How to Make Money
Open Source Product Strategy
Utpal Bhatt, Actuate
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Agenda
• Introduction
• Product Strategy Options
• Actuate and Open Source
• A Product Strategy Checklist
• Wrap-Up: Conclusions (So Far)
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Actuate Corporation
Background
Publicly Traded
BIRT – on NASDAQ
Revenues
$138.9 million in FY2012
Profitability
22% non-GAAP Operating Margin in FY2012
Employees /
Community
600+ employees worldwide / 2,500,000+ BIRT Developers
Headquarters
San Mateo, California
Offices
Worldwide Sales Offices
R&D: San Mateo, Kansas City, Shanghai, Toronto, Barcelona
Customers
Over 5,000 top-tier accounts in banking, insurance, securities, government,
health care, education, utilities and OEM in high tech
Open Source
Founded Eclipse BIRT Project in 2004
BIRT iHub
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BIRT Analytics
Actuate’s Involvement in Open Source
BIRT: Business Intelligence and Reporting Tools
A New Generation of Data Visualization Technology
• Makes all data-driven content development easy
• Modern, web-page design metaphor
• Open and standards-based
• Flexible with rich programmatic control
• Full support for libraries and reuse
• Foundation for a range of solutions
Simplicity
that makes
simple
layouts easy
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Power
BIRT
to create
very complex
layouts
Open Source
Product Strategy Options
Platform Support
Support for Open Source
Services
Bundling
Cloud Provider
Cost Reduction Using Open Source
Embedding
Contribution
Open Source Project
Value Added Products
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Development of Open Source
Actuate and Open Source
An Evolution
Platform Support
2000
Support for Apache HTTP Server
Services
Support for Tomcat Server
Bundling
Support for Red Hat and SUSE Linux Servers
Bundle Apache Tomcat Server in Server products
Cloud Provider
Build a Designer product on Eclipse platform
Embedding
Propose and launch BIRT Project in Eclipse Foundation
Contribution
Support programs and commercial derivative of BIRT
Open Source Project
Release additional commercial products based on BIRT
Value Added Products
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Actuate and Open Source
Strategy Drivers
We knew that Actuate needed:
• A next-generation application
development tool to complement its
new, world-class server
• Foundation technology for new
Enterprise Software product offerings
• A new go-to-market strategy to endrun older, established BI competitors
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Actuate and Open Source
Which Path is the Right One?
We asked ourselves, how can we:
• Leverage our core competencies
• Pursue a value-add strategy that
maintains Actuate’s revenues
• Rapidly build market momentum
Answer: Leverage Open Source
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Build community of developers and users
Generate buzz and awareness
Gain market share and expand the market
Drive high quality via community feedback
Create a market for value-added products
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Key Takeaway:
Know Your Objectives
Actuate and Open Source
Product Strategy
Platform Support
Services
Product Development: “Open Core” Model
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Ground up initiative targeting developers
Open Source technology that addresses core needs
Establish the open, standards-based technology of choice
Technology becomes foundation for new product offerings
Bundling
Go To Market
Cloud Provider
Embedding
• Leverage open source distribution
• Develop a new community of users: Expand the market
• Permissive (commercially friendly) open source license
Revenue Triggers/Commercialization
Contribution
Open Source Project
Value Added Products
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• Offer indemnification / Support / Services around open source
• Develop complementary products that will interest developers
• Create new Enterprise Software based on open source core
A Product Strategy Checklist
Revenue Strategy and Triggers
Licensing and Intellectual Property
Feature Strategy
Development Team and Process
Open Source Project/Community
Organizational Alignment
Nurturing a Community: Evangelism
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Revenue Strategy and Triggers
Monetization in an Open Source World
Revenue Generation Choices…
Embedding Open Source
• Open source technology leveraged in commercial product offering
• Cost-reduction strategy – no direct revenue from open source software
Support and Services
• Generate revenue from support, training, certification and/or consulting
• Leverage your expertise as sponsor/contributor to the project
Dual License
• Open source code is available using a reciprocal/restricted license
• Offer a commercial license with a more permissive license
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Revenue Strategy and Triggers
Monetization in an Open Source World
Revenue Generation Choices (Continued)…
Open Core: Value-Add Products That Extend Open Source Offering
• Commercially licensed products
• Strategy may assume a relatively small % of users will purchase these
Advertising
• Open Source software is free and supported by advertising revenue
• Typically only used in consumer-oriented projects
“Exit Strategy”
• Technology fits into a wider market that may interest other vendors
• Revenue comes from acquisition of technology (and user base)
Actuate Model is Primarily Open Core
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Licensing and Intellectual Property
Open Source License Choice
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Dual Licensing
Open-Core Licensing
Open-and-Closed Licensing
Single Open Source License
Assembled Open Source
Closed License
• License choice is critical for adoption and
revenue generation
• To develop and grow a community, the right
license is required
• Is the license good for IT organizations?
• Is the license good for ISVs?
• Is the license good for extending the
technology?
• Open source license that is too restrictive
may limit adoption
• Open source license that is too open may
limit revenue opportunity
Actuate Model is Open-and-Closed License
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Feature Strategy
What to Open Source, What Not to Open Source?
