Patrick Tomasso / Unsplash
Enterprise software has undergone a dramatic evolution for 20 or more years. Today we have containerization, languages are less important, microservices are pervasive, and it’s all enabling very powerful software solutions. Open source software innovations across cloud infrastructure management, workflow automation and data application development have fundamentally changed software development and realization.
With the emergence of connected products and information-based services, even more complexity has arisen in the design of systems and services as well as in the core of intelligent products. Because networks and data add yet more complexity to the process and because just about everything will get connected, we strongly believe that designing new connected solutions requires a combination of the elements from several disciplines in order to fully address the nature of smart connected business opportunities.
The late Buckminster Fuller used to say that all significant inventions eventually become the common property of humanity, regardless of their proprietary origins. There was, for example, a moment when the technology of the ballpoint pen was brand-new and belonged to its inventor (whoever that was), and a ballpoint pen was a precious thing. Over time, the concepts and techniques for creating ballpoint pens became common knowledge, and the once-amazing writing implement became cheap and commonly available—an unremarkable fact of everyday life.
Fuller was also fond of pointing out that if you were stranded on a desert island and your life depended upon creating a ballpoint pen, you were in big trouble, even though in the midst of humanity you could get one for pennies. In other words, the benefits of shared information are incalculable, good for everyone, and vital for our evolution as a species.
A couple of decades after Fuller’s death, the open source software (OSS) movement came into its own. Fuller had nothing to do with it, but he would have liked it. The open source philosophy holds that digital technology is among the most significant of human inventions, and its core manifestations should be the common property of humanity, too—not “eventually,” but now, as they are being created.
Open source started as a fringe activity but has since become the center of the universe of software development. Open source has progressed and expanded through a dramatic evolution from its creation with the GNU project in the early 1980s at MIT, to the launch of GitHub in the late 2000s, to the acquisition of Red Hat by IBM for $34 billion.
Open source has delivered amazing software innovations as well as commercial innovations, including new business and revenue models as well as unique go-to-market systems. Even traditional proprietary software providers like IBM and Oracle (among many others) use open source tools in their technology stacks and invest heavily in open source projects. For example, Kubernetes, the open-source software platform that automates deployment, scaling, and management of containerized applications was originally developed by Google.
As open source software has technically evolved, so too has the underlying economics and value creation of OSS as a business. Historically, open-source software projects weren’t initiated with the goal of monetization. Instead, these projects were focused on providing solutions to existing challenges. Sometimes these challenges are small and experienced by a handful of developers. Other times these problems are much larger. When a project provides a solution to a big problem, demand for that project grows, and as that project grows in scale, a revenue-generating business is established to support its growth. Typically, these businesses are started by the founders of the original project to provide enterprise support to large organizations adopting the software.
At the heart of open source software’s success is community and collaboration. Collaborative communities don’t just produce fewer bugs, they also build much better software. Collaboration has been at the foundation of the open source movement since its beginning. The vast number of software tools and building blocks developed by the open source movement, from programming languages to the Internet, were driven and developed because of knowledge sharing and collaboration. Consider these trends:
- Over 73M developers contribute, leverage and collaborate today with community-based platforms like GitHub;
- The open-source services industry is set to exceed $23Bn in 2021, and expected to reach as much as $50B by 2025;
- Big-ticket acquisitions have driven up valuations for OSS, like Red Hat (acquired by IBM for $34B in 2019) and GitHub (acquired by Microsoft for $7.5B in 2018) — as well as large public market valuations like those of MongoDB ($7.9B) and Elastic ($7.3B).
Over the last two to three years, open source software-based businesses have generated over $125 billion in liquidity from acquisitions, mergers, and IPOs. Open source is flourishing because it has been quietly maturing and becoming more accessible over many years. Today, open-source software is thriving because it is free, enterprise capable, high quality and eliminates vendor lock-in.
The Evolution of Open Source Software
source: Harbor Research
EVOLUTION OF OPEN SOURCE SOFTWARE
How did this all come about and where is open source heading in the future? Since its emergence, open source has evolved through waves of development. Its earliest state was with academics and researchers reveling at the idea of “free software” and the notion of just “give it away” to anyone. Then came the arrival of Linux (an event that Microsoft CEO Steve Ballmer called “a cancer”) when open source demonstrated a better, more efficient way to develop core software technologies. All this evolved to where we are today, with open source software business models having morphed from just service and support to the staggering scale of software-as-a-service (SaaS) delivery models.
The three waves each have had significant impacts on how software is developed and the economic and value creation models that inform the OSS business. What is important about the next wave of evolution will be the combined impacts of multiple technology developments that appear to be increasingly reinforcing and accelerating one another. Cloud infrastructure resources are providing unprecedented computing scale. Higher performance wireless networks and mobile computing devices are extending the reach of computing. Machine learning and AI are bringing intelligence to diverse [edge] things. Embedded systems and IoT technology are connecting and integrating a broad array of physical and digital applications. And Web3 and the metaverse are bringing together new human-computer interfaces and decentralized architectures.
Each of these technologies is powerful on their own, but creative combinations of these capabilities are multiplying their impacts. Human-connected devices and machine-connected devices enable exponentially more data. The cloud then enables us to capture and analyze all that information through its computational capacity. Which, in turn, sets the stage for AI and machine learning tools to analyze and capture new insights.
Software is Infiltrating Everything
source: Harbor Research
BACK TO THE FUTURE
The modern business enterprise has been deconstructing for decades. Companies used to develop the logistics, tools and processes they needed right inside their four walls. Today, no one thinks of a company as bound by the four walls of a building. Companies are ecosystems now, value-delivery networks consisting of a disassembled set of business functions and entities – some owned directly, many sub-contracted, but all requiring orchestrated data and information.
Enterprise software has also undergone a dramatic evolution for 20 or more years. If you pull on that thread even a little bit, it’s not hard to see that the days of the monolithic applications are coming to an end. Re-usable software components, containers and micro-services are the new way to build applications.
At the same time, because enterprises have diverse users, functions and entities, all with an overabundance of data flows and interactions, they need new optimized tools to orchestrate the value presenting itself. Open source software innovations across cloud infrastructure management, workflow automation and data application development have the potential to enable developers to launch applications faster, with fewer specialists, dramatically reducing the time and cost that it takes to build new solutions. This approach, in turn, allows diverse users and customers to refocus on their business challenges, not technology development or infrastructure management.
One trend is very clear: unless traditional software businesses adapt, they will likely disappear. While players like Microsoft have already recognized this shift, there are and will be many suppliers of monolithic and proprietary software that won’t adapt and will be marginalized by open source. ◆
This essay is supported by our technology opportunity overview, “The Smart Systems and IoT Software Opportunity.”
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