Once More unto the Breach

Open Source Communities and Customers in Pictures

[Update (19-Nov-2010, 15:41 GMT): Voici une traduction en Français par Philippe Scoffoni.]

[Update (11-May-2010, 10:37): Matt Aslett posted commentary on this post at the 451 Group CAOS blog.]

Debate continues on whether open core business models are a winning strategy with a capital "w" or not, and whether customers care. Matt Aslett's recent excellent posts continue the discussion. The big concern for those that criticize or express concerns is that customers are mis-lead, essentially that there's a bait-and-switch free-versus-product or a deliberate lack of clarity in the marketing around the product value.

I want to take a different approach to the discussion here. Before we had Internet-sized bandwidth on which to collaborate around software, traditional software business looked something like the first diagram. R&D delivered product. Marketing delivered messages. Sales and marketing managed and qualified leads through a pipeline and if the product solved a customer problem properly, a market was made and you could measure the profits.

The Internet happened, dramatically removing friction from the process of collaborative software development and delivery. Developers could share the economic cost of software creation (innovation and construction) and large repositories of useful building blocks were born and made available through these project-focused communities. The Web accelerated the early Internet trend.

Companies began to form around some of the projects and for the past decade and a half there's been confusion as people debated how to make money when you give away the software, or the other side of the economic equation around variations on why people work for free. This has unfortunately led to the idea of community and customer interaction akin to the following diagram. The community is jammed into the middle of the customer pipeline. The community gives stuff to R&D which still delivers product. Marketing now messages to customers AND [worse] the community, and the company tries to "convert" the community into customers.

This probably started around the time that MySQL AB observed they had a paying customer for every thousand downloads. This mis-set expectations in a fundamental way. People assumed causality. It created false metrics around driving downloads and improving conversion rates. (We'll come back to this ....)

Marten Mickos (while CEO at MySQL) observed that the early community has time but no money while the later community has money but no time, and that his customers are in the latter bucket. This is the start of a better model for understanding community and customer. Let's use the "time is money" line as the division between community and customers because by forcing the separation of the two groups we can add clarity to both and the things a business would need to do differently with each.

Instead lets treat the community (time but no money) as a completely separate entity from the customer pipeline (money but no time). The community members engage with R&D over the project. They engage with marketing in a conversation about project direction, and ancillary things like translations in other markets. Customers are qualified through the pipeline based upon the product.

Indeed you can start to see how to think about these different groups of people using different well understood and documented processes for community development and sales channel management.

This allows you to clearly address each groups's selfish needs.

Community	Customers
They have time but NO money	They have money and no time
They want a problem solved and look to the project	They want a problem solved and look to the product
They can’t be converted	Your Community is the litmus test of solution viability.
They can contribute time, so: What do you want them to do? What do you need to enable? What do you need to let them know?	You manage leads through the qualification pipeline and conversion process like any other customer-focused sales process
They will not waste time, so the project needs to solve a problem for them before they will invest themselves in it

Product for customers is clearly differentiated from project and community. How the product is differentiated depends upon the company and the value proposition to customers. At it's simplest, the product may be a supportable and maintained collection of software, certified to run on specific supported platforms and with particular applications, and trivially installable. The product may be the support and maintenance itself. Some companies pack more "enterprise ready" marketable differentiated features or attributes into the product. Others (e.g. Red Hat, JBoss, MySQL) develop a valuable network offering that includes support, maintenance, certifications, additional warranties, monitoring, indemnifications, and the like into a single subscription model. Regardless, there is well-defined value that solves a customer's problems.

Companies like Alfresco and Hyperic and JBoss all saw conversions in the pipeline because potential customers came to the web site, learned what they needed to learn, downloaded the appropriate things to try, and used the community as a litmus test of the solution before returning (self-qualified) to buy product.

This visualization also clears up debate about "open source" and "community". Some companies publish their product source code under open source licenses and never try to develop a real community. There's nothing wrong here if indeed they're running a more traditional software business model and don't care specifically about enabling the community to directly engage with the project. Publishing the software is a sign of strength and confidence in their product and their ability as a company to satisfy customers with a valuable solution that is more than just the software.

