Red Hat CEO Says Software Vendor Model Is Broken

alphadogg writes "The current model of selling commercial enterprise software is broken, charged the CEO for Red Hat. It is too expensive, doesn't address user needs and, worst of all, it leaves chief information officers holding all the risk of implementing new systems. 'The business models between customer and vendors are fundamentally broken,' said Jim Whitehurst, speaking Wednesday at the Interop conference in New York. 'Vendors have to guess at what [customers] want, and there is a mismatch of what customers want and what they get. Creating feature wars is not what the customer is looking for.' Whitehurst estimated that the total global IT market, not including telecommunications, is about $1.4 trillion a year. Factor in the rough estimates that half of all IT projects fail or are significantly downgraded, and that only half of all features in software packages are actually used, then it would follow that 'easily $500 billion of that $1.4 trillion is fundamentally wasted every year,' he said."

Comments

Cloud will kill the model

[Mephistophocles]

Whitehurst touches on the emergence of cloud computing in the enterprise as well, and this is integral to an intelligent discussion of the imminent death of the traditional licensing system of enterprise software. From TFA:

""People say [they are interested in the] cloud but what they are really espousing are frustrations with existing IT business models," Whitehurst said in an interview with IDG News Service after the presentation. Whitehurst kicked off his talk by asking a seemingly simple question: "Why are costs of IT going up when the underlying costs to deliver those services halves every 18 months?" The cost of computing should come down, he reasoned, thanks to improving processing speeds and storage capacities. New, more powerful development tools and frameworks should also ease the cost of deployment. Yet IT expenditures continue to go up by about 3 percent to 5 percent a year.

That ease in the cost of deployment, coupled with the flexible infrastructure the cloud supplies, will eventually mean the death of the traditional "per-proc" style of enterprise licensing. Happily, it likely means fantastic opportunities for open-source to take back a large share of the market. I've spent the last year migrating my medium-sized enterprise to the cloud AND a near-100% opensource infrastructure. In my particular sector (healthcare) that's becoming a trend - it's not a coincidence that the move within the medium to medium-large enterprise to the cloud often goes hand-in-hand with a serious investigation of open-source software within the mission-critical, production infrastructure.