How to Position Open Source Versus Proprietary Software

Most software that’s sold today remains the exclusive property of the software vendors that created it. The past few years, however, have seen an upsurge of interest in open source software that’s created and supported by a development community consisting primarily of volunteers. Under the open source model, volunteers perform peer review to help ensure quality. The resulting software code then is made freely available to anyone who wishes to use it or modify it.

Although open source software licenses are free, for-profit companies sometimes sell an upgraded version of an open source product and, for a fee, provide customer support for both the open source and upgraded versions. The Linux operating system and the Apaches Web server are primary examples of supported open source software.

Much has been written on the advantages and disadvantages of open source versus traditional proprietary methods. The following list summarizes the main arguments.

1. Business model:

• Proprietary advantage: Profit motive provides impetus for new features and high-quality support. Disadvantage: The vendor’s ability to add features and provide support is limited by cash flow.
• Open source advantage: Freedom from profit motive enables experimentation and new ideas. Disadvantage: There is little impetus for ongoing support or additional standard features.

2. Quality control:

• Proprietary advantage: Corporate structure helps ensure high-quality, timely software releases. Disadvantage: There is no objective measurement of quality that customers can trust.
• Open source advantage: Peer review ensures only high-quality code is added to the project. Disadvantage: There is the potential for the development effort to meander into techie-only areas.

3. Product completeness:

• Proprietary advantage: The need to satisfy paying customers drives inclusion of attractive features. Disadvantage: Some product functions may be coded hastily to fill out a feature list.
• Open source advantage: Peer review ensures features in code actual work as expected. Disadvantage: Critical elements, such as documentation, may be missing.

4. Security risk:

• Proprietary advantage: The lack of source code makes it harder for hackers to penetrate. Disadvantage: Programmers often include back doors to help with debugging.
• Open source advantage: Code visibility helps ensure security holes are located and plugged. Disadvantage: Code visibility can give hackers access to potential security weaknesses.

5. Customization:

• Proprietary advantage: Ability to customize increases the salability of the software package. Disadvantage: Customization is limited to tools and APIs included with product.
• Open source advantage: Open source allows for easy modification, even of core features. Disadvantage: Modifications must be reprogrammed for each code release.

As the above list illustrates, the arguments surrounding proprietary and open source software are finely balanced. Regardless of whether you’re selling proprietary or open source software, you should familiarize yourself with the controversy and learn to articulate both the advantages of your company’s approach as well as the disadvantages of your competitor’s approach.

Discussions you have with customers on this subject also should have the appropriate strategic focus. If you’re selling for a proprietary vendor, that focus should be total cost of ownership. Your job is to show how your license fee or subscription pricing structure is a bargain in the long term, even if the upfront cost is higher, which it probably is. By contrast, if you’re selling for an open source vendor, the correct strategic focus is flexibility and control. Your job is to convince customers that the ability to view and modify the software gives them power and thus is more likely to result in customer satisfaction.

The above is based on a conversation with Laura Didio who covers software development methodologies at The Yankee Group, a market research and analyst firm headquartered in Boston, MA.