Some companies also develop large successful communities without ever publishing their product software. This is why community building is so important for your company and why community development is an essential ingredient in your solution pitch to customers. Communities historically anchored your customers. Communities create knowledge, expertise and experience, all necessary to provide a complete solution for your technology pitch to the customer. Communities create advocates and evangelists to spread awareness about your solution. Communities create enormous inertia in the status quo around your technology. This is why companies like Microsoft invested millions in developing the Microsoft Developer Network (MSDN). It has taken more than a decade for other Internet communities around interesting open source projects to wear down the inertia inherent in MSDN. Likewise, IBM has invested enormous amounts of money in the IBM Developer Network, incorporating free and open source software to meet their solution needs and value propositions to their customers. With open source projects relating to your company, the community is anchoring your solution.

This is the real "conversion". The community enables customers. It is correlative not causative. Community members that have solved their problems using your technology base will carry their excitement, knowledge, and commitment into new places where customers exist. With well organized open source communities, the community now fronts your technology to new customers as well as later anchoring customers once they exist.

IT Customer Buying Patterns and Vendor Competition

Tail light chasing your competition means you will NEVER own a concept in your customers's minds. Matt Asay recently blogged about Novell's continuing practice of chasing Red Hat in the Linux market rather than defining itself on its own strengths, (in this case offering support for Red Hat servers cheaper than Red Hat). He rightly addresses the woolliness of their thinking and closes by saying:

Instead, Novell should be focusing on the things it does really well, like its powerful SUSE Studio technology, which makes it super easy to build Linux-based appliances. Novell is never going to be a better Red Hat than Red Hat. It should focus on being a better Novell. That positive message is what CIOs buy.

The post also includes a fragment of a leaked memo from a Red Hat country manager crying foul against Novell in a memo to a customer. Some consider this a sign that Red Hat is beginning to misbehave in its arrogance.

Here's what I think Novell is up against: Is the customer "happy" with Red Hat is the wrong question. This applies equally to both pricing and arrogance issues. There are few inflexion points to grab. Novell's opportunities aren't around offering cheaper support, but have to be looking forward to the next ground they can grab in customers's minds.

From my historical perspective as a customer, (and this was confirmed in recent discussions with CIOs I trust), customers never "trust" vendors, and in fact expect them to misbehave to maximize their own revenue. Customer organizations manage their IT budgets as a portfolio (especially large complex organizations with lots of "platforms" to support). Switching solutions means retraining, instability in something complex that isn't "broke", and the savings would need to be enormous to consider the conversation at all. And it's not enough to save a lot on the specific vendor competitive situation because the customer is actually judging the savings against their entire portfolio.

Let me borrow an example from discussions and a blog post from three years ago. Saving even 50% per year on a Red Hat support contract by switching to Novell is irrelevant. The risk of instability isn't balanced against a commensurate savings in the overall budget (against say the IBM or Oracle annual spend), or new value-add to the company. It's not worth the conversation. Matt rightly points out that the savings of moving from Red Hat to CentOS is 100% and the form factor exactly matches Red Hat. Is the customer "happy" with Red Hat is the wrong question. They're not unhappy enough with the value-to-conversion risk to make the conversation interesting compared to all the other more interesting value generation projects they're undertaking or savings in the ugly parts of the budget.

What this means is that once established, there are few opportunities for the 2nd place guys to break-in. The market leader already owns a concept (or concepts) in the customer's mind. It's not about differentiation. It's about owning the differentiation in the customer's mind. ("We're cheaper" is already owned by CentOS.) You need to catch the next technology wave and own a particular definition faster at a time when the customer technology office is already at an inflexion point so a "new" vendor is an obvious part of the discussion. For Novell, this might mean positioning all the great technology in SuSE Studio on cloud appliances for the intranet. Today the message seems to be focused on getting more ISVs to compete with Red Hat's perceived success with ISVs. Positioning this technology to solve the ISV problem backwards is irrelevant. (Near as I can tell Red Hat and Novell each have roughly the same number of ISVs and I'm betting there's substantial overlap. Red Hat has again created the perception that they have more ISVs in a customer's mind. They were likely first to grab the ISV market, and they have entrenched the concept in customers minds.)

Nobody knows what cloud computing will mean for the large organization IT shop. Positioning SuSE Studio as the perfect way to "build virtual internal application appliances for your internal cloud", with all the supporting materials, examples, tutorials and the like is a possible way to own "in-house application appliances" in the customer's mind before Red Hat or IBM or some clever start-up comes along and does so. Then Novell can talk about the value proposition of SuSE as a secondary complementary [larger] revenue stream. Following Red Hat means you'll always be second.

