Monday, October 25, 2010

FuseSource Gains New Autonomy to Focus on OSS Infrastructure Model, Apache Community Innovation, Cloud Opportunities

Transcript of a sponsored podcast discussion on the status and direction of FuseSource, which is being given its own corporate identity today by Progress Software.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor: FuseSource.

Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you're listening to BriefingsDirect.

Today, we present a sponsored podcast discussion on the rapid growth, increased relevance, and new market direction for major open source middleware and integration software under the Apache license.

We'll learn how the FUSE family of software is now under the FuseSource name and has gained new autonomy as its own corporate identity. We'll also look at where FuseSource projects are headed in the near future. [NOTE: Larry Alston also recently joined FuseSource as president.]

Part of the IONA Technologies acquisition by Progress Software in 2008, FuseSource has now become its own company, owned by Progress, but now more autonomous, to aggressively pursue its open source business model and to leverage the community development process strengths.

Even as the IT mega vendors are consolidating more elements of IT infrastructure, and in some cases, buying up open-source projects and companies, the role and power of open source for enterprise and service providers alike has never been more popular or successful. Virtualization, cloud computing, mobile computing, and services orientation are all supporting more interest and increased mainstream use of open-source infrastructure.

Please join me in welcoming ours guests. We're here now to discuss how FuseSource is evolving to meet the need for open source infrastructure with Debbie Moynihan, Director of Marketing for FuseSource. Welcome to the show, Debbie.

Debbie Moynihan: Hi, Dana. Thank you. It's great to be here.

Gardner: We're also here with Rob Davies, Director of Engineering for FuseSource. Welcome to the show, Rob.

Rob Davies: Hi, Dana. Good to speak to you today.

Gardner: Debbie, tell me about some of the trends. As I said, we're seeing some of the most aggressive use of open source and IT infrastructure. We're seeing great success in terms of total cost, efficiency, and agility. Why is that happening now, and where do you see the demand trends headed to in the next several years?

Cost reduction

Moynihan: As we all know, over the past couple of years, there has been a lot of focus on cost reduction, and that resulted in a lot of people looking at open source who maybe wouldn’t have looked at open source in the past.

The other thing that’s really happened with open source is that some of the early adopters -- we have had customers for many years -- started out with a single project and now has standardized on FuseSource products across the entire organizations. So there are many more proof-points of large global organizations rolling out open source in mission-critical production environments. Those two factors have driven a lot of people to think about open source and start adopting open source over the past couple of years.

Then, the whole cloud trend came along. When you think about scaling in the cloud, open source is perfect for that. You don’t have to think about the licensing cost as you scale up. So, there are a lot of trends that have been happening and that have really been really helpful. We're very happy about them helping push open source into the mainstream.

From a FuseSource perspective, we've been seeing over 100 percent growth each year in our business, and that’s part of the reason for some of the things we're going to talk about today.

Gardner: How about the popularity of the Apache license? We see controversy, in some cases, a lack of clarity and understanding about where some other licenses are going, but Apache seems to be pretty solid and pretty accepted.

Moynihan: We really like the Apache license. There's a lot of confusion around open source licensing. There are many different licenses. There is a lot of fine print. A lot of people don’t want to think about it, and a lot of legal departments get concerned about the gray areas. The Apache license is very easy to understand and it's very permissive in what you can do with software that’s licensed under the Apache license.

Essentially, you can make any modifications you want to the software and you don’t necessarily have to contribute back to the community. It's nice, if you can contribute back, but from a business perspective, if you want to use any of the components, it's what's considered a non-viral license. So, you're pretty free to do what you want, as long as you give credit back to those who wrote the initial code.

Gardner: Rob, we've seen a lot of popularity for open source in operating systems -- server operating systems, in particular -- but why has the use of open source for infrastructure, say for integration and middleware, become so popular? Why do you think that’s going to continue with such things as cloud?

Davies: There has been a trend over the last few years, and Debbie alluded to this, with companies looking to open source and kicking the tires around. In fact, I recently spoke to a large customer of ours in the telco space. They had this remit. Any open source that came in, they wouldn’t put into mission-critical situations, until they kicked the tires for a good while -- at least a couple of years.

Because there has been this push for more open source projects following open standards, people are now more willing to have a go using open source software.

