Cheap Computing and Open Source Movement Reduce Software Costs
Thursday, 6 January 2005Serving Small Business’ need for dynamic data-driven applications hasn’t been an attractive financial proposition for traditional enterprise software firms who rely on larger customers to drive sales and profitability. Where medium and enterprise software companies may have budgets in the hundreds of thousands, even millions of dollars, the typical small business software budget may be as little as a few thousand dollars per year. With small budgets yet big expectations, it’s no wonder this segment of the business population has felt ignored. This is likely to soon change, however, as the evolution of Open Source business software combines with ever cheaper and more abundant computing power to enable even the smallest businesses to digitize key parts of their operations.
In the early days of the PC, increases in computing power, along with concurrent decreases in computing costs, enabled ever wider adoption of desktop applications. The widespread availability of the desktop PC created a vast market for applications such as word-processors and spreadsheets which were dependent on Microsoft DOS and eventually Windows. A similar tipping point occurred in the mid-1990’s when decreasing internet connectivity costs and relatively inexpensive servers combined with a burgeoning volume of offerings on the Web to create the Internet boom.
Today, another wave is taking hold as thousands of small businesses adopt Open Source applications to run their business. Companies like Sparco Technologies, which uses Open Source CRM to manage its sales program, can get nearly the same functionality of commercial software without expensive licensing and consulting costs. Sparco, a San Antonio, Tx based wholesaler of Wireless Technologies to over 30,000 distributors around the world, uses the popular open source application SugarSales to monitor its sales pipeline and measure the effectiveness of its telemarketing efforts. “We needed a solution that would allow us to quickly manage and track information throughout our entire sales and marketing process” said Dave Dullnig, President of Sparco. “We looked at eCRM from Salesforce.com and NetSuite. At the end of the day it boiled down to cost. With SugarSales it takes a little more effort to generate the custom reports we need than it might with a commercial solution, but our annual costs are more than ten times lower than the typical eCRM provider. We use a Managed Application Service Provider, bNitro.com, and pay a flat fee of $39.95 per month whether we have one or 20 users. bNitro implemented the application for us, manages upgrades, and backs up and protects our data. We access our CRM system via the web. It’s simple, cheap, and reliable.”
Managed Application Service Providers like bNitro.com are an essential force in driving the new wave of Open Source adoption. While the capabilities of Open Source business applications are growing ever closer to their commercial counterparts, most small businesses do not have the technical expertise needed to implement and maintain them. To get web-based software like SugarSales up and running still requires some technical savvy. Managed Providers eliminate the complexity, letting small business clients simply log-on and use the software through a web browser. Since most small businesses don’t need the capacity of a full server, Managed Providers generate economies of scale, via server sharing, that drive the cost to deliver Open Source applications down to a small fraction of their commercial counterparts. “We’re not burdened with the Microsoft or Oracle taxes that companies like SalesForce.com and Seibel are. We can run our web servers and applications entirely on Open Source software and thus our costs are really limited to hardware and network connectivity, which is abundant and inexpensive these days” says Jeff Minich, VP of Business Development for bNitro.com. “At these low price points, widespread adoption of these Open Source applications becomes inevitable in my view.”
In the summer of 2004, bNitro.com launched a test of its Managed Application Services for Open Source CRM, Online Project Management, and eLearning. “We are driven by our customers, and they had been asking for these solutions. After five years of delivering financial applications via the web to over 20,000 websites, we knew the process; we just didn’t want to take on the risk of building new software from scratch” said Minich. “After evaluating and adopting Open Source versions of CRM and Project Management for our own internal use, they seemed like an obvious solution for our customers.” With its test period successfully completed, the company hopes to attract thousands of small businesses that have felt left out by traditional software providers. “We’re ready for the masses so to speak” says Minich. “There are millions of small businesses that, once they figure out what they can do with Open Source software and how cheaply they can do it, will want to integrate these technologies into their day-to-day operations.”
Source: PR Web
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