Berkus's Ten Ways to Destroy Community and Bacon's Art of Community

This was a great week for reviewing "community building" resources in my world. I discovered Josh Berkus's recent Java One presentation, "Ten Ways to Destroy Your Community", and I received my reviewer's copy of Jono Bacon's "The Art of Community". [srw — I was a pre-publication reviewer for Jono.]

Berkus's presentation is absolutely brilliant. After pointing out very tongue-in-cheek why your community is such a painful group of people (e.g. "They mess up your marketing plans by doing their own marketing and PR" or "They mess up your product plans with unexpected innovation"), he proceeds to give you a perfect run down of ten ways to be rid of them with excellent examples. In order:

1. Difficult Tools
2. Encourage Poisonous People
3. Don't Document Anything
4. Closed Door Meetings
5. Lots of Legalese
6. Bad Liaison
7. Governance Obfuscation
8. Screw Around with Licences
9. Stop Outside Committers
10. Be Silent

The sad part of this list is how true it is. While Josh picked examples from his experiences, too often you visit a site to evaluate a company-led (or consortia-led) open source project to find too many of these counter principles in play.

Jono's book was published last Summer. His lyrical metal prose conveys his brilliant experiences over past years in community involvement, then community development, culminating in one of the best led community examples around Ubuntu. While Jono's eleven chapters don't align neatly with Josh's ten weapons of mass distraction, there is method and madness to attack each of the problems (or hopefully to avoid them altogether).

1. Difficult Tools [Chapter 5]
2. Encourage Poisonous People [Chapter 9]
3. Don't Document Anything [Chapters 3-5]
4. Closed Door Meetings [Chapter 3,4,8]
5. Lots of Legalese[Chapter 8]
6. Bad Liaison [Chapter 11]
7. Governance Obfuscation [Chapter 8]
8. Screw Around with Licences [Chapters 1,2,8]
9. Stop Outside Committers [Chapters 4,8]
10. Be Silent [Chapter 3]

If you need a quick litmus test to check on your community, read the presentation. Once you [honestly] suspect there may be a problem [or two], dig into book. Enjoy.

Conversion Rates (Again), Open Source Business Execution, and JBoss

Readers know I disagree with the facile answer that businesses that use open source software need to "convert" their user community into customers. I've laid out my concerns in two blog posts over the past couple of years (here and here). Today, reading Matt Aslett's (always useful) 451 CAOS Links I came across this gem from David Skok on developing the JBoss business pipeline.

If I had to summarize my overarching concern with conversion discussions (and wearing my customer hat), it's that sales and marketing types confuse conversion with selection. They're trying to jump start leads by applying historical pre-web lead qualification thinking in a world where the web allows potential customers to self-educate and then self-select. The process and thinking that goes into this JBoss case study isn't simply good for open source related business strategy. (I really wish we'd had this level of process and the tools to support it 15 years ago when we started Softway Systems.) Quotes that stood out for me:

The first question we looked at was: Did they know the names of the people that had downloaded their software 5 million times? The sad answer was no. Not only did SourceForge not allow them to collect names, but even if they did allow it, there was clear evidence that developers would simply not go through with the download if they were asked to provide their name.

Following one of the key principles of this methodology, we immediately realized that they needed to find a motivation to get the customers to provide the company with their contact information. The best motivation appeared to be the documentation, that they were currently selling. There was one big problem: selling the documentation was resulting in $27,000 per month in revenue, which was paying the rent and several peoples’ salaries. To me it was obvious that this was a small price to pay to get the names, but to the JBoss team, who had battled their way to get every dollar of revenue, that was less obvious. We debated this issue over the next three months, but finally they gave in and switched on the offer. It turned out to be a huge success: over 10,000 leads started pouring in every month. Over time this grew to 16,000 leads per month.

And ...

Later on the process, JBoss was able to look back at the customers who had actually bought the product and close the loop, by testing whether they had predicted the right events as qualification events. They did a lot of analysis to refine the events based on this information. Several of the original assumptions, based on common sense, turned out not to be true. For example, the amount of time that a lead spent on the website had little impact on their likelihood of becoming an opportunity or a closed deal. The same was true for time spent using the Wiki or the Forums.

Here was a process used specifically to "weed out" (qualify) customers from the noise of lead potentials in user and developer communities using the web site. The entire article is worth reading and careful consideration within your business. This is how JBoss "went on to reach an annualized bookings run rate of about $65 million a year within two and a half years after starting the process." Execution requires the right team, but it also requires the right process.