Provide Real Value to Open Source Community
• Open Source, but not useful, will not get traction
• Open Source, but needs your deployment platform, will not get traction
Remember: Good Product Design is (Even More) Important
• Extremely easy to download, install and get started
• Ease of use is critical – it is too easy for users to “walk away”
• Make your technology an easy decision for your target users
Be Careful Not to Erode Your Revenue Strategy…
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Feature and Licensing Strategy
Find the Right Balance
Avoid Eroding Commercial Opportunity
License
Permissive
Open Source
Community
Restrictive
“Open”
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Features and Functions
“Commercial”
Feature and Licensing Strategy
Find the Right Balance
Avoid Restricting Open Source Community Growth
License
Permissive
Restrictive
Open Source
Community
“Open”
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Features and Functions
“Commercial”
Actuate BIRT Technology Family
Complementing and Extending Eclipse BIRT
Development
Actuate BIRT Extensions
Deployment
Development
Tools
User
Interactivity
Deployment
Tools
High-Scale
Distribution
Skill-specific tools
for developers
and users
Engage users
with rich,
interactive content
Manage, schedule,
secure, run and
distribute
Load-balanced,
high availability for
100,000s of users
Eclipse BIRT
Meet Core Requirements + Deliver Real Value
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Open Source Project/Community
Possible Approaches
• Contribute to an existing project
• Create and lead a new project in an existing community
• Create a new project and community
• Existing open source initiatives and distribution channels…
• Eclipse.org
• Apache.org
• GitHub
•…
Generating Awareness is Critical Factor
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Open Source Project/Community
Actuate and the Eclipse Foundation
Instead of going it alone,
Actuate chose to partner
with the Eclipse Foundation
Actuate proposed and started
Actuate Joins
Eclipse Foundation
as Strategic Developer
and Board Member
Adds BI and Reporting
as Open Source Project
BIRT
Business Intelligence
and Reporting Tools Project
… a top-level Eclipse project
AUGUST
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2004
Development Team and Process
A Change in Development Culture
To realize all the benefits of open-source
strategies, you must learn to:
• Be transparent and non-proprietary
• Admit outsiders into your QA and
bug-tracking process
• Invite and manage engineering
contributions from all over the world
• Instill and enforce rigorous product
management and development
processes
Because it requires logistical and even
emotional adjustment, moving to open
source development takes time…
and can require a leap of faith
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Development Team and Process
Actuate and the BIRT Project
• Dedicated significant resources to work
on the project
• Ground up initiative – we did not open
source existing code
• Aggressive development plan to quickly
build momentum
• Vendor led Open Source: Primary
development resources are Actuate
funded
• Contributions from IBM, Innovent
Solutions, InetSoft and Community
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Organizational Alignment
Achieve Buy-In from All Stakeholders
Open Source rules are very different…
Define Success Conservatively
• Revenues do not occur overnight
• There are no guarantees
• There are valuable intangible benefits
• Define and measure realistic goals
Focus on Long-Term Value
As momentum builds over time, you can:
• Raise awareness significantly
• Strengthen brand
• Build revenues to respectable levels
• Sustain high profitability
Be Prepared to Iterate on the Model
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Successful Open Source
Strategies Involve Multiple
Business Units
It is Not Just an
Engineering Initiative
Organizational Alignment
Sales and Marketing
Sales teams are focused on short-term
revenues, so they don’t get excited about
long-term, open-source benefits
Starting Point for Entry-Level Accounts
Initiate and maintain relationships with
small customers by starting them with
BIRT and growing them into a large
sale a year or two down the road
Set Sales Expectations Early and Often
Open Source & Traditional Marketing
Open Source distribution complements,
but does not replace, traditional
marketing approaches
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Nurturing a Community: Evangelism
The Open Source Community
Successful Communities do Not Happen Automatically
All strong communities have enthusiastic and active supporters
Dedicate resources to working with and supporting the community:
• The “Evangelism” role
• Actively monitor and respond to forums
• Create “How To” and tutorial content for web site
• Work with and write articles for 3rd party publications and web sites
Management, Project Leads
Traditional Marketing
Opportunities
Open Source Evangelism
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Open Source Community
Nurturing a Community: Evangelism
BIRT Exchange Community Site
Centralized knowledge hub for BIRT developers
• Access demos, tutorials, tips and techniques, documentation…
• Easy for users to contribute content, share knowledge
• Enables developers to be more productive and build applications faster
Explore
• Search/sort
• Rate, comment
• Forums
Download
• Documentation
• Software
• Examples
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www.birt-exchange.com
Contribute
• Report designs
• Code samples
• Technical tips
Wrap-Up: Conclusions (So Far)
BIRT Technology Uptake
Thriving BIRT Community
Cumulative BIRT Downloads
• Over 2.5M developers using BIRT
in 157 countries
• BIRT technology deployed in
many applications / products
More than
12 million
downloads
Growing Commercial Success
• Very high growth in BIRT-based
product revenue
• High percentage of commercial
business starts with Eclipse BIRT
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
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Wrap-Up: Conclusions (So Far)
Real Results and Business Benefits
BIRT has enabled Actuate to:
• Penetrate new markets
• Extend reach into traditional markets
• Strengthen the Actuate brand
• Increase sales and operating margins
well above software industry norms
Industries
• Manufacturing
• Telecom
• Retail
• Hospitality
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Geographies
• India
• China
• Other developing
markets
BIRT
Actuate’s new
generation of
development technologies
Q&A
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