Open Source and Its Digital Disruption

Marcel Boer
Nov 21, 2020 · 5 min read
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Open source technology is at the core of the digital disruption to offer companies a robust, secure but cost-effective IT infrastructure. Enterprises use various software solutions which integration and maintenance are a big huddle due to complex and time-consuming adaptions. Open source provides fast adaption and controlled upgrades. Traditionally, open source can be dated back to the 1950s when software development was a side product of hardware that gave big business back in these days. In the 1990s and the early 2000s, open source arose with developers working across enterprises to create open software being accessible to the public. Open source software can be viewed, contributed to, and redistributed. Examples of open source software are broad, whether it’s operating systems, databases, web servers, application servers, or browsers, the concept of open source is digital disruption. Let us dive into the aspects of digital transformation, as well as the organizational and monetary impact of open source to enterprises.

Open Source and Digital Transformation

With the availability of open source software, enterprises regardless of their size and power can solve fundamental business problems, target new businesses, and can invest in innovation. As the basic foundation of software solutions and innovations, open source enables agile and fast growth of software products and a new generation of market needs. Open source is part of several different business models, those which highly rely on open source as the core technology and others which use open source as a specific extension of other software products. Taking platform-based business models into consideration, open source offers a flexible and fast approach to connect rising demands with customizable offerings. The exponential growth of open source software results from a growing community of developers, pioneers, and entrepreneurs. The more drivers open source technology has, the more advantages and offerings open source will yield. Open source is fast-growing, disrupts business models, and creates digital transformation.

Dimensions of Open Source Software

Open source is a disruptive innovation with some symbolic characteristics. The following considered dimensions are price, source code access, functionality, modularity, license, and consideration of open standards.

  • Price: The price for the core of open source software is very low to zero. The total cost of ownership for open source software also takes support, customization, and hosting into consideration as they are not for free by default.

It is not a binary decision whether a software product can easily be categorized as open source or not. The above characteristics help to distinguish the nature of software with a tendency to be open source or not.

Organizational Impact of Open Source Software

Besides its technical and business impact, open source software has implications on the organizational strategy of enterprises. Aspects of organizational impacts are the development, distribution, licensing, and marketing of the software.

  • Development: The development of open source software is mainly done in globally distributed and self-organized development teams. The teams can be categorized by the heterogeneity of roles, functions, and experience of community participants.

The organizational impact of open source software is quite strong as development practices and tools were adapted considering the above aspects.

Monetization of Open Source Software

Open source is a widely used business model pattern but how do enterprises actually make money by offering their software products as open source? The following models help enterprises to monetize open source software:

  • Support model: Monetization is achieved by selling support services like integration, training, and bug fixes for projects. This monetization model can be applied in cases of mission-critical projects as enterprises rely on it. One very popular example is RedHat.

There is not a universal business model that implicates entrepreneurial success. In most cases, enterprises offering open source software choose a hybrid approach of a combination of the above-mentioned models.

Conclusion and Final Thoughts

Open source is a disruptive innovation boosting the digital transformation. It is interesting to monitor the future development of open source and its emerging market impact. Also, the organizational aspects shall be taken into consideration to sustain open source as a successful business model. Open source is a good fit for environments with no existing pattern and standard or where those lacks to meet the needs of a broad community of users. With various characteristics, licenses, and initiatives, open source is a successful business model pattern that yields different variations.

Further Readings

It is worthwhile to consider the following readings for a better understanding of open source as a digital business model.

Business Models of a Digital Era (Link)
Do not miss this article about how digital transformation and digital natives are changing the business. With the adoption of emerging technologies and customer behaviors, companies show a variety of new business model patterns that face the characteristics of a digital era.

Open Source Data Platforms (Link)
We are living in a data economy with the need for marketplaces to exchange data volumes that are providing insights into customer behavior. Open source data is the new oil and provides innovative, future business models. The article details how open source data marketplaces enable data providers to monetize their data and create new demands.

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Marcel Boer

Written by

Enthusiast & Innovator | Keen to conceptualize, implement and test innovative business models

The Startup

Medium's largest active publication, followed by +771K people. Follow to join our community.

Marcel Boer

Written by

Enthusiast & Innovator | Keen to conceptualize, implement and test innovative business models

The Startup

Medium's largest active publication, followed by +771K people. Follow to join our community.

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