Making Money from Open Source and the Business Model Debate

Matt Aslett makes great observations about open source business models in a recent blog follow-up discussion:

I am very glad that they took that decision, because in hindsight the statement “there is no open source business model” would have been inaccurate in the context of our report. We identified that there are multiple models used to build a business around open source: theoretically hundreds.

The 451 Group did a lot of research as they developed their model of discussion, and their definitions around development model, license choice, and revenue trigger are great. But it still feels like they start falling victim to the shades of grey slicing problem.

I'm still more of a fan of the tool analogy. As a company, you have a certain budget to spend developing the product, it's marketing, sales and distribution. Imagine a proper old hardware shop where you have a certain budget and need to figure out how you're going to spend to buy what tools from which aisles (development, marketing, sales, legal) to launch and build (and maintain) your product. "Open source licensing" is a set of new tools in the legal aisle and "collaborative community development" is a new aisle. It's not that there are hundreds of business models, but rather one can combine the tools in hundreds of ways. (Some ways are more proved than others depending upon the business.)

Indeed, "dual licensing" doesn't even belong in the open source licensing tools. It's an attribute of copyright law. I can license my intellectual asset to as many people as I want in as many ways as I choose. The Microsoft EULA attached to software at the local office supply store is different to the Enterprise Agreement signed when a corporation purchases based on a bundle of units and services is different again from a volume license to a smaller organization. No one accuses Microsoft of "dual" or "multi-licensing" their software. The fact that MySQL began closed licensing royalties as well as selling service agreements subscriptions (i.e. product) of their GPL distributed software does not mean that they invented "dual licensing".

The fundamental question around which this all revolves is the confusion embodied when one asks, "How can you make money when you give the software away for free?" Large "software" companies (Microsoft, SAP, Oracle, Adobe, etc.) have spent a lot of time questioning the scale of "the business model(s)" rather than looking at the opportunities the tools provide. In the end, they need to understand that it's not the "software" that a customer is buying but the solution and the support and maintenance and certified tested warranted removal of risk embodied in their product packaging and testing capabilities. (This is a core competency Microsoft has over most "software" companies when you consider the size of the test matrix defined by OEMs, ISVs, and device manufacturers that needs to be exercised between code complete and release-to-manufacturing.) Whether you call it a "license" fee and then charge 20% of the license fee per year for maintenance, or distribute the "license" fee into the maintenance "subscription" over time isn't a discussion about open source. It's just business.

Open Source Software and Product Management Tools

Matt Asay has a great blog post today on what Alfresco has learned with regards to their use of open source and product management, from both the perspective of their own product development feedback, as well as the strength of reuse by their customer base.

For years, our marketing has targeted buyers in these markets, pitching a low-cost, high-value alternative to proprietary ECM/WCM/RM.

Our customers didn't get the memo. While we were talking about ECM, many of the roughly 30,000 people downloading the product every month were using it as a foundation upon which to build their own applications, most of which would never be classified as ECM. They were creating their own category of infrastructure/middleware, using our technology.

The content application server was born, and we almost missed it, despite the fact that it was happening with our code. We were so busy marketing our vision that we almost missed listening to our users' vision(s). This new vision on an old way of using our product will significantly impact everything we do for years to come.

This is the sort of strategic edge I meant yesterday when discussing the extra tools a product manager has when open source software is added to the mix. Matt also points off to Vinnie Mirchandani's posted observations on how mainstream IT is rediscovering custom-built applications again. (Indeed it was exactly this sort of rationale coupled with open source software that was the impetus for the creation of Optaros in 2004 and why I went to work there.)

It really is about the engineering economic imperative of collaborative community development coupled with free and open source software licensing and enabled by the web and its ability to remove friction from the process. Developing good software is hard work, and we have shared software literally since we've been writing it. Brian Behlendorf gave a great talk around the time I began this blog where he made a number of key observations about open source repositories based on his experience. Open source projects don't "end" the way traditional development of IT applications end (sliding into withering maintenance) or vendor-led software products (being replaced by forced upgrades). Well run open source projects are much more organic. The software evolves and adapts. The building blocks are continually improving and very complex and powerful platforms can be constructed.

