When we started developing Linux a quarter of a century ago, we were able to build on the huge legacy of Free Software that we found for Open Systems.
At that time we spoke emphatically of Free Software and meant civil, democratic freedoms. We have always vehemently distanced ourselves from free as in free beer. Today I can say that: I also like to consume free beer. At least as long as the offer is large and the taste is good. Metaphorically speaking, Free Software is well tolerated. In my experience, the risk of waking up with a fat head is greater with proprietary software.
If we look at it matter-of-factly, the free beer in the beer tent can also be a means to an end. In this sense, Free Software can also be used strategically in many ways. I would like to give a few examples of this in this article.
As a first concrete example of the strategic use of Free Software, I go back to the year 2000, the time of Otto Schily as German Minister of the Interior.
The interior minister is formally responsible for the IT operations of the federal administration. As such, Otto Schily had to decide at the time about purchasing licenses and maintenance for thousands of Windows, Microsoft Office and other Microsoft products. And Otto Schily realized that he had no scope for a real negotiation with a real decision. Microsoft could simply submit an invoice and ask for a timely transfer.
At this point Otto Schily initiated a number of ambitious migration projects in which Microsoft was replaced by Free Software. At the time, I personally migrated the process database from Microsoft SQL to Postgres at the Bundeskartellamt.
I can proudly say that we were technically successful. However, this success was not decisive. It is much more important that the projects were economically successful. In the sense that Otto Schily now had a completely different negotiating position with Microsoft. Free software has established itself in the federal administration's server operation. Not as a comprehensive replacement but as an equivalent component. And so there is always an alternative to the proprietary providers. This is important for the market and it is important for the taxpayer.
A second example of the strategic use of Free Software for cost optimization can be found in the business models of Strato, 1 & 1, Host Europe but also in the cloud providers. Here the costs for software are pushed so far that there is simply no space for an independent software manufacturer. This is only possible with free beer. It is not the beer that is sold, but the space at the counter.
The third example leads us into the abyss of a silo organization. In the intrigues of internal power and distribution struggles, innovation often only takes place in slow motion. Here, free beer software can be strategically used in a third way. It is not a question of saving license costs, but of bypassing the other departments and the procurement process. The application business departments are profit centers and there is usually no shortage of budget. What is lacking is flexibility and speed.
Free software is free beer to tap yourself. This creates an immediate sense of achievement, innovation takes place in real time. The dynamic that unfolds in this way is not only motivating, it is a necessary prerequisite for long-term survival in global competition.
In the sense of a sober view, I now leave the beer tent and come back to free as in freedom. As I said, the strategic use to reduce costs is absolutely valid. However, it would be fatal to limit strategic considerations to this aspect. Anyone who only exploits Free Software without having a strategy for participating in its development is a colloquial scrounger.
Open source projects generally don't care how many snoops are attached to them. We all know scroungers, they are part of life. But whoever only drinks free beer and never spends a round has no friends. And having no friends takes revenge at the Beauty Contest for talented developers, which I will discuss later.
At this point, however, I would like to pause briefly and consider the question of what the three strategic elements highlighted so far actually have to do specifically with Free Software, with Open Source. Freeware or public domain software is also free of charge.
In individual cases, a free product like this can also be strategically effective. Adobe delivers its PDF reader free of charge, thereby preparing a market for its chargeable PDF tools.
Free software, or Open Source software as we technically call it today, is not an individual case. It is omnipresent and available in a comprehensive range of services with a high quality standard. Free software has continuously developed into a digital commons over the past decades. As a common good, Free Software opens up a creative and productive space alongside the classic markets for licenses and proprietary products.
Unlike the medieval common pasture, the digital commons is resistant to overuse. The open source licenses ensure the continued existence and growth even when a large number of users are on the go as free-riders.
Free software has gradually changed the structure of the software business as a whole. The server business is dominated by Linux, the smartphones by Android, web servers are Free Software, programming languages and development environments, a large part of the databases, document management systems, AI and ML frameworks, everything is varied and available in high quality as Free Software. Of course, there are still many commercial software offerings. But they always position themselves in an environment of Free Software. Purely proprietary offers are being replaced.
In software development, open source software is used so naturally and universally that the basic character of Free Software is no longer perceived by many users.
Even Microsoft has long been committed to open source strategy and is one of the largest contributors to open source software. The Roslyn compiler and the entire dotNet core are open source. For this Free Software there are of course commercial offers with quality assurance, support and SLAs. Practically all users use the finished products and the open source communities are manageable. The use of this software is therefore not really strategically relevant for the users.
For Microsoft, the changeover of their own development model is relevant insofar as it represents the company as a sovereign technology leader. At the same time, the spread of free and open source software is a very effective way to build trust or counter mistrust. The image of Microsoft has improved enormously with the shift towards open source methodology and strategy.
Similarly, in the development of new technologies, we find numerous examples of the central role of Free Software. The tools and libraries for software development for Big Data, Internet of Things, Machine Learning and Artificial Intelligence are distributed as Free Software. Google, Amazon, Apple and Co are positioning themselves as sovereign technology leaders and at the same time occupying the emerging new markets with their products. In this way, new standards are set, programming interfaces and APIs are established as experience knowledge in the innovative developer communities. This is the strategic use of Free Software.
