When Tony Losey came to the 3Sixty Group in 2003 he saw that, like many small companies, the manufacturing firm didn't have much in the way of advanced systems. It was running an old ERP system on machines that dated back to 1992, there was no company intranet and executives had pushed the company's Web site, a key business driver, to an outside hosting provider.
The organisation didn't have a lot of money to throw at IT. But Losey, who took over as head of the one-person IT department, zeroed in on open source as the key to keeping the company competitive as it grew quickly through acquisition. It's a direction that an increasing number of small and mid-sized firms are taking as Linux and open source become battle-tested and are finding mainstream acceptance among larger corporations.
While bigger companies look at open source for cost savings and flexibility, smaller businesses are viewing open source as an opportunity to bring in advanced technologies that in the past were available only through expensive, proprietary packages, analysts say.
"Open source really is becoming an entry into things [SMBs] couldn't do before," says Bob Igou, a research director at Gartner.
The 3Sixty Group, for example, has a company intranet – thanks to the Plone open source content management system – and uses open source CRM software from SugarCRM. In addition, the company's ERP system now is running on Red Hat's free Fedora Linux, and Losey wrapped up a project to move from Windows to the open source Samba file and print server and an open source directory server about two months ago.
"Open source allows us to bring in functionality that before we couldn't afford, or didn't have time to pay attention to," says Losey, who now has three IT staff under him.
CIO at Rudolph & Sletten Sam Lamonica agrees that open source software can give SMBs a leg up, without breaking the bank. When the contracting firm needed a good network monitoring tool but didn't want to pay for all the bells and whistles that came with proprietary packages from companies such as CA and HP, it looked to the open source community.
Lamonica deployed an open source monitoring system from GroundWork and says that moving forward he'll weigh open source options along with commercial software packages in any buying decision.
"We're past the point in time where we have to say, 'Well, I won't get fired if I buy Cisco,' or 'I won't get fired if I buy Microsoft.' I think that fear has gone away and open source has matured a great deal so that now people are no longer afraid of it," he says.
In the past, smaller organisations often have been reluctant to bring in open source because of a lack of in-house skills. While small and mid-sized companies still may not have deep open source expertise, that barrier to adoption is diminishing as a growing number of firms emerge to provide third-party support for open source projects.
In addition, companies such as SpikeSource and OpenLogic are developing pre-packaged stacks of software that may also include proprietary components, making it easier for companies to integrate open source into existing infrastructures, analyst say.
"There is definitely more interest among SMBs in Linux and other open source solutions," says Michael Dortch, principal business analyst and IT infrastructure management practice leader at the Robert Frances Group. "These [applications] have always offered cost savings over traditional proprietary solutions, and are now also gaining sufficient ease of use, integration, and support to make them more viable options for SMBs."
IBM, for example, has rolled out open source-based community editions of its WebSphere middleware, designed specifically for small and mid-sized organisations. At LinuxWorld in August, Collax introduced its open source business server in the US. The product is designed to give SMBs an alternative to the Microsoft Small Business Server by offering a suite of open source applications for security, networking and communication.
The key benefit of Collax is that the business server can be dropped into organisations that don't have Linux or open source expertise on staff, the company says. Händlmaier, a 50-person company that makes mustard in Regensburg in Germany, for instance, made its first foray into open source this year thanks to Collax.
Händlmaier "liked the idea that Collax was pre-qualifying and configuring the [package of applications] so that they did not have to hire a Linux programmer to do the work," says Norbert Auburger, a managing director at the integrator that deployed the Collax Business Server at Händlmaier. "This meant time and money saved."
By using the Collax Business Server, Händlmaier has cut its IT administrative costs in half, Auburger says.
It's that kind of cost savings – and a need for a more open, flexible platform – that prompted Palm Beach Community College (PBCC) to shift its Software AG ERP package from z/OS to SuSE Linux on the mainframe, a project it completed in May this year.
"We're not a huge institution and we were running z/OS with the big boys and we were paying for it," says Tony Parziale, CIO at the school. By shifting to Linux, PBCC was able to gain more capacity without facing skyrocketing licensing fees for the z/OS operating system, he says. "It was cost and it was open architecture, as well. We wanted to be on an open platform and we felt it would give us more flexibility in the future to go where we want to go," Parziale says.
Parziale says the college is saving about $30,000 a month by moving to Linux and is looking to expand its use of open source. "It's just kind of hard to break the Wintel environment," he says.
That cultural opposition is lessening, however, as real world examples of the benefits of open source increase in number, Parziale says.
"There is definitely great acceptance of open source applications …. It's now moved to where you can pick up any of the major publications and read about Linux and larger organisations starting to use it," he says. "That eliminates a lot of the concerns that senior management has when they think you're moving down this untried, untested path, if you can show large companies running the operating system to support major applications."
Backcountry.com, an online outdoor sporting goods retailer, moved into open source around 2001 when it was just getting launched out of the founder's garage.
"There was no way they were going to drop $50,000 on an Oracle licence," says Dave Jenkins, the Red Hat consultant that helped Backcountry.com deploy a Linux-based e-commerce system and later became the company's CTO.
Today, the firm has more than 200 employees and continues to look to open source in all areas of the business, including the desktop, where today about two-thirds of PCs are running Linux.
"Today it's coming down to a classic case of small business saying, 'Oh boy, we don't really want to pay for all that [in proprietary software]' and there are enough engineers and system administrators that have experience with Linux to say, 'Well, you know what there are open source alternatives,'" he says.