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Open Sourcing Software in a Large Corporation?
code-libre asks: "I work for a small R&D group in a large corporation. We've spent the past few years developing a small but unique piece of software that was originally meant for internal use only. A VP recently approached us and asked if we could 'package and sell' the software so as to get a direct return on investment - at prices as much as $500k. Within our group, we worry about the costs associated with long term support and maintenance. We are also sure that a price over $10k is ludicrous, let alone $500k. I think it would be an excellent move to open source the software, but I need some advice..."
"Even at a price of $10k, we don't expect to sell more than maybe 20-50 licenses. Costs associated with producing this software thus far are approaching $2mil, so we doubt our costs would be recouped. It is thus relatively easy to make the case that we _shouldn't_ sell the software.
On the other hand, it is software that will be vitally useful to those in the right markets. I would like to present the idea that releasing the software for free (and open source) will have two effects: one, branding the software turns it into a free piece of advertisement for our company in emerging markets. Two, open sourcing it will allow for others to help improve the software, which we in turn can use to our advantage - an indirect ROI.
Will points like this fly at a large corporation with little to no policy on giving stuff out for free? How can I convince an older generation of business leaders that FOSS is the way of the future? Ideally, I would like to help the company setup a internal group that could expedite small internal projects to the market place via FOSS routes. Any one have any experience with this?"
On the other hand, it is software that will be vitally useful to those in the right markets. I would like to present the idea that releasing the software for free (and open source) will have two effects: one, branding the software turns it into a free piece of advertisement for our company in emerging markets. Two, open sourcing it will allow for others to help improve the software, which we in turn can use to our advantage - an indirect ROI.
Will points like this fly at a large corporation with little to no policy on giving stuff out for free? How can I convince an older generation of business leaders that FOSS is the way of the future? Ideally, I would like to help the company setup a internal group that could expedite small internal projects to the market place via FOSS routes. Any one have any experience with this?"
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From what I can deduce from your post, you've got basically zero chance of convincing the higher-ups. And frankly, I'm not even sure that open sourcing it is a good idea, anyway. If your target market is 20-50 customers and it's a niche piece of software, you're dreaming if you think anyone is going to do any work on it, much less submit patches back. You're essentially giving your $2 million of R&D away for free with no gain for the company. No corporation is gonna go for that.
I would prolly caution you to be careful with this. You say this software is reaching close to 2mil in development costs. That's quite hefty for an internal piece of software. Open sourcing the software could be of great benefit... but make sure that you don't open source you or anyone you work with out of a job if it turned out that less devs were needed. (I don't know enough about your current situation)
As to how to approach the VP and other PHB's... You're going to have to go the only route that will make sense to them... Show how it will help their bottom line. That is why he came to you to begin with, and it's what he wants to hear. Giving away software he is looking to sell isn't going to recoup the costs of developing said software.
Sell support perhaps?
Maintain two versions? An open source version that feeds into closed version perhaps?
This is a tough one if your VP's mindset is dollars.
I had zero luck with it at with one of my previous employers where I was in a similiar situation (although with less 0's in the figures) I just couldn't find a way to appeal to what they wanted to see... money.
"why don't you just slip into something more comfortable...like a coma!"
You're already thinking in the right ways - C/B of selling at a certain price.
Don't forget support commitments, opportunity cost of turning your R&D lab into a customer facing "profit" center, etc.
Also, don't be surprised if, as you go through the process, you find that a certain price-point, set of behaviours, or various possible changes would make it profitable.
I forget what 8 was for.
A piece of software that is worth that much should be taken full advantage of. This is what R&D is meant to do for a company. If you are in R&D this is supposed to be your job, and it is supposed to pay off for your employer someday. Don't complain when this actually ends up successfull.
Open source should not be a consideration for this unless there is some other mitigating concern? Such as the company needs open source, or the software is stagnant because the company doesn't have the resources to apply towards development.
