It is a time to come back to Open Source software discussion. Open source was not the hottest buzzword for the last few years maybe, but if you look deeper, open source companies delivered a set of very impressive results. Check TechCrunch article – How Open Source software took over the world.
Read the article. Financial results are impressive.
…we’ve witnessed the growing excitement in the space: Red Hat is being acquired by IBM for $32 billion (3x times its market cap from 2014); MuleSoft was acquired after going public for $6.5 billion; MongoDB is now worth north of $4 billion; Elastic’s IPO now values the company at $6 billion; and, through the merger of Cloudera and Hortonworks, a new company with a market cap north of $4 billion will emerge. In addition, there’s a growing cohort of impressive OSS companies working their way through the growth stages of their evolution: Confluent, HashiCorp, DataBricks, Kong, Cockroach Labs, and many others. Given the relative multiples that Wall Street and private investors are assigning to these open-source companies, it seems pretty clear that something special is happening.
The most interesting trend is a trajectory of movement from Open source to Open core SaaS. The article speaks about Gen1, Gen2, and Gen3 open source software.
The latest evolution came when entrepreneurial developers grasped the business model challenges existent in the first two generations – Gen 1 and Gen 2 – of open-source companies and evolved the projects with two important elements. The first is that the open-source software is now developed largely within the confines of businesses. Often, more than 90% of the lines of code in these projects are written by the employees of the company that commercialized the software. Second, these businesses offer their own software as a cloud service from very early on. In a sense, these are Open Core / Cloud service hybrid businesses with multiple pathways to monetize their product. By offering the products as SaaS, these businesses can interweave open-source software with commercial software so customers no longer have to worry about which license they should be taking. Companies like Elastic, Mongo, and Confluent with services like Elastic Cloud, Confluent Cloud, and MongoDB Atlas are examples of this Gen 3. The implications of this evolution are that open-source software companies now have the opportunity to become the dominant business model for software infrastructure.
It is interesting to see what happened in PLM and manufacturing and Open Source projects. I can see a growing usage of open source infrastructure in PLM initiatives. At the same time, most of large PLM vendors are not affiliating with the development open source models.
One of the most visible vendors in PLM affiliated with open source is Aras Corp, which introduced Enterprise Open Source Aras Innovator back in 2017. Check more about Aras here Aras made big marketing around Open Source PLM for the last 10 years. But, the model Aras introduced is very unique. Aras called it – Enterprise Open Source, which is a combination of closed core, free license, subscription model and community. Within time, Aras started to follow more the trend towards monetization, which is probably more Gen 2 of open source projects. I’m interested to learn more and compare Aras current business model with Gen 3 trend. Aras core is not developed using open source projects and runs on Microsoft .NET and Microsoft SQL server. In the recent Aras executives video interview, Peter Schroer, Aras founder, and CEO said that Aras runs Open Source Business Model, which is probably an indication of the future transformation of Aras Open Source, which is only related to community projects using free license Aras Innovator core. Aras is using community very efficiently to validate Aras ideas and test Aras platform.
Another example is OpenBOM (disclaimer – I’m co-founder and CEO). OpenBOM is developed using open source software and this is probably a clear match to Gen 3 model of open source business. We use open source software while providing software via SaaS subscription. The foundation of OpenBOM technology is open source and we are actively learning how to turn a growing OpenBOM user base in a community with more active participation. Reach me out if you want to discuss more.
My third example is actually coming not from PLM vendor, but from a combination of a manufacturing company (BMW) and Microsoft. Check GrabCAD article – How BMW Manufacturing Plants are Using Open Source Platforms. I found the article interesting. Navigate to this link to learn more about OMP (Open Manufacturing Platform).
My favorite part of OMP ideas is related to standardization of data models – this is a great opportunity to bring more openness and standard approach to PLM.
As Microsoft explains, its Open Manufacturing Platform exists to enhance the optimization of production and logistics functions in any facility. One of the secret sauces for the platform’s success is open source for everything on it. That simplifies things quite a bit, making the manufacturing process easier to manage throughout each factory.
With that common platform, data standardization becomes a reality. In turn, managers can audit performance from a central point through a shared dashboard, plus various data insights are available far sooner since the numbers don’t need to be crunched from several systems. It’s a simpler way.
By standardizing data models in the shared system, Microsoft says machine learning will also be leveraged in the development of improved manufacturing processes. We don’t really know and maybe don’t really understand what kind of potential innovations for streamlining which could result from this collaboration, but it will be interesting to find out.
What is my conclusion? I can see some very interesting trajectories in the development of open source for manufacturing. Manufacturing is the industry with the biggest potential impact of modern technologies. Manufacturing companies are running very old legacy software. At the same time, IT foundation of manufacturing companies is moving fast to develop and adopt open source technologies. It is a trend that software vendors can use to contribute to the development of modern manufacturing technologies. Just my thoughts…
I’m looking for more examples of open source in PLM and manufacturing these days. If you know one, please reach out to me via email.
Disclaimer: I’m co-founder and CEO of OpenBOM developing cloud-based bill of materials and inventory management tool for manufacturing companies, hardware startups, and supply chain. My opinion can be unintentionally biased.