451 CAOS Theory 
A blog for the enterprise open source community
Pentaho and Upsell
Raven Zachary, April 20, 2006 @ 11:03 pm ETPentaho, an open source business intelligence sofware vendor, announced the release of two “Professional Edition” products today – BI Suite and Reporting Server (press release). It seems that the model being used these days looks a lot more like Pentaho than JBoss. Providing an open source product with a complimentary enterprise/pro version is becoming the standard open source vendor offering.
I’ll be curious to see whether this model ends up being what customers want in the end. The JBoss model is transparent – everyone gets the same version, and you only pay for what you need (in terms of support, training, etc.). With SugarCRM and Pentaho, for instance, the desire is upsell.
Will “upsell” limit community participation? Will an individual contributor be less willing to donate code/time to an open source project that serves as the basis for a commercial product? Maybe that doesn’t matter. SugarCRM and JBoss employ the primary developers on their projects, and open source ends up being less about community participation and more about community awareness, perhaps?
Time will tell.
Comments (8) Categories: Software
I think what we are seeing is the establishment of a continuum of approaches as companies explore the open source commercial domain-space (Oh my god, what have I just written?)
Anyway, pseudo-intellectual posturing to one side, I think you are right and that the upsell side of things is very likely to increase immediate revenue at the expense of limiting community involvement. If we assume that community involvement=reduced development cost, what we will see are companies attempting to find the balance between the two. I would expect to see company’s business models ‘hunt’ back and forth as they attempt to find the optimum niche… the most obvious examples of that typing of hunting is when a previously open source product is closed – for example when Tenable” took Nessus closed.
The thing is though that when the community involvement in development of the free version gets close to zero, the business model begins to look more akin to that of the commercial companies who provide free (as in beer) crippled versions of their big-iron databases for evaluation.
Of course, the big difference is that the open source companies cannot cripple their free versions, the furthest they can go is attempt to make it abandonware – and other individuals and companies can always pick it up and “unabandon” it.
Christopher is exactly right when he says companies will be performing a balancing act between earning revenue from commercial pursuits that rely on their open source projects and increasing community involvement in those same open source projects. But by taking on the challenge, Pentaho provides a winning situation for everyone – the open source community, the commercial customers and the company itself.
Possibly the greatest indication that this model works for Pentaho is the percentage of effort toward their commercial versus open source initiatives. Pentaho spends 80% of their time and effort building a robust open source offering and supporting a talented and thriving community. The 20% spent on commercial efforts helps fund their open source objective, which is to bring the promise of a quality open source BI alternative to a frustrated closed-source commercial BI market.
Pentaho’s commercial offering has drawn a number of partners into the fold that intend to provide support, training, and community contributions to the open source codeline and documentation. This is a huge win for the fast-growing Pentaho community, since the paid Pentaho engineers can’t keep up with the enormous demand for the project
Also a great win for the community that isn’t interested in Pro Edition features, but wants choice and quality in support and training on Pentaho.
Pentaho has also been a gracious citizen of the open source community (their own as well as others). They have contributed countless engineer hours in community forums, are participating in conjunction with other companies in the open source realm in efforts to standardize BI technologies, have provided enormous (relative to the standard) amounts of architectural and technical documentation regarding their vision, and being a Pentaho-an myself, I can tell you that any business decision that impacts the open source community is considered with great care and thoughtfulness to those who support the project. So the Open Source community (not just Pentaho’s) has gained a giant in terms of contributions, talent and support.
And FINALLY (Whew! I think I’m high on my own koolaid!), chew on this. When Joe Corporate purchases a Pentaho commercial license, a good portion of that license fee is going right back to pay for those engineers that are spending upwards of 80% of their time on the OPEN SOURCE project. Wouldn’t that be one of the most beneficial forms of contribution?
Hi,
I was thinking this over, and wondering if the 451 Blogs and 451’s paid research might be somewhat analogous to the open source model of someone like a SugarCRM or Pentaho (with some exceptions of course).
To consider the analogy, imagine that the 451 Blogs are your “open source” version, and 451 paid research services are your “Professional” or for-pay version.
In the Blog – You put out some ideas, and invite comments and pose questions to the community. You get some other ideas, some “contributions”, and some interesting opinions. In this way, it’s like an open source project.
451′s Blogs are great (as is the research, we subscribe). But ultimately, 451 Group doesn’t make money and pay 451 analysts with the blogs, because the blogs are free. The blogs (I think, as an outside observer) are designed to interest people in 451 Group, generate ideas, show off the expertise of some of the 451 analysts, and to get more people interested in subscribing to paid research services and consultancy from 451. The analysts who support the 451 blogs are paid by the fees of research clients, not blog readers. But at the same time, the 451 experts spend some time sharing thoughts with the community for free. This is an example where “paying customers” are funding a resource that’s valuable, and free, to a community (people who read the blogs). In this way, couldn’t one suggest that the simple fact that there is a paid-for business around 451 research actually generates *more* value for community/free users? It’s also reasonable (although not provable) that the active sponsorship of the blogs by 451 analysts generates more activity and community contribution than if 451 were not involved. And no paid research means no paid 451 analysts which means no 451 blogs, which is a loss for the community. Does the analogy fit? It’s somewhat different in that I have to think that 451 Group’s business model prohibits it from putting 80% of its efforts into the free/community edition like Pentaho of SugarCRM do. But ultimately, you’re providing good value to both community/free users and paid clients, and each side of that model arguably benefits the other. What do you think? Does that theory hold water?
Thanks for blogging on this topic, Raven.
Good information. Thanks
Feeling lucky today, got an opportunity to read such a interesting post.
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That would be “complementary” not “complimentary”, right?
The explanation is quite simple. What redhat has done for operating systems and app servers, etc., what MySQL (which was purchased by Sun for $2B) has done for databases, etc., Pentaho is doing for Business Intelligence and Data Integration. It’s simple, you need expertise to meet your objectives if you want to deliver and deploy successfully. You can choose to do it alone or pay someone to help you. There isn’t any obligation nor vendor lock-in. It just so happens that when you pay for a subscription, not only do you get support, but you also get a software feature block that helps with configurations and management of the software as well as other subscription advantages. Our community is bigger than ever and the software is developed in house by “our” engineers. We accept contributions as well which go through a consideration and review process before it ever makes it into the open build.
Thanks for your blog.