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Does your IT model lead or follow the competition?
by Alex Hankewicz and Leslie Satenstein
November, 2009

    With the advent of high speed networks and the globalization of the market place, companies are being squeezed to reduce costs in order to remain competitive. As technology becomes pervasive around the globe, there has been a paradigm shift to providing low cost fast ways of delivering IT technology. The business process reengineering that is occurring is due to SaaS and to free and Open Software. This article describes the decisions that world corporations and SMBs are taking to cut IT costs in order to permit sustainable growth.

Service Oriented IT Systems (SOITS)

I have coined this phrase for one reason. Today, we find that SMBs and large institutions are very cautious about IT processing costs. If you have a Microsoft Server environment, with SQL Server, Exchange, SharePoint and a gamut of support or business software from ERP, Finance and CRM software and the support for (anti-virus, anti-spam and the like), your licensing and support costs are very substantial.

There are several trends that are driving changes to the in-house IT data center as we know it. The first is cost reductions due to the cost competitive Open source Linux product offerings for server and desktops platforms, free to acquire with low optional cost support. An Open source product is software offering which includes all its source code. Some open source software is Microsoft operating system based, however, more of the open source software is written for Linux. The open software is of two categories, --supported by a vendor, or supported by the community. The distinction between vendor and community versions is not wide; there is a common root. Open source starts off as a community venture; the software is free, as are the enhancements, but when the product matures, the developers offer support for the product at reasonable cost. Included with the support they usually offer some additional functionality above what is offered with the community version. Thus, you have a free community supported product, with the ability to purchase onetime or ongoing support and extra functionality.

An open source software product is usually supported by volunteer around the world end-user collaborators. They are actively engaged to test, discover, and report bugs and to submit fixes to improve the main product. Support is definitely not a free-for-all approach that permits anyone to modify the main product. Support is done is as follows, ”The individual modifies a derivative of the software and makes it available to the community at large in order to prove the correctness. With the community concurrence the fix or enhancement gets migrated to the main product.”

Open Source knowledge is already widely available as local trade schools, colleges and university educators rely on using open source code and GNU (Free Software) alternatives for training. Reading someone else’s code to learn, or installing your own Linux server with a web or open source business application is a fantastic student resource. Open Source allows the best global brains in software engineering to be creative and collaborate to provide bug free functionally rich applications.

Another trend noted by businesses is the adoption of some Software as a Service (SaaS) applications. There are many applications that are priority level two applications in a business. Priority two applications include HR, CRM, and Web. If the SaaS system is down for a few hours a year, the business will continue, albeit somewhat crippled for those few hours. Fortunately these types of availability failures are few and far between.

Occasionally what happens is the SaaS vendors’ servers or the network connecting to them gets overloaded, resulting in slow response times (poor performance). The high speed networking is often the culprit. On the other hand, the savings are obtained in having an application up and running in short order and with a pay as you use option can provide a competitive edge. (SaaS is reminiscent of time-sharing systems.) SaaS as a service is thus far not the lowest of cost alternatives, but is a great solution if one requires worldwide internet access.

The advantage of SaaS is that the vendor supports the application, provides backups and performs recoveries should the need arise. The disadvantage is that as the SaaS application grows in data quantity, so will the operating costs. SaaS provides the company the opportunity to evaluate the SaaS offerings and to plan and migration to a lower cost solution on a low cost platform with a functionally rich and stable Open source product.

Open source gained its start due to Linux. Beginning in 2004 I started with Linux and even then I noted the trend of companies to trade-in their Windows Servers for Linux servers. The savings with medium to large Linux deployments provided large amount of cost reductions. Governments that have converted to Linux platforms have recognized cost savings in the millions of dollars and are thus converting to open source applications and platforms. A few countries around the world have stipulated that open source software, preferably locally developed, is to be used for government departments. Examples of such decisions include Africa and Latin American countries, as well as some USA states. Many police forces have switched to Open Source. As Open source successes are noted, I noted that more companies are planning that migration.

The trend today is away from the desktop workstation to the Netbook, and as well to the mobile Blackberry, IPod, Palm, Android, devices. Mobile and WEB/Intranet applications are moving much of the vendor-customer interfacing out of the head office. With Mobile computing, one must re-architecture business systems to work with small memory based cell phone technologies. SaaS vendors as well as new open source software offerings provide the solutions. This does not appear to be happening as rapidly or at all with internal closed source systems.

So, what are a few of the Open Source alternatives?
OpenBravo, Compiere, xTuple are three full ERP packages for the SMB. These products compete with the best of the closed source products for the same sized markets.

In the CRM world, SugarCRM, and Xtuple offer great cost competitive solutions.

In HR, we have OrangeHRM as the leaders of the pack. Other vendors (WaypointHR, ICeHRM) are just around the corner.

In Finance, there is GNU Cash, Turbo Cash, JFS accounting and more.

In the office domain, Open Office is a free office suite, well suited to SMB requirements.

In the database world, Sqllite, MySQL and Postgres stand out as the best known functionally rich high performance database applications. MySQL was purchased by Oracle, Postgres competes with Oracle for the SMB requirements.

The majority of Website systems consist of the LAMP environment. Lamp stands for Linux, Apache, MYSQL database, and the PHP/Perl programming languages. If you own a PC with 512meg of memory, a reasonable sized (40gig) hard disk, you can setup your own free LAMP based website. This solution may be great for you. Don’t forget to use RSYNC or other open source backup software.

One of the major advantages of Linux over the XP software family is the resistance to virus attacks. The operating system architecture prevents this from happening. ClamAV, supplied with Linux, is an anti-virus program to clean a virus contaminated email. Linux design is such that it is not affected by such viruses, however, if such received infected emails are forwarded, CLAMAV removes the contamination. Spamassassin, an open source software, is standard on Linux and it serves to prevent your server from being bombarded with spam. Visit the Spamassassin website for more information.

What is the best solution for the SMB? Open Source or SaaS? In a SMB having the right software can help the organization attain a competitive advantage. The challenge is how do cash strapped companies come to terms on whether to buy or rent these applications. Below are some factors to consider:
If your company is considering a long term investment that supports specific customers then having the ability to support the application in house may be the solution
If your company neither has the people or financial resources to manage an on premise solution then Saas makes sense and with the money saved, investments can be directed to business IT infrastructure investments such as Business Intelligence which can be a strategic tool designed to analyze the key performance indicators of the business.
The software must grow and be flexible enough to support the SMB's business changes. The business needs of an SMB contribute significantly to the decision regarding the software delivery model required--be it an on-premise, or software-as-a-service (SaaS) offering.
Consider the viability of the SaaS service provider The software must grow and be flexible enough to support the SMB's business changes. The business needs of an SMB contribute significantly to the decision regarding the software delivery model required--be it an on-premise, or software-as-a-service (SaaS) offering.
Consider the complexity of your organizations business processes if you have fairly consistent and generic business transactions then a Saas offering is an ideal alternative in an SMB with fewer then fifty users
In closing before embarking on whether to source an Open Source , Saas or On Premise software vendor it is recommended to seek independent advice before deciding whether software needs to be purchased, rented or leased, or packaged into a managed services deal--taking into account the right service level agreements, risk factors and exit conditions.

At ITBMS we offer qualified business professionals which can guide you to the best solution for your particular needs. Our expertise in enterprise applications across the scope of Open Source,On Premise and Saas will give you an honest and in depth appraisal of your business and the solution which meets your needs. Our business and technical analysts, developers, writers and network specialists are there for you. Contact us for a quotation or even a hosting service.

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