Carlo Daffura responded to yesterday's post with pointers to two posts supporting the idea of the economic value of open source software in product development. This certainly bears out our experience from 1995-1999 developing Interix (now Services for UNIX at Microsoft). Following one of Carlo's examples, Ari Jaaksi's paper is a fantastic overview of Nokia's experience launching the N770 and the cost savings to be had.

I essentially said yesterday that it's all just software business, that there is no "open source business model". Please don't misunderstand me. Open source licensed repositories and collaborative community development on the web substantially add to the tool set of product management on both the marketing and engineering sides of the house.

Open Source Business Models Redux

I debated again yesterday with a colleague on open source business models. I don't believe there is such a thing. Several well documented models have been articulated and debated (see Matt Aslett, Roberto Galoppini, Carlo Dafarra for excellent cogent examples) but when you get into the discussion it immediately degenerates when you try to assign certain companies to certain models. It degenerates further when you try to invert the discussion to argue that these stylized business models share attributes or can be applied together when discussing example companies. To me it's a useless rat-hole of a discussion.

It confuses audiences into thinking "open source" (or "free software") is different in a business context. Such confusion:

• Slows adoption by customers.
• Causes investors to hesitate.
• Can lead inexperienced start-up executive teams to chase ghosts instead of focusing on the business at hand.

Here's how I tried to articulate the counter-debate yesterday:

1. Customers buy solutions. In the immortal words of Theodore Levitt (Harvard Business School), “People don't want to buy a quarter-inch drill. They want a quarter-inch hole!”
2. Geoffrey Moore wrote "Crossing the Chasm" in 1991. As well as clearly articulating the Technology Adoption Life-Cycle (that he has evolved over the ensuing ~20 years), it helps people understand that developing a "whole product" offering (the core product and its complements) provides a better solution to customer needs and companies in a market that provide the best whole solution succeed better than their competitors and peers.
3. For technology solutions companies, there are a well understood collection of tools that product development management uses to deliver solutions.
• Buy or build complements and include them in the base product.
• Publish interfaces to encourage complement value add in an ecosystem of partners.
• Provide tools and frameworks to ensure partners can easily build complementary products in the ecosystem, providing an even bigger "whole solution" or enabling it to be re-positioned into new markets (i.e. onto new problems).
• Publish tutorials, how-tos, books, etc. to ensure people understand the product solution and can provide complement value add in the ecosystem. And publish here is a very loose word. Consider magazines and conferences and user groups here as well, and how the web helps or supplants each. The web removed enormous friction from this collection of related tools.
• Develop training programs to ensure people understand the product solution.
• Develop certification programs to ensure a good supply of knowledgeable people on the solution.
• Provide consulting services to ensure an immediate supply of knowledgeable people on the solution. Really though it could be other services as well (maintenance, repair, operational, etc.)
4. Companies can choose to sell (or license) the complement or give it away. In each case there's an opportunity for direct or indirect revenue. As long as the sum of the revenues is greater than the sum of costs of providing the whole solution (and operational margins are within tolerances specific to the "tool" or tactic or mix in the portfolio) the company is profitable and thrives. [Indeed, over time as value moves around the solution network — and it's a network not a stack — companies have a better chance of survival if they control more of the higher margin pieces of the network that is their whole solution or ecosystem. Think IBM with the breadth of whole solution they can deliver posting better than expected results September 2008 as the rest of the economy tanked.]
5. The larger the company, the more tools it likely uses in providing a whole solution. Maybe this is the corollary to the above statement. It certainly explains why we all rat-hole when trying to fit large complex companies into the stylized business models.
6. Adding open source licensed software repositories on the web and collaborative community development into the mix adds new tools, and evolves old tools:
• To "buy" vs "build" for complement value add, you can add "borrow" (IBM Websphere and Apache, and Red Hat and RHAS) and "share" (IBM and the original Eclipse project, and Intel and moblin).
• New companies (Red Hat) with lower margin business models (compared to the incumbent) can use F/OSS components to rapidly develop products that either serve new markets or serve the bottom end of an over-served market and then evolve over to or up into an incumbent’s market space. [Classic Christensen economics here.]
• It broadens the base of "users" which opens future customer opportunities and locks out competitors. (JBoss and MySQL used this tool.)
• Companies that participate in communities:
• Can rapidly develop complements to core offerings in their solution network (without necessarily building complete products), e.g. SAP and MaxDB and MySQL
• Can amortize dev/support/maint costs of software components across customers/partners/competitors (e.g. the vendors in the Linux Foundation today are no different than the vendors in the OSF 20 years ago sharing the development costs of OSF/Motif and OSF/1 as royalty free base technology).
• Get to interact directly with like-minded customer prospects in community, influencing customer/partner developers.
• Build brand awareness and trust through transparency of actions.
• Companies that participate deeply in communities better influence those communities (e.g. participate, hire, or acquire).
• Companies developing their own communities increase the opportunity for partners to provide complement value add as well as encourages engagement and commitment through participation and contribution.
• Companies can use F/OSS projects to reduce the cost of sales by allowing users to try and pre-qualify themselves as customers.
• F/OSS projects are an interesting publication strategy against competitors from an IP strategy perspective.

