Low cost of acquisition;

Independence from vendor release and licensing requirements; and

Ability to manipulate source code -- even by the smallest enterprises.

10-22-07 Open Source SW - Next Disruptive IT Influence
(Freely available.  Registration Required)

The extent to which open source software will really erode the presence - and profitability - of traditionally-licensed software within user enterprises.

The greatest gaps between user expectations of open source software and traditional software vendors - and why current open source vendors are unlikely to bridge those gaps. 

Why hybridized "open source + proprietary source" development models and software portfolios will be the key to survival and success for software vendors, along with the critical success factors/building blocks for software vendor survival strategies. 

What the top business and technology drivers of open source adoption are for user enterprises and why they vary by company size - but not by geogrpahy or vertical industry. 

Why there is no single, over-riding business or technological inhibitor to the adoption of open source software by user enterprises, and what this means to software vendors.

How the "management premium" of open source software affects both user enterprises and software vendors. 

Saugatuck survey data indicate that open source software may account for as much as 10 percent of worldwide user software, in all sizes of enterprises. Thirty-two per cent of user enterprise executives expect that by YE 2010, more than half of their key on-premise software will be open source. 

Open source is changing the way user enterprises perceive, buy and use software. And as a result, open source is changing the way IT vendors and service providers develop, license and support software.

Open source is first and foremost a development methodology, not a product, a technology, a single license scheme, or a business model. Open source's key advantages derive from its community-driven development model. The greatest benefits will go to those who understand this and use it to their advantage. 

Open source will be a significant part of all aspects of hybrid IT environments, based in large part on vendor and services provider use of open source components to reduce development time and costs.

Saugatuck sees three basic stages of open source marketplace presence, evolution and maturity through 2012 (i.e., "Early Adoption", "Core IT Acceptance", "Commercial Ubiquity"). User enterprises are already entering the second stage, while most vendors are stuck in the first, early stage.

In the long term, the greatest open source presence in most enterprises will be as components within vendor and SaaS provider solutions. Saugatuck looks for a majority of SaaS providers to incorporate open source software both in their own platforms and systems, and as part of software and services offerings, by YE 2010. To accomplish this, SaaS providers will partner with (or acquire/be acquired by) leading open source software providers.

There can be no one "open source" model for management or business, for users or vendors. Successful software vendors will utilize business models that blend licensing and revenue streams, including open source and SaaS.
While open source software can reduce the costs of software acquisition and development, and can reduce development timeframes and resource needs, it almost always increases management resource requirements.

Open source is delivering significant business value to user enterprises, and therefore is being managed as would any other valuable IT asset. Open source's presence in user enterprises is far from haphazard or accidental - it is increasingly planned and managed.

SMBs want and need custom solutions - and open source is a means to deliver those at significantly reduced development costs for vendors.