If you come from a university or university of applied sciences today and start as a software engineer, you have absolutely certainty gained experience with Free Software during your training and study time. In the simplest case as a user. The more ambitious developers read open source far beyond the application, learned from it and trained and perfected their skills in community projects. Exactly these developers are needed today. Simple programmers will be replaced by robots in the future.
By the way, this new aspect of computer programming, the use of machines for automation, maintenance and optimization of the development work is only possible through the use of artificial intelligence on the large source code stocks of Free Software. For example, Github offers tools for automatically improving your own programs and documentation. Completely new business models are being built on the digital commons and the strategic use of open source is being raised to a new level.
In addition to the ubiquitous use of Free Software as a tool or framework in software engineering and coding, the topic also plays an important role in the recruitment of new employees. Ambitious developers who take care of themselves profile themselves in open source projects. And they attach great importance to participating in such projects, at least occasionally, even in paid roles. For the developer, this is both a reference and a business card, but it is also an attitude.
If you are interested in the open source mindset and implementation in the company, I recommend the book “The Open Organization” by our CEO Jim Whitehurst. And I can also shamelessly advertise here on Github: Red Hat is Hiring! We have a lot of vacancies for super cool roles.
Employers who do not have an open source strategy or who half-heartedly only exploit the digital commons lose in the competition for the best talents. And this cultural change does not only affect software development. In addition to Jim Whitehurst, I also recommend Frederic Laloux with “Reinventing Organizations”. Pioneering book! Hence a few more starting points for a solid and future-oriented open source strategy.
Free software has played a central and proven role in the introduction and standardization of technologies, formats and protocols for decades.
The emergence of the Internet is a good example of the strategic effectiveness of Free Software. The protocols are formulated as open standards in RFC documents and implemented as Free Software references. This ensures universal availability and interoperability. The triumphal march of the Internet and the associated network protocols, interfaces and file formats
In the late 20th century, digital networks were still dominated by proprietary products and protocols. Who else knows Novell Netware? Or the Windows 95 MSN? Today it's all history. Today Microsoft hires the Samba team to document the details of the CIFS protocol and they provide their test environment for the development of the domain server in Samba4.
This change has not come of its own accord. At Microsoft, in particular, the various antitrust proceedings have certainly played an important role. Overall, however, we can say that the markets are increasingly sensitive to vendor lock-in. And the ubiquitous practice of open standards, open APIs and open implementation lead to the corresponding expectations on the customer side.
Docker is a good example of this new market dynamic. The initial project established a data format and a tool for creating and handling Linux containers. The resounding success is due directly to the implementation in Free Software. Docker INC, which was founded on the project, is therefore not easily successful in establishing a functioning business model based on Free Software. The technology belongs to the digital commons. The company is owned by risk investors. It can go well together, but it doesn't have to.
What we take from the example: Docker would never have become an INC if the project had not started as Free Software. From the point of view of dotCloud, the release of docker on Github fits into an open source strategy. Docker INC certainly has an open source strategy. How successful it is and whether investors' expectations will be met remains to be seen.
At the moment it looks like Docker INC is trying to expand the Docker hub as a platform business. This leads us directly to another example of the strategic use of Free Software.
(Holger Schmidt / MIT: 10% of GDP is generated in platform economy.) (Holger Schmidt: Platforms are based on and offer space for interaction, business model based on interaction data, cultivating dynamic ecosystems)
There are now only two relevant operating systems for tablets and mobile phones: Android and iOS. Both are essentially open source. Android is a modified Linux. There is a market for Android: Google sells operating system subscriptions to mobile device manufacturers. Google does not do its business by selling Android. Android is the means to an end, it forms the platform. Google does its business with the Play Store ecosystem and collecting data from mobile users.
Platform economy fuels the business of modern IT giants. Amazon, Google, Facebook, Airbnb and many others use Free Software to build free solutions with relatively little effort, with the aim of binding a maximum number of users in the shortest possible time. Payment is made with data, attention or paid supplements.
By building on Free Software and often offering tools, libraries and open APIs for integration and expansion, the platforms invite partners to collaborate on the platform. Successful platforms cultivate an open source ecosystem with which the platform is upgraded. The global internet-based platforms are increasingly conquering and occupying use cases that have previously been served by local and regional service providers and by on-premise software.
A current example of the dynamics of these community-based developments is the "Connected Home over IP" project by Apple, Amazon, Google and the ZigBee Alliance. The strategy is well known: open standards, open source reference implementation. Connected Home addresses the consumer area of IoT. With its IoT stack, Bosch addresses the industrial use cases of IoT, and automobile manufacturers with Connected Car in turn address another area.
All of these initiatives use open source methodology to set standards, penetrate markets, build know-how in technical communities. It will be exciting to see how these different IoT areas influence each other and where the lines of disruptive potential between the corporations and the startups in these markets are.