What all of this means is that the ideas need to be turned around. Technology businesses and technology adoption is well understood. We know how to measure successful companies and compare them. We understand the tools those businesses use to engage customers and solve problems. Open source software is a key economic driver from an engineering efficiency and software reuse perspective, but it also opens new opportunities and additional tools for product management to engage better with customers and improve both the top line and the bottom line.

But there is no open source business model.

The Community Leadership Summit and the Art of Community

Good community leadership is desperately needed. Too often companies mistakenly think of it as some small adjunct to marketing, an extra channel over which to broadcast messages and through which to generate leads. Likewise product engineering can equally confuse community purpose and disrespect its impact, relegating it as "beta tester" or ignoring its contributions with Not-Invented-Here blinders. We've understood community since before we climbed down from the trees, and we've understood the social dynamics: despite our best intents every village has its idiot and every playground has its bully. But when community in its truest collective sense meets business, we seem to forget all our lessons and expect something to manage with the efficiency and efficacy of a time-motion study in an automobile factory.

This weekend, 18-19 July 2009, marks the first Community Leadership Summit in San Jose, California, at the San Jose Convention Centre (McEnery Conf Centre). Jono Bacon, community leader for Ubuntu at Canonical, Ltd. has done amazing work organizing the event and it promises to be a great opportunity to share experiences and learn from one another. It is a free event in front of O'Reilly's Open Source Conference, supported by a small savvy set of vendor sponsors, but the event is about community development experience and not any one vendor's take on it. While free, one should go to the registration page to register.

Jono has also been busy this past year writing "The Art of Community". He developed it over time in conjunction with the Art of Community blog. I was a reviewer, and I think it's an excellent book covering the breadth of the subject. It will be available in August, and you can pre-order it here.

I was hoping to participate in this year's inaugural summit, but unfortunately I'll not be attending it (or OSCON) for several personal reasons. I will certainly miss friends and colleagues, but trust next week will be as brilliant as always!

SourceForge Acquires Ohloh!

First, congratulations to Scott Collison (Ohloh CEO) and the Ohloh team. [Caveat lector: I've been an advisor to them for some time.] It's a great exit for a great little company. As with all the companies I advise, there needs to be something unique going on. Ohloh has always been unique. As I described in January:

When a potential open source user wanted to find out "what open source software is available" to solve a problem, they were invariably left hunting across Google, SourceForge, and sites like java-source.net and FreshMeat. There was no consistency. The depth of information was sketchy. Some of it was bleeding edge software, some tied to the site. There was no sense of "what's good" unless you were already involved in a particular community, and even then community bias could get in the way. This gave way to a collection of directory solutions and companies that tried to bridge this gap.

Ohloh has always had the most useful and interesting directory for me. First, they have no direct sales model tied to the directory, so my trust in the depth and breadth of the information is high. Second, the beauty of the analysis is that the core data is metrics based on what programmers do, not what they say. I can see how big or small a community is, how long it's been around, how active it is, and this provides hard data when one then looks at the qualitative commentary. Third, it's always been comprehensive across the open source world and getting better all the time.

...

Over their several year history, they have continued to expand and add features to their core statistical analysis. They've built the community and expanded the number of repositories they support. Once one finds a project, one can see other projects immediately that are related through the tagging and stacking other Ohloh users share. The site is a proper social network for open source developers. It's been used to get a project manager's view of an open source project by the project's own leadership. As a resource for job hunters and recruiters it's invaluable to be able to see the visual resume of a developer. They've evolved their offerings to act as download host, and provide job and support services classifieds.

