Economic impact of open source on small business

Results from an in-depth study of open source's role in small and medium businesses.

A few months back, Tim O’Reilly and Hari Ravichandran, founder and CEO of Endurance International Group (EIG), had a discussion about the web hosting business. They talked specifically about how much of Hari’s success had been enabled by open source software. But Hari wasn’t just telling his success story to Tim, but rather was more interested in finding ways to give back to the communities that made his success possible. The two agreed that both companies would work together to produce a report making clear just how much of a role open source software plays in the hosting industry, and by extension, in enabling the web presence of millions of small businesses.

We hope you will read this free report while thinking about all the open source projects, teams and communities that have contributed to the economic succes of small businesses or local governments, yet it’s hard to measure their true economic impact. We combed through mountains of data, built economic models, surveyed customers and had discussions with small and medium businesses (SMB) to pull together a fairly broad-reaching dataset on which to base our study. The results are what you will find in this report.

Here are a few of the findings we derived from Bluehost data (an EIG company) and follow-on research:

60% of web hosting usage is by SMBs, 71% if you include non-profits. Only 22% of hosted sites are for personal use.
WordPress is a far more important open source product than most people give it credit for. In the SMB hosting market, it is as widely used as MySQL and PHP, far ahead of Joomla and Drupal, the other leading content management systems.
Languages commonly used by high-tech startups, such as Ruby and Python, have little usage in the SMB hosting market, which is dominated by PHP for server-side scripting and JavaScript for client-side scripting.
Open source hosting alternatives have at least a 2:1 cost advantage relative to proprietary solutions.
Given that SMBs are widely thought to generate as much as 50% of GDP, the productivity gains to the economy as a whole that can be attributed to open source software are significant. The most important open source programs contributing to this expansion of opportunity for small businesses include Linux, Apache, MySQL, PHP, JavaScript, and WordPress. The developers of these open source projects and the communities that support them are truly unsung heroes of the economy!

France awards €2 million open source support tender

The central IT department for the French government has granted a €2 million contract to support 350 different open source tools throughout fifteen different ministries. The three to four year contract, which was officially tendered last year, was awarded to consulting companies Alter Way, Capgemini and Java specialist Zenika.

The supported software and technologies include several Linux distributions such as Ubuntu, Debian and CentOS and programs including Firefox, OpenOffice, LibreOffice, OpenERP, Nagios, Drupal. Programming languages such as PHP and Python are also within its scope.

The government's IT department is requiring the companies to give back improvements made to the open source code they are supporting to the respective communities as part of the contract. The current contract only covers bug fixes and maintenance of existing installations, development of new features will be covered by a new tender which has not yet been published. Not participating in the contract is the French Ministry of Economy, Finances and Industry which has awarded its own open source support contract.

Eight years ago, a similar contract had failed, resulting in "expensive proprietary software solutions" being rolled out throughout the French government, according to the news site LeMagIT. Therefore, aside from saving costs, increased and more sustainable adoption of open source tools is a priority.

Gamification is used by New Open-Source CRM app

The backers of a new open-source CRM (customer relationship management) application called Zurmo are hoping to stand out in a crowded field via the use of gamification, the notion of applying game-like design principles in an effort to make users engage more closely with a product.

Now in beta, Zurmo is written in PHP and made available under the GPLv3 open-source license. A release candidate is slated for availability in July, with a "general audience" release scheduled for September.

Its core CRM features cover contact management, deal tracking and activity management, while the gamification elements include the use of points and badges that users receive based on the actions they take, both in terms of sheer use as well as "business-related milestones," such as garnering a certain number of sales leads.

As users build up these points, they can achieve higher levels. The best performers jockey for space on a "leaderboard" inside the application, with the idea being to spur competition.

"We made the decision to go with gamification about six months ago,"said Zurmo's community manager, Stafford McKay. "We could either continue on and do the normal enterprise functionality like everybody else, or do something different."
The problem is that the CRM industry "has failed in terms of user adoption," McKay added. "Truly, end users do not use the [systems]. We've got to fix this. What is the point of creating an application nobody's going to use?"

Gamification is still a nascent field, "but we see it as really interesting and very possible in terms of motivating users," McKay said.

The company is seeking contributors to the open-source project. Right now, five internal developers and about eight committed external contributors are involved.
Zurmo is using test-driven development practices to create the software, which makes the process slower but avoids buggy code.

It would probably be possible to reach general availability earlier than September but Zurmo wants to make sure the initial release has "a nice baseline of functionality," said co-founder Ray Stoeckicht.

Gamification is a key philosophical focus of the product but not the only one, he said. In addition, Zurmo intends to deliver a "pure" open-source product, with all features available for download at no charge, rather than offering more basic editions at no cost and charging more for additional functionality, as is often done, he said.

