Open source firms 'to be consumed by wave of consolidation'
Published: 16 Feb 2006 10:05 GMT
A wave of consolidation is sweeping the IT industry, and many open source business applications will be left behind when customers pare down their suppliers, an SAP executive predicted Wednesday.
SAP sells proprietary ERP software used to track corporate finances and manage relationships with customers, but the German company faces competition from OpenMFG, SugarCRM, Compiere and others.
But those rivals are too immature to make it, said Peter Graf, SAP's executive vice-president of marketing, during a speech at the Open Source Business Conference in San Francisco. When major changes occur — as is happening today with customers retooling computer systems to adapt to the Internet — customers want to bet on known quantities, he said.
"We believe that open source business applications do not have enough time to mature before this huge consolidation wave matures," Graf said.
Graf is not the first from a proprietary software company to dismiss competition from companies that employ the collaborative, sharing methods of open source programming. But changes of heart are not unknown: IBM bought an open source Java application server company called Gluecode, despite having a successful proprietary competitor; and database giant Oracle considered buying MySQL.
SugarCRM's chief executive, John Roberts, unsurprisingly, adamantly disagrees and said his company's technology is mature enough today for use by major customers. "We relish the opportunity to compete with them any day," he said in an interview. Avid Technology is one customer that converted from SAP's products to SugarCRM's, he added.
Another voice of dissent came from Compiere's top executive, Jorg Janke, whose software is used by, among others, a French manufacturer and seller of beauty products with 2,000 stores. However, he acknowledged that some criticism of open source business software is warranted.
"There are lots of people who think open source is a quick way to form, so they put out marginal business applications and try to get venture capital funding," Janke said.
SAP isn't solely a proprietary software company, though its core products are. When it comes to open source projects, "We're both a consumer and a contributor," he said.
SAP uses several open source programs, including the Eclipse programming tools and Java application server software components such as Apache's Struts and JBoss' Hibernate. Many open source projects are widely used enough to maintain their influence, he said.
"When the market consolidates, people [put] their investments into the biggest pile," Graf said. "Which open source technologies are mature enough to survive the wave that's coming? Linux — absolutely. Eclipse? Yes. Mozilla? Most likely."
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