You can always Open source it later.
If they try and charge $500k and don't sell any, you won't have a problem (at least not that problem, anyway).
Look, if they think they can sell even 1 $500k license, thats better than the 10-20 $10k licenses you are proposing.
If the VP approached you about this, its probably because he knows much more about the $500k possibility than you do. Take it as a hint that something is really there, rather than something maybe being there.
Besides, maybe the VP also wants to make sure your salaries are justified in the face of out-sourcing or cost-cutting measures.
Software development is a sunk cost. Any other use of it is a win unless support costs outweigh the amount of licensing. If they sell 30 software licenses at 10k each then that is 300,000. Also that is 30 companies they will have to support. This may mean hiring more people. If the software usefulfness lasts 5 years, then hiring an extra programmer at 60k a year to do support will nullify the gain of selling the software for cheap.
What this guy is saying. The software is useful but opensource it, so other companies will use it, maintenance needs to be done can be done elsewhere thus saving the company potentially hundreds of thousands of dollars.
In return the company gets free advertising, and goodwill with other companies. And since, he is going after emerging markets, may introduce a way of entering lesser developed countries via a trojan horse.
I'm not saying its a good idea or not, but I think this person is a lot more intelligent and useful than you give him/her credit for.
Somebody wasn't paying attention to RMS's actual ideas.
1) FREE AS IN SPEECH, NOT FREE AS IN BEER.
If you feel so strongly, the customer can be given the source along with supporting documentation, a one year contract for support, customization, or whatever, and your company still gets money. Speech can be private, and can be compensated for.
The *real* point of Open Source is no secrets between developer and user. Nothing says Bob on the street corner needs to know.
Nobody says you have to put it on SourceForge. I suspect 99% of projects on SourceForge don't belong there anyway, and that about 5% of downloaders from SourceForge do something to change the source code, and less than 1% actually do any useful development to support the project. Basically, I see SourceForge as a vanity press: anyone can upload their new Java-based MP3 jukebox alpha-quality software, and feel like they are part of some cool movement, striking a blow against the man. But that's another topic.
2) Quick career hint: a company pays your salary because it thinks it is getting something *more* valuable in return, not to send you on some ego trip as an OSS missionary. Save that for when it is *your* company.
If you are known to higher-ups in the company as someone who was absolutely essential in a multi-million dollar revenue stream, and is likely to do similar things in the *future,* they might not outsource your job to India. (Unless you are already working there, in which case, they won't outsource it to China.)
And if you are tired of working for your company, that kind of dollar figure next to "head developer" will get you hired a lot more quickly than "code monkey."
What is it about open source that makes it equal pixie dust in the imagination of Slashdot posters?
.tar.gz file doesn't make them developers.
Open Source != others magically do free "code maintenance."
That's like saying giving a teenager the keys to your car means they'll get you that oil change and take it to the car wash and return the tank full of gas. Not likely.
99% of people who see code should NOT be doing maintenance on it. They didn't spend the time to understand the design, they don't have the training to code, and they are as likely to break something as to actually do useful maintenance. MOREOVER, with a license like GPL, they *don't* have to give you back the changes unless the distribute the binary *with changes* to *YOU*.
Open Source == customer can do focussed customization if they wish. Or port it to their new Linux server. Or can get support from somebody else (like *YOU* as a contractor) if your company keels over. But giving people a
The poster is not thinking logically, for example:
"Even at a price of $10k, we don't expect to sell more than maybe 20-50 licenses. Costs associated with producing this software thus far are approaching $2mil, so we doubt our costs would be recouped. It is thus relatively easy to make the case that we _shouldn't_ sell the software.
The $2mil is a sunk cost. It is irrellevant to whether or not you should try to sell the software. The decision does not depend on how you can recoup all of your losses, it depends solely on how you can minimize your losses. That doesn't mean that selling closed source is the best way to minimize losses, but that's the way you have to think about the problem.