Now that everyone on the blogosphere has voiced their opinion on the latest SAP acquisition of BO, I can safely post my own rant as well.
I read all about the pro’s and cons of this deal. IMHO it just doesn’t matter a lot. In the end, the flood of open source software is going to wash away the proprietary sand castles left and right.
Yesterday we actually spent a lovely day at the beach with the family. When you start building, it feels like ages before the water will hit the castle. When the water closes in it looks like those few centimeters of water ain’t going to make a lot of difference. However, here’s a reality check: there’s just no escaping. After a couple of waves there was nothing left but a small pile of mud.
The analogy with closed source BI vendors is a bit flawed. It will not take 6 hours for the tide to come in, it will maybe take 6 years. However, I strongly feel that the tide is coming in and that the waves are going to hit hard.
Wars are already being fought left and right, castles are vigorously defended, there is lying and cheating and even lawsuits are filed against open source companies lately. In the end, it’s just going to be nothing but a small splash in the ocean.
Some 8 or 9 years ago I actually started dabbling with Business Objects. It was a revolutionary business proposition at the time. No longer was there a need for expensive “SQL generators / report generators” on the mainframe. You could do the same thing and more for pocket change. You could get licenses for a thousand $US a seat, imagine that! It was the golden age for companies like BO, Cognos and many others.
A dot-com bubble and a few years later and there is an unprecedented consolidation wave going on. You see, the only way these big corporations can get more market-share and increase their turn-over is simply by buying other companies. Never mind that the BO reporting client software is 99% the same as 8 years ago. (Most of the bugs are the same too) Technically, not that much changed. The strategy of all the closed source BI companies is still the same: spend +75% of your turnover on sales and marketing. Innovation, software development and other costs are best kept at a minimum to keep your profit margins as high as possible. Suppose you acquired a few companies that have exactly the same business model as your own. You wouldn’t care about software alignment, integration and other stupid things would you? It just means you have to spend less before the customer buys either product.
Spending insane amounts of money on acquiring your customer is a nice strategy … as long as it works. If it stops working because someone undercuts you substantially, there is no way out.
The speed at which Pentaho and other open source companies are innovating tells me that there is soon going to be a tipping point when the size of the castle walls are not going to matter anymore. The business proposition of open source is just too good. It’s a win-win for both the customer AND for the professional open source companies.
Until next time,