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Fight between carnival and lent - how to become rich on free software

Who really makes money on open source products? How to use open source model not only as distribution channel but for achieving tangible financial results! Open Source business models.

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Fight between carnival and lent - how to become rich on free software

  1. 1. Fight between carnival and lent … and how to become rich on free software Piotr Karwatka, CoCEO Divante
  2. 2. Divante • eBusiness Software House operating since 2008 • Over 180 people at our office in Wroclaw, Poland • Offices in Rotterdam, London, Stockholm • Clients from Europe, Asia, Africa and US • Case studies: divante.co/portfolio Key to success? • Pragmmatic over egocentric • Business goals first • Best tools available
  3. 3. Marketing User Experience Technology • 360 view of Customer • BigData - Actionable Data • Omnichannel Customer Experience • Omnichannel Loyalty • B2B Omnichannel • CRM Live Integration • Customer Database • Enterprise Serial Bus • Multichannel Management • Product Information Management • Digital Products • Omnichannel Order Management We’ve built Divante services with Open Source at it’s core Marketing Automation Customer Experience Personali zation
  4. 4. What’s Enterprise Open Source? - Open Source software is inevitable - Enterprise Open Source = projects backed by proffesional companies: Magento, Wordpress, RHEL, MySQL, Android … - Often along with commercial licences, support and services - Long ago stopped to be scored as “enthusiast based”, non-professional projects. - Open Source is great for being used by Enterprises - fosters standarization / distribution - no vendor lock-in, - quality - are weable to write better code than contributors like Google, Microsoft …? - community and support, - security, - commercial services, SLA, - it’s so pragmmatic, developers love it, no marketing fluff, - Hell has frozen over! - Even Microsoft open sourced .NET, ported SQL Server to Linux and integrated Ubuntu to Windows The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future by Kevin Kelly)
  5. 5. Open Source Business Models - Dual Licensing - Open Core (ex: Magento) - what you pay for: some extra features to be in commercial version, - notes: how to make Core version good enough? - Partners (ex: Magento) - what you pay for: Partners pay for certification - notes: why to become a partner? - Consulting services (ex: Red Hat Linux) - what you pay for: customization, adding new features, trainings, - notes: not very scalable, - SaaS / Enterprise Cloud (ex: Mautic, Heroku, SugarCRM) - what you pay for: hosting, SLA, provisioning, - notes: it’s no longer so open as it should be - Mixed (ex: Magento)
  6. 6. Fight between carnivale and fest Open Source products rarely are commercial successes comparing to proprietary equivalents
  7. 7. Why Open Source fails? More: why Open Source fails. CIO Magazine "If we look at Red Hat's market, 50 percent of potential customers may use Fedora (the free Linux distribution,) and 50 percent use Red Hat Enterprise Linux (the version which is supported and maintained by Red Hat on a subscription basis.) So a large part of the potential market is carved off – why should people pay the 'Red Hat tax'?" Peter Levine, a partner at Andreessen Horowitz. - Revenue Limits - ex. Magento vs. Demandware - Uneven playing field - ex. KVM vs. VMware Why should customer pay for commercial version / features / services? Partners can canibalize software vendor businnes when original value offer is too low.
  8. 8. Example - Magento Magento valuation when sold to Permira - along with GSI Commerce unit - was 925M$ (with 1.5% market share) Demandware valueation when sold to Salesforce was … 2.8B$ (with 25% market share) - strong Community, very active partner eco-system, mixed revenue streams - … but most of revenue are probably NOT from licenses, - 1.x offers too low value offer Community vs. Enterprise - only around 25 EE licences sold in 2015 Magento: By Developers for Developers. Demandware: More Business focused. Everything depends on how do you define success!
  9. 9. VARs (Value Added Resellers) and Agencies! Who benefits the most in Open Source world? It’s great to built your service or added value business on top of Open Source: - you use standarized / commonly recognized base, - starting point is low - not have to built product at first, - you can focus on business value, extending, - you can achieve better results than software vendor because your value is more appreciable by business customers who realy pay - you can use all Open Source Business model as well. So why anybody build open source projects? It always depends on how you define success! Use your strengths and focus on business value!
  10. 10. How to survive as product vendor in Open Source? At the time they sold MySQL AB to Sun in 2008, 70 percent of the company’s income came from licenses. “That was the reason that MySQL had a huge valuation,” Widenius said. “We were a product company and people had to pay for it in certain situations.” BSL (Business Source License), FAIR.IO, OSE (Open Source Eventually) - Idea initialy wasn’t mean for aiming commercial success but for founding MariaDB foundation - But it’s really interesting for enterprise products! - Mixed approach: - Always Open Source or Open Source from some point (OSE approach) - Free to some point (CPUs, accounts …?) - VBP - Value Based Pricing - ”success share” - No questions about “Why to pay” with all other benefits of open software - Still great for Agencies - there is license fee to share! More: MySQL founder tries a new software licensing model. Techcrunch.
  11. 11. - Open Loyalty is Open Source loyalty program ready to use out of the box, - CDB - Central Database and 360deg view of customer (offline / online) - POS - application, - End-customer application, - If you’re Agency you can use it to implement omnichannel experience for your retail/eCommerce customers, - Licensed using BSL-like license - always open source - with Value Based Pricing. Open Loyalty We decided to build Enterprise Open Source product to be used by eCommerce / marketing agencies based on our experienced for large companies like SMYK.COM, ING, ENERGA, PZU, JTT First case studies underway! Alpha tests for partners are open!
  12. 12. „Can you give me your phone number to get bonus (..)” Buying off-line Mobile App / SMS Client Sales clerk How it works? receipt order info Customer-order matching phone number bonus points alerts recommendations Customers Database Promotions Rules ERP / POS Integration
  13. 13. Earning point rules 13
  14. 14. Reward campaigns 14
  15. 15. Dasboard 15
  16. 16. Customer profile 16
  17. 17. Levels 17
  18. 18. POS Cockpit 18
  19. 19. ESB Open Loyalty is Omnichannel Enabler - Open Sourced, easy and fast to deploy B2B B2C SelfService Mobile POS Amazon eBay Rakuten Allegro ShopinShop .. .. .. .. .. Magento 2.0 PimCore EDI API XML Open Loyalty based on Symfony 3.0 Rapid B2B Rapid B2C Marketplace Multichannel Loyalty Program CRM (OroCRM) BI (Pentaho) PIM CMS OMS POS Mobile Marketing Automation (Mauutic)
  20. 20. Win using Open Source with Divante Discuss how you can win with Open Loyalty Just grab us your e-mail: pkarwatka@divante.pl
  21. 21. Divante UK 286C Chase Road London, N14 6HF United Kingdom (+44) 20 30115154 mblum@divante.co Divante Sweden Divante HQ Divante NL Divante UK Divante HQ 17 Dmowskiego Street 50-203 Wroclaw Poland (+48) 733 355 596 sales@divante.pl Divante Holland Rivium Quadrant 141-181, 2909 LC Capelle aan den IJssel The Netherlands (+31) 657 625 006 mpolak@divante.co Divante Sweden Erik Dahlbergsallén 15 115 20 Stockholm Sweden kpodeszwa@divante.co