would add PHP and MySQL to your list, and have had far more significant social impact than Java.

    Will we ever see an open source HRIS? Possible, but not the way we’ve seen so many other OSS applications grow up. To put it bluntly, I don’t think you’re going to see many developers sitting there on a Saturday afternoon going through stacks of legal and accounting texts figuring out the right way to deal with maternity leave. OSS developers will take on difficult work, but boring work is much less likely.

    SugarCRM (which we use at my company) is probably the best open source “business” app I’ve seen. It’s also covering a GIGANTIC market segment–CRM. Prior to purchasing QuickBooks, I looked around at the open source options for accounting tools, and to put it quite bluntly, they stunk by comparison. That was quite some time ago and today they still do. And compared to an HRIS, the potential market for a usable accounting tool is enormous.

    The commercial open-source model followed by SugarCRM depends on users to provide the initial marketing leverage. Basically, you get technically very sophisticated users like me to download and self-host, and build your market up from there. Small IT businesses are by their very nature the ideal candidates for this because we don’t have bureaucratic IT policies and are willing to put up with flaky apps, or to fix bugs ourselves. After a while you prove you know what you’re doing and then the bigger businesses start taking you seriously as they are now doing with Sugar.

    HRIS however is by its nature something smaller companies simply don’t need. While it would theretically be nice for small businesses, the reality is that the real benefit offered by Paychex/ADP/PEOs is liability mitigation. Open source simply can’t do that. So I don’t think you are going to attract the traditional early adopters that all OSS projects need to grow to the point of self-sustenance. The OSS dynamic is excellent at providing scripting frameworks and web CMSs, but that’s not even 25% of what’s out there.

  3. systematicHR Avatar

    Colin:
    Thanks for the great insight and comments.

  4. Chris Brown Avatar
    Chris Brown

    I’d argue that another facet here is that Java, Linux, PHP, and mySQL are not applications; they are building blocks for applications. Since they sit low in the stack there is great opportunity for them to be reused over and over in many applications. An open-source applicant tracking system would be purpose-built and given the relatively limited number of uses for such an application the scale is just not there. A hugely successful, paradigm-changing HR application would be lucky to get to 1,000 deployments, while mySQL claims 10,000,000.

    Most of the successful OSS applications that I can think of quickly have wider appeal and/or hacker interest — Mozilla and GIMP for example — or don’t require tons of domain expertise to get started.

    I can’t think of a single large OSS project that has a strong, say, business process analysis or legislative adherence need, as you’d see in HR or really any ERP-esque domain. Are such beasts out there?

    Between the small number of deployments possible, the high amount of expertise required to do it right, and the squareness/unsexiness of the HR domain in general, it just doesn’t seem likely.

    I could however see lashing together a framework with OSS tools (for database, integration, transaction processing, UI) and then supporting a business based off of customizing that starting point, or as Colin offered, setting a price point low enough that users don’t care if it doesn’t meet their exact need.

  5. Chuck Allen Avatar

    Even though I have a current post on HR-XML-related open-source initiatives, make no mistake — I certainly don’t see open-source software displacing commercial HR solutions. You may see continued adoption of of open-source infrastructure within HR solutions – particularly among outsourcers and solution providers wanting to shore up thinning margins.

    If you really examine open-source software and commerical HR solutions, you’ll see they are apples and oranges. Today’s HR solution is a lot more than software. The real value in almost any HR solution comes from the encapsulation of specialized knowledge and service features. When I use a hosted solution to process HR-XML’s payroll is it the software that benefits me? Very marginally. The real value is that the provider keeps up with the tax rates in the states where I have employees, handles filing/deposits and compliance, and has the connectivity with the ACH system to enable direct deposit. Those aren’t the type of things that open-source software can do by itself. Similarly, an open-source HRIS would be a step backward. What was traditionally provided by an “HRIS” (an installed piece of software) is increasingly provided through service offerings (including those being offered and planned by the traditional HRIS vendors).

    That said, the impact of open-source work will be profound, but in a behind-the-scenes way. It is common for open-source code to serve as a starter kit for developers of HR solutions. For example, I know of developers in the HR-XML community recently taking a look at things such as http://www.opensaml.org and http://www.openspml.org to jump-start their work related to federated identity management and provisioning.

  6. martin snyder Avatar

    Its getting tireseome agreeing with Colin on every blog comment, but once again, he nails the main point: open source developers are not going to sit and do the grind work of utilities, detailed accounting procedures, etc. because they are not fun, sexy, or rewarding in any way to code.

    The model with some potential right now is the RedHat idea; the core is open source, but the extras and the key services are provided by vendors with total expertise in those areas.

    Its not the intellectual property of the software code that drives the dollars in ATS deals; of course there is a component there, but its not giant.

    re: Chris’s comment “A hugely successful, paradigm-changing HR application would be lucky to get to 1,000 deployments” :

    I have to disagree with that. HR is a basic economic process and there may be over 100,000 HR operations in the US alone of more than a few end-users in size.

  7. Chuck Allen Avatar

    martin snyder wrote:
    > open source developers are not going to sit and do the grind work of utilities, detailed accounting procedures, etc. because they are not fun, sexy, or rewarding in any way to code.

    True, but I think you are missing the point a bit. Even if you could get the developers to develop all that gorp, I don’t think you’d end up with anything that resembles a leading edge ATS solution or that is a cost-effective alternative to one when you would consider the degree of work/maintenance that would be necessary to make and keep your open-source ATS productive. The “services” part of “web services” is more than just a buzz word. You are not buying just sofware, you are buying things such as encapsulated adaptivity, embedded services of adjunct third-party services, and often some degree of built-in compliance assistance.