From an economic perspective, a proprietary software business requires a substantial investment. The capital requirement is usually several orders of magnitude above the future license price and above the value in use of the software. The proprietary software manufacturer uses capital, develops the product and then controls sales, service and use. Customers buy the license for a defined application and generate value in use. The manufacturer siphons off a substantial part of the utility value from the license costs. If enough profit cannot be skimmed off, a proprietary software product simply disappears from the market. The same thing happens if the manufacturer is taken over by a competitor or goes bankrupt.
Completely different with Free Software: Ideally, development begins with the user and the development effort is in the same order of magnitude as the utility value. Community education distributes the effort and makes larger projects possible. The distribution and use of the product are not controlled by the manufacturer. If the manufacturer builds an open source business model on the product at any time, he can also skim off a part of the value in use, but the concrete proportion is usually significantly lower than that of the proprietary counterpart. At the same time, Free Software allows an entire open source ecosystem to benefit and profit from the product: distributors, students, consultants, other open source projects, cloud providers - everyone can take the software and use it productively and creatively for their application.
Occasionally, there is also the opportunity to set up an independent business operation based on Free Software. Red Hat is one such example, other examples are the Eclipse Foundation, MariaDB or Docker INC.
To extensively discuss the open source business models is beyond the scope of this event. In any case, successful open source companies build on strong communities and have internalized the corresponding culture. At the beginning there is always the customer benefit and the project. Under lucky circumstances, an economically viable business can develop from this later. It is good to develop Free Software for business customers, but it is better to do Free Software together with business customers.
Lecacies and technical debts have accumulated in the data centers, which cannot be lifted and shifted into the cloud ch to fix. Free software can also be used strategically in this area and the methodology in particular can be advantageous Apply vigorously. For automation, there are not only tools such as Ansible, but also exchange platforms for scripts and the like nd playbooks. The same applies to security with OpenSCAP, and of course also for the entire CI CD automation in the new DevOps scenarios.
The IT departments in industry and administration are also carrying legacy proprietary software development from past decades.
Specialist applications whose manufacturers have long since disappeared from the market or which have discontinued support for an old product line. In-house developments whose developers and know-how carriers have switched to other roles or have left the company. Those responsible for the application are happy, whose software can run at least on a current operating system version.
These applications are used somehow, but they are not relevant to competition. That is why there is no budget for modernization. The innovative specialist departments, the profit centers with the free funds for software development, instead pay into the accounts of the public cloud providers.
At the Bitkom Forum OpenSource in September 2019 in Erfurt, we saw a good example of what modern IT can look like. Stefan Hausotte from G-Data spoke about their open source strategy and open source contribution.
G-Data's core business is antivirus software for Windows. Free software is used extensively in production. Among other things, G-Data needs a graph-oriented database for the management of highly networked information and objects. In the young field of big data analytics, there are a number of such databases, most of which are Free Software. G-Data chose JanusGraph, the project is managed by the Linux Foundation. Big names like Google, Hortonworks, IBM and Amazon are involved. With at least two developers, G-Data makes a substantial contribution to the development of JanusGraph.
In the Bitkom OpenSource Monitor we see that around a third of all companies in Germany are actively involved in the development of Free Software. For most of these companies (86%), this commitment is the cheapest way to use these technologies. This commitment also helps motivate and train employees.
Free software makes it possible to participate and participate directly in the latest developments in the areas of big data analytics, machine learning, Internet of Things. The markets for these new technologies in particular have not yet developed. New approaches and ideas are constantly emerging in the open source ecosystem, others are rejected and die. Commercial providers may sometimes become established, but in general the development is so dynamic that Free Software has the upper hand. An open source business model may then develop from individual such projects.
In any case, it is obviously worthwhile and important for the companies involved to be an active part of this dynamic development.
Collaboration on an industrial scale is necessarily associated with agreements that, from an antitrust perspective, quickly drift into an illegal area.
Such a risk of secret practices that exclude other market participants can be systematically prevented by means of a solid open source project. We can see this specifically in the example of the automotive industry, which is under special scrutiny and has been subject to severe penalties in the recent past. The necessary and meaningful collaboration in the area of connected car and autonomous driving therefore takes place as an open source project under the umbrella of the Eclipse Foundation.
We see how Free Software displaces or at least hedges proprietary products. We see how Free Software is establishing new technologies and standards globally. We see how Free Software motivates people and spreads knowledge. We see how Free Software makes the development of specialist applications and special software cost-effective and future-proof.
Digital transformation is inconceivable without Free Software. It is certainly possible to drift through the flow of agile software development through this transformation. However, we can only speak of digital sovereignty if we recognize the strategic power of Free Software and use it consciously.
The Bitkom Open Source Monitor comes to the conclusion that only about every fifth company in Germany has formulated a concrete open source strategy. These 20 percent have recognized how effective Free Software is and what role it plays for innovation and the market. I would like to learn more about these strategies. And I would like to see the number of companies who establish a Open Source Strategy grow fast.
I invite you to comment on and contribute to this document here. What is your companies Open Source Strategy? Is there anything you can share?