Zurmo's backers have previous experience in running an open-source CRM business. Stoeckicht and McKay both work for Intelestream, a firm that offers consulting and services for SugarCRM and its own Intelecrm application, which is a fork of the SugarCRM community edition code. Zurmo's lead architect and co-founder, Jason Green, was an early SugarCRM employee and founded Intelestream, where he serves as CEO.

Intelestream and Zurmo are completely separate companies, and Zurmo has its own codebase, according to McKay.
Zurmo hasn't made final decisions on how it will make money off the software, but will probably look toward support and customization services, as well as building out a channel model, Stoeckicht said.

Hosting is available for the software from Zurmo and a few partners, but right now most deployments are on-premises, he said. In terms of customers, Zurmo is targeting small and medium-sized businesses.

Zurmo's success or failure may rest on how it executes the gamification components.
"Gamification is most effective when it employs rewards in exchange for actions," said analyst Ray Wang, CEO of Constellation Research. "Sometimes the reward isn't pay, it's personal pride," he added. "Really good gamification mechanisms take advantage of non-monetary rewards."

For example, reaching a certain point threshold might earn a user a dinner with the boss or a preferred parking space, Wang said. "It's something that's valuable to them. That's what motivates people."

Java is less use than C, but index's precision is doubted

 The C language, which displaced Java as the most popular language in the Tiobe Programming Community monthly assessment in April, has maintained its number 1 spot in the May report released this week. But a high-profile member of the PHP community is questioning the accuracy of the index itself.

The May release of the index, which gauges the popularity of programming languages, had C used by 17.346% of developers, as opposed to 16.599% using Java. The index is based on the number of skilled engineers worldwide, courses, and third-party vendors interested in the particular languages. Examinations of search engines including Google, Bing, and Yahoo are used to calculate ratings; other sites such as Wikipedia, Amazon, YouTube, and Baidu are factored in as well.

But Andi Gutmans, who is a key developer of PHP and CEO of PHP tools maker Zend Technologies, dismisses Tiobe's index, citing its tendency to fluctuate. "It's very questionable how they come up with those numbers," Gutmans said. Tiobe's index for May has PHP as the sixth-most-popular language, but used by just 5.711% of developers. Gutmans insists PHP usage is growing quickly. He cited other industry figures showing 50% of the Web running PHP.

Tiobe Managing Director Paul Jansen defended the index, saying most criticism comes from declining programming communities. "Of course, we use a very simple algorithm so it is easy to shoot at if [it] doesn't fit your expectations, but it shows something about the visibility of each language on the Internet over time," Jansen said. "It is not scientific but at least it is the best try I have seen so far. If Andi Gutmans has some suggestions [for] how to improve the Tiobe index, I really would like to know. We are willing to adjust the index if he shows up with a good suggestion."

Tiobe in its report said the top 10 languages in its index had not changed much in the past eight years, apart from Objective-C moving into a slot and Delphi moving out. New language adoption appears to be much harder than expected. "The main reason for this is probably that it is very difficult to migrate a large code base from one language to another one. So changes are slow. But even if we take this into account, there are no new languages that show a slow but constant [rise]," Jansen said in the report.

Tiobe cited Scala as an example of a language that has not had much movement over the years, even if it is becoming a hot topic in Internet discussions. Currently ranked 46th, Scala entered the Tiobe index at number 57 in 2006 and moved up to number 48 a year later.  "Not much happened to the language after that," Jansen said in the report. Other examples of languages not moving forward much in the index include F#,  ranked in the 40th spot now and 38th six years ago; Groovy, now 32nd and ranked 36th in 2008, and Erlang, which is now ranked 44th and was ranked 35th in 2006. "So where is that next big programming language? Let us know," said Jansen.

Also in Tiobe's top 10 for the month were: C++, in third place used by 9.825% of developers, followed by Objective-C with 8.309% and  C# at 6.823%. Ranking after PHP were Visual Basic with 5.457%; Python with 3.819%; Perl with 2.805%, and JavaScript with 2.135%.

WampServer delivers a smart, Windows-friendly platform for Apache, MySQL and PHP-based apps

While many popular website applications (WordPress, Drupal, Joomla, etc.) are open source and therefore freely available, running these PHP-based apps on a Windows IIS web server requires a bit of retrofitting.

Although Microsoft has streamlined the process of installing and configuring the PHP scripting language on IIS 7.0, many web administrators consider the fix, which involves enabling FastCGI extensions, too risky for production environments. Others simply wish to set up an independent test environment for evaluating open source apps.

Follow Network World's open source community

Moreover, PHP extensions are not the only hurdle for Windows webmasters. A large number of PHP-based open source apps rely on backend databases (MySQL, Maria DB, PostgreSQL, etc.) that also need special handling to run on Windows.

Enter WampServer, an open source product that installs a PHP-apps-ready platform consisting of Apache web server, MySQL database, PHP, plus several helpful GUI-based utilities. WampServer can be installed on virtually any version of Windows, either desktop or server. With an active user community, industrial-grade training programs and a large installed base, WampServer is one of the world's most popular Apache-MySQL-PHP distributions.