Open Source Is Eating The Software World

It's been said software is eating the world. This year’s Future of Open Source survey points to the fact that open source is eating the software world. This is due to a significant shift as to why open source is chosen over proprietary alternatives and because of major advantages open source has in quality, security and innovation.

First some background. Well over a decade ago as an entrepreneur, I experienced the power of open source when it provided a solution to a critical development deadline for one of my engineering teams. Now, as a venture capitalist, it’s a pleasure to be part of its evolution - investing in open source leaders and innovators, and helping to drive awareness and potential for open innovation in the industry.

This week, together with over 30 collaborators and industry leaders we are announcing our seventh annual Future of Open Source Survey results. With insights from more than 800 respondents (from customers, vendors and the community), this year’s survey was the largest yet. And the results are inspiring.

With over one million unique projects today, open source is creating an environment of open innovation and revolutionizing the way organizations work and do business. Here’s why:

Quality (Competitive Features, Speed and Security)

At its core, the inherent advantage of open source is driven from thousands of developers working to improve its code, while developing new features and enhancements that the users themselves want to see. As a result, open source enables quicker deployment times versus proprietary alternatives’ and frees customers from vendor “roadmap prison”. All this while creating a higher level of security that has become the second most important factor for open source deployments. As one of our panelists, Ed Tilford, Head of Open Source Governance from Thomson Reuters discussed, with security a boardroom priority – this is an opportunity for open source to be adopted and endorsed at the highest levels of an organization across more and more industries.

Openomics

Over the next 2-3 years, industries such as government, healthcare and media sectors are on an open source growth path. Driven by principles of collaboration, speed and transparency, 35 percent of survey respondents believe open source will impact government the most.

With big data leading the charge to enable the healthcare industry to cut costs and improve quality, all facilitated by over 2,000 open source healthcare projects, it was not surprising that health and science came in second place.

Separately the media industry continues to evolve at such a pace that only open source solutions will be able to provide the type of engaging content users want at the speed of the Web – which explains why it came in third in the survey.

The broad adoption across all industries, noted above, has led to increased investment. In 2012, open source venture investment jumped 80 percent over the prior year, with $553M invested compared to $307M in 2011.

For open source vendors, the survey revealed an opportunity to reduce friction associated with deployment complexity and it follows that SaaS is expected to be the top driver of revenue growth going forward.

Culture and Innovation

The open source community is one that is founded on collaboration. It is this culture that is facilitating a crowdsourced approach to innovation like never before. Focused on the common goal of solving major challenges for the enterprise and for industry, 57 percent of respondents feel greater competitor collaboration will happen over the next three years, as crowdsourced experts deliver bigger and more continuous breakthroughs than that of a single development team. Moreover, companies are learning and becoming increasingly sophisticated as they work within open source communities, realizing it can help them attract talented developers and influence projects that can benefit them competitively. Finally, by taking advantage of open APIs (62 percent of respondents currently use open APIs and 28 percent planning to use them in the next 6-12 months) businesses can spend less time coding and more time on what matters – creating great digital experiences and personalizing them. Only open source will allow them to do this quickly, efficiently and reliably.

The Future of Open Source

Open Source IS the next-generation innovation model and its momentum is stronger than ever. As broader adoption creates a virtuous cycle of innovation and investment, we can expect more disruption from open source, new business models and many more exciting new projects and companies.

If you are an entrepreneur seeking to make a difference with Open Source, this is your time! What will you contribute?

For more details on the survey, see the full results here.

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At Underscore VC, Michael and his team partner with daring entrepreneurs to invest in founders and build from inception to market leaders. As a former entrepreneur turned VC, Michael has backed and built teams that have created billions of dollars of value focusing on large, market-changing technologies such as Cloud Computing, IoT and Big Data as well as disruptive business models such as Open Source and SaaS. Current representative investments include Acquia, Cazena, Demandware (NYSE:DWRE), Mautic and Salsify.

Follow Michael on LinkedIn, Twitter @mjskok, his website, and in his Harvard Innovation Lab class, Startup Secrets. Follow Underscore VC on the web and Twitter @UnderscoreVC.