In one commentary, Jon Sobel (SourceForge group president of media) made reference to "Another advantage for SourceForge ... is that Ohloh's data will help the company deliver advertising that is more targeted and effective." This is the real key to the acquisition. A primary revenue driver for SourceForge is advertising across the forges and online media properties. Ohloh has been successfully developing a data service that would wildly improve the ability to target technology advertising and provide data rich feedback for high-tech marketing campaigns. [Frankly, Google should have acquired Ohloh.] They have a number of large corporate customers. So through this acquisition:

• Ohloh can improve SourceForge's advertising revenues.
• The Ohloh data service itself provides an excellent additional revenue stream in the high-tech corporate marketing world.
• The Ohloh community site is complementary to SourceForge's forges, providing open source communities better tools for understanding their projects.

This is a great acquisition for SourceForge. Hopefully along the way, the original and unique aspects of the directory that make it so valuable to open source users (as opposed to open source developers) are not destroyed or lost, and that SourceForge continues to recognize the difference between the core data competency Ohloh represents, the core value proposition to SourceForge's customers, and its complementary uses as a separate directory at strengthening the SourceForge brand in non-revenue producing ways.

Other commentary:

• The official press release
• Matt Asay's interview with Jon Sobel, SourceForge group president of media
• Ars Technica Article

Partner Programs and Open Source Software Businesses

I was discussing partner programs with colleagues the other day. Partner programs tend to need careful thought — much more than many young companies realize. The simplest summary I can offer is that partner programs aren't about marketing — they're about sales, which means they're about compensation plans and metrics aligned with those plans.

Four years ago when Optaros announced what it was doing (consulting services based on open source building blocks) many companies approached us to "be partners". This meant everything from at its most innocent "let's share leads and swap logos" all the way to "Optaros would be a great sales channel for our product." All this requires (a.) a lot of time, and (b.) needs to be tracked against revenue. As a channel, it needs management just like a company's sales team does, so you can figure out who is really performing and so as to get rid of the non-performers. We did sign several light weight partnerships (i.e. logo swap and a joint press release) in the first year because it gave us a press release with a high profile (i.e. newsworthy) partner. We expected nothing else from the partnership — no leads, no co-marketing, no co-sales. Some partners never called with leads despite promises and follow-up from us. They did, however, call to give us a hard time if they heard us using a competitor's project/product to solve a problem for our customers. Obviously our customers were more important to us and our revenue than the partners lack of leads/revenue. [To be clear, Optaros has strong partner management in place and developed a number of excellent partners over time with strong complementing business relationships.]

Aside from the day-to-day management, you also need to ensure there's no channel conflict. You will encounter problems with partners where their business development people may love you, but their sales force may never think of you because:

• You're not helping them meet their quota
• Worse, your product/service competes with the higher margin items they sell to make their quota
• They'll take a lead from you, but have no need to return the favour on their way to closing their quota. (Contrary to popular belief, they will not call you because they like you — they are sales people and there needs to be some bottom line benefit to calling you because otherwise you're taking away valuable time from them making their quota and "salesperson of the month/quarter/year" and the perks attendant on that title. These are highly competitive revenue-focused individuals. Good sales people in a channel conflict won't call because it wastes their time.)

Business development managers that don't sell for a living don't necessarily understand the channel conflict problem. They also might be compensated on something like "partner satisfaction" or "# partners signed", etc., rather than on revenue numbers. Not only that, if the partnership is one sided (they get sales, you don't) they still may not care. Partner programs aren't worth anything if the channel and compensation programs aren't well-aligned to mutual benefit.

Gaining visibility through partners is an interesting idea and a Big Name Partnership MAY help as a marquee sort of "partner" regardless of sales, but THEN you need to ensure you have a solid business development person on their side that will speak GLOWINGLY on your behalf to potential investors or act as a direct customer reference to close a deal. That's when they count. Otherwise, you're lost in a sea of all their partners. [Softway was a Microsoft partner back through the late 1990s before the acquisition. It was a fascinating relationship when it came to getting them to admit that they wanted to see UNIX/Linux applications running natively on Windows NT.]

I'm not saying don't set up a partner program — I'm saying set one up with your eyes wide open and with a realistic eye on the revenue that could otherwise be gained by (for example) hiring another sales person rather than a partner manager. Once you understand exactly how you want to make revenue directly for yourself, you can better determine how to organize a partner program (by region, by vertical, by function) such that your needs and your partners's needs and compensation are properly aligned and your partners trust you to not conflict.

Photo by Robert Scales