    So I think Chris Brown is dead accurate. Open source will at best be building blocks for robust HR services. The HR market is large, but I think his estimate of the number of deployments (if you are counting not the results of the “building blocks” deployments, but the imagined “Redhat” HR system variety of deployment) would be relatively small. With the flexible service offerings in this area, I can’t imagine many end-user organizations would find the responsibility of open source HR software attractive. You could imagine some outsourcers leveraging such software as a building-block — but even outsourcers wanting to shore up their margins don’t want to offer cookie-cutter solution — so you’d imagine a lot of customization would be necessary — so much so that some outsourcers might choose to rent someone else’s than take on the cost and expense themselves.

  8. Martin Snyder Avatar

    I see the future as being less application centric. Interacting with datastores in a variety of ways with a variety of tools will make the idea of a single ‘package’ a tenuous concept.

    If you want to see one new idea of how end-users will be interacting with data in years to come, check out SAP Duet.

    It’s possible that some open source solution could establish wide usage based on only a high quality core data model and a data access feature set like Duet that enables everyday web-designers and business intelligence pros to put the pieces in place to finish a solution.

    No two deployments would look the same but end-users would not be doing a ton of maintenance either.

    While web services will be a huge part of any ecosystem, the services that I have in mind are much more basic; live training, web design help, report building, data manipulation. These make up a large portion of ATS expense today.

    I respectively submit that 1000 installations is not going to get anywhere near a significant percentage of end-users who work as professional staffers in some capacity. The end-user count for a universal recruiting widget is going to be in the millions worldwide.

    It’s those pesky services again- that’s why I see it going the RedHat way if it were to ever happen like that.

    I’m sure that one could run a successful, profitable ATS firm using none of your own software. Any open source IP that is widely useful will just improve margins. I’m also sure that there are already more than 1000 MySQL projects running that hold recruitment data.

    It could happen that some major ATS vendor could develop Duet like capabilities, go open source, and knock it out of the park. That would take some vision and some guts.

    That rules us out 😉

  9. Chuck Allen Avatar

    > It could happen that some major ATS vendor could develop
    > Duet like capabilities, go open source, and knock it out of
    > the park. That would take some vision and some guts.

    You are considerably in the realm of the hypothetical. I think the bottom line is that you won’t see open source offerings as any sort of main-stream alternative to commercial HR services. Open source will have a role in enabling (i.e., providing the building blocks for) commercial HR services – but the two are really apples and oranges. Source code or installable software that is free of IP incumberances does not equal the functionality and services bundled into leading ATS offerings. Software simply does not equal services.

  10. sam Avatar

    hi…

    in reading the comments, i’m curious as to why you guys seem to firmly believe that an open source ATS system couldn’t work, and find it’s way into the biz world.

    i know of quite a few small businesses (

  11. Chuck Allen Avatar

    Okay, I’ll bite. Maybe a good first question to ask is what is the scope of functionality encompassed by an ATS? As I said, above, you have to step deep into the hypothetical, but if you were to strip an ATS down to its core, maybe you would find something that could be “open sourced”. Perhaps this might be an applicant portal, administrative user interfaces, configurable hiring workflow, a user interface for hiring managers, some generalized external interfaces, and maybe some metrics from within the system. While something like this could conceivably be an open-source project — what you’d end up with would be largely “plumbing”. When you examined the cost and risk of making the plumbing as productive as a commercial ATS, I don’t believe the comparison would favor the open-source solution.

    Core “plumbing” existings in every commerical ATS, but it is a decreasing part of the overall value provided by leading ATS systems. A small business or a large one that deployed or maintained the basic open-source plumbing would lose a lot of adaptability and ***services****. It may be opaque to the user, but in leading ATS solutions there are significant service components. Compliance (EEOC, FCRA, privacy, labor-law compliance, etc.) is one example. I don’t know of employment lawyers and regulatory specialists who contribute to open source projects – I do know that the services of such individuals inform the design, operation, and maintenance of leading ATS solutions. Security and privacy is another category of services. You mention the appeal of an open source ATS to small businesses – I’d argue that most small business would be well advised to not to take responsibility for hosting and securing candidate data.

    Moreover, there also are an increasing number of integration and anciliary services that most leading ATSs provide — for example, pre-hire assessments and screenings. Integration is involved (the stuff HR-XML helps with), but the provision of these ancilary services involves more than setting up the system interfaces. Your ATS provider assumes a number of roles here — one of the most important and troublesome is “managing identities and trust”. With fraud and criminal activity running rampant on the Internet, managing identities and trust across a provider network is challenging and not something that “software” by itself (open source or otherwise) can do and not something that a small business wants to do either.

    Finally, a viable open-source ATS is something that simply hasn’t happened — and this isn’t because a lack of starter code. After the dot com bust, there was a good deal of code that could have served as a base for such a project. There simply wasn’t a community or sponsor that deemed such a project worthwhile. My read of the market today is that a project like this is even less likely than in the past. Talent management might be one of the few HR “buzz words” that rises above mere buzz-word status. The walls are coming down. The divisions between talent acquisition, succession management, vendor management, knowledge management, etc. are becoming less distinct. Perhaps by the end of the decade an “ATS” won’t be as prominent as a separate application category as it was at the beginning of the decade. In this respect, starting an ATS open-source initiative may really miss the mark.