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Larry Augustin: Open source fueling enterprise software shift

Visionary Augustin says distribution, support models changing

By , Network World
August 18, 2009 10:57 AM ET

Network World - 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.

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