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Open Source BI: The Best Things in Life Are Free

A lot of people hearing about open source BI ask me questions like "How can they be viable companies if they give away the software?" or "How do they make any money?" I think the real question should be "How long can software companies in maturing markets continue to produce software with the existing price structure and stay in business?"

I decided to answer those questions in a column at DM Review by analyzing a BI vendor's financials and making them into an open source company:

"To get to the bottom of the argument, look at an anonymous healthy BI software company. Company X is a fairly typical BI provider that makes most of its revenues through the standard means of licenses and support, with a little services thrown in on the side. Figure 1 shows their revenue breakdown by percent and by dollars."

For a reason I don't understand, they made the examples I used anonymous. Company X was Cognos, and I took the numbers straight out of their public financial statements on their web site.

The result is that with relatively reasonable estimates, the company is much smaller but still profitable. I expect that in five years time, as consolidation in the BI industry continues, the marginal players in the market are going to have to find ways to stay in business. Open sourcing their software is one avenue. Read the rest of "The Best Things in Life are Free"

Posted by Mark Friday, October 06, 2006 1:02:00 PM | permalink |