Larry Augustin: Open source fueling enterprise software shift

Visionary Augustin says distribution, support models changing

Open source is driving distribution and support changes in the enterprise software industry, says Larry Augustin, an open source visionary and new SugarCRM CEO.

Open source is giving a mighty boost to the enterprise software industry, changing the support equation for users and signaling to Microsoft and other proprietary vendors that it's time to catch on or be left out, according to Larry Augustin, an open source visionary and the current SugarCRM CEO.

Augustin, who took over SugarCRM about three months ago, built his reputation on his early work in the open source community and during a stint as a venture capitalist. He thinks the maturing software industry is showing signs of changes that will redefine the customer/vendor relationship, alter current business and distribution models, and eventually fuel cloud computing.

"It wasn't long ago that software was this mysterious magical stuff," says Augustin, who is credited with helping coin the term "open source."

"Now people understand software and they understand that many applications have matured. I think we'll see over time the software industry reach a point where it is not proprietary vs. open source, but the shade of how much control you want, how much do you want to do yourself, and how much do you want the vendor to do," Augustin says.

Those control issues, fostered by having source code for applications, will help balance the customer/vendor relationship, Augustin says. In essence, users won't get locked into applications that vendors no longer push forward even while they continue to collect support fees.

All those factors, Augustin says, put pressure on vendors such as Microsoft and others to consider their future business models.

"Over time you will see Microsoft adopt more open source principals as they strive to continue to make Windows relevant," he says. "They have put a toe in the water with their Shared Source program. I don't think it gets them there, but you can see them thinking about it."

Augustin's SugarCRM has built a relationship with Microsoft that began in 2006 with an interoperability deal on the back of a license that is part of Microsoft's Shared Source Initiative, a program through which Microsoft shares source code with customers, partners and governments worldwide.

Microsoft's recent actions also back up Augustin's words. Over the past year or so, Microsoft has donated code to PHP, offered support to the Apache Foundation, and just last month made its first code submission to the Linux kernel (even though it happened under a cloud of duress).  Augustin says these moves show signs that the software industry has matured.

"It is why you see so many open source applications and why Microsoft is really struggling," he says. "They are in a mature market now and trying to figure out how to make changes. IBM went through similar change in the 1990s and almost went out of business."

Augustin says Microsoft has to figure out how to emerge in an industry where the company cannot simply define things on its own. Customers want more flexibility and openness because they have that understanding of software, he says.

One big influence on changes currently taking place, Augustin says, was brought to light during his 2002-2004 tenure as a venture capitalist at Azure Capital Partners. He says it is clear that a shift in software distribution models gave open source a lift.

"There was this recent period in time where it was difficult to get an enterprise software company funded," he says. "The problem was not that people weren't creating interesting new technology, the problem was that it was hard to distribute and sell. All the money would go into sales and marketing."

But enterprise software is back, he says, "and the reason why is open source. It has given people a way to get their software out there and get it distributed and make its way into companies at a fraction of the cost that it used to take to sell and market enterprise software."

Successful open source companies such as MySQL (now owned by Sun/Oracle), Red Hat, SpringSource and Hyperic (both  now owned by VMware) started life as venture funded companies, he notes.

Augustin is now eyeing a revolution in cloud computing that is borrowing some of open source's principals. He says cloud computing introduces an element of flexibility that original application service providers (ASP) and pure hosted applications could not offer.

"Now customers may make different decisions on levels of service they want out of an application and apply that where it makes sense for them," he says.

With SugarCRM today, users have a back-end database they can move from internal clouds, to external clouds, to hosting environments.

"It's all the same database and all you have to do is move it between providers, onto your own internal provider infrastructure or out to the cloud," he says.

Augustin says the goal is to provide a one-touch or instant ability to move the database, a process that would eliminates manual steps.

"You can imagine that you could run [the database] on internal IT infrastructure and have a provider with a warm standby or vice versa depending on what makes sense for the end user," he says.

Augustin says cloud computing is getting to the point where infrastructure is going to become commoditized, which will enable even more flexibility and choice for running applications.

"As a CRM vendor I would rather invest in the software than the infrastructure," he says.Follow John on Twitter: twitter.com/johnfontana

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