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Sunday, 21 June 2009 14:13

No license payments lure, as open source on the rise!

The absence of upfront license payments is the main driver in open source adoption, along with the lower costs of total ownership, for companies in the European market despite lingering market concerns about the level of software support and the quality of open source software.

According to IDC in its latest survey of 515 Western European IT decision makers in organisations with more than 50 employees, there’s surprisingly high usage of open source enterprise applications, with nine percent of respondents reporting current use of an open-source back-office application, while seven percent used an open source CRM application.

IDC says that despite a lack of license fees and less cost of total ownership, the main inhibitor inhibiting organisations from adopting open source applications are concerns related to the level of software support and the quality of open source software.

Bo Lykkegaard, research director, European enterprise applications and services at IDC says that "in an enterprise applications market in which large vendors boast a 10% market share, adoption rates of 9% and 7% appear very high," and, he adds, “usage can mean anything from departmental use or niche use to enterprise-wide deployment.”

“We expect the majority of users of open source enterprise applications to use commercial enterprise applications at the same time. Despite this reservation, the survey results show that open source adoption in ERP and CRM has reached a critical threshold and should now make a 'bleep' on every vendor's radar screen, particularly for those that compete in the midmarket."

According to Lykkegaard, IDC sees vendors of open source enterprise applications attracting equity investments, with heavyweight leaders and growth rates typically above 20% per year, sometimes much higher.”

IDC believes the net effect of the emergence of open source enterprise applications will be one of price pressure, in particular in the midsized segment,” and Lykkegaard says the research firm does not expect a “religious war between an open source community on one side and commercial proponents on the other.”

“Rather, it will all come down to a battle over who can provide the customer with the most ERP or CRM per euro," says Lykkegaard.

IDC’s study - Open Source Enterprise Applications in Europe: Disruption Ahead?  examines open source adoption in the enterprise applications market from both a demand side and a supply side, the IDC says the supply side perspective is covered by in-depth profiles of five open source application vendors in Europe, including Compiere, Openbravo, xTuple, SugarCRM, and vtiger.

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