Snowball effect

We've been around in this space for a while, but the earlier adopters who were just trying out in distinct groups are now rolling this out into broader production. Because of that, there is this snowball effect. People see that larger organizations are actually using open source for their infrastructure and their integration. That gives them more confidence to do the same.

In fact, if you look at the numbers of some of our larger customers, they are using Apache ServiceMix and Apache ActiveMQ to support many thousands of business transactions, and this is business-critical stuff. That alone is enough to give people more confidence that open source is the right way to go.

Gardner: Debbie, tell us a little bit about the FuseSource move toward more autonomy. This clearly is an opportunity, but it’s a different opportunity than a purely commercial license and software model. Tell us what’s going on with Progress Software and FuseSource.

Moynihan: We're really excited as a team. Progress is launching a new company called FuseSource that will be completely focused on the open source business model. The FuseSource team has been an independent business unit, since IONA was acquired by Progress Software. We have been fairly independent within the company, but separated as our own company we'll be able to be completely independent in terms of how we do our marketing, sales, support, services, and engineering.

When you're part of a large organization, there are certain processes that everyone is supposed to follow. Within Progress, we are doing things slightly differently (or very differently depending on the area) because the needs of the open source market are different. So being our own company we'll have that independence to do everything that makes sense for the open-source users, and I'm pretty excited about that.

Being our own company we'll have that independence to do everything that makes sense for the open-source users, and I'm pretty excited about that.



Gardner: So, here we are in the middle of October, and this is pretty much now a done deal. Tell me about the history of FuseSource and what led up to this movement.

Moynihan: Rob, who is on the call, can maybe talk about the early days. He was actually a founder of a startup company and that was really the genesis of that is now FuseSource. So Rob, why don’t you start out and I can chime in if needed.

Davies: The notion is of having open source infrastructure start with a group of developers and founders in open source projects. It worked for commercial license based infrastructure product companies before. We -- the other individuals are James Strachan, Hiram Chirino, and Guillaume Nodet -- realized that the best way to deliver open source for infrastructure was to develop open source at Apache.

We decided that open source is the best thing to do, because it opens up the software for engineers to look at, use, and enhance. We felt like that was a very good way to grow a community around the projects we wanted to do.

We started this company called LogicBlaze, which was acquired three years ago by IONA. At that time, we decided to sell to IONA because we wanted to piggyback on their expertise of doing large infrastructure rollouts. IONA, the FUSE brand, and the FUSE product line then really came into the forefront.

Get the message out

D
ebbie Moynihan, who was the director of open source at IONA, was working on another project at the time called Celtix, which morphed into Apache CXF. We decided to collaborate on this effort to get this message out about using really good infrastructure based on Apache open source projects and get that into the marketplace.

Then, when IONA was acquired by Progress, Progress initially liked the idea, or liked the fact that it’s disruptive. They invested in the group: we added more employees, more sales people, more people in marketing, etc. We have been involved in that for the last two years.

But, it has gotten to a point where we realized that to operate it in its most effective way it has to be outside of Progress to a degree, because it is so different in the go-to-market strategy and what we deliver to customers compared to the rest of what Progress is doing with the one-product solution.

Moynihan: Also, from a business prospective, Progress’ go-to-market is, as Rob said, offering solutions at the business level, whereas open source has traditionally been looked at by developers and project managers more from a technical perspective and more from an open source advocate perspective.

That’s growing over time, as we have talked about earlier. Open source is becoming more and more mainstream, but our approaches to marketing and sales are different in the FuseSource team and are much more community oriented and grassroots than the way that corporate marketing is done at Progress Software.

Our model is that there is no license cost. It’s a subscription support model.



Gardner: Let’s face it, the business models are quite different. The way in which you develop revenue is more through support and maintenance and not on the upfront costs and implementations. Maybe you could explain why the business models being separate makes more sense.

Moynihan: Absolutely. From a practical perspective, the business model is very different. In traditional enterprise software sales, there is a license fee which is typically a large upfront license cost relative to the entire cost over the lifetime of that software. Then, you have your annual maintenance charges and your services, training, and things like that.

From an open source perspective, typically upfront, there is no license cost. Our model is that there is no license cost. It’s a subscription support model, where there is a monthly fee, but the way that it is accounted for and the way that it works with the customer is very different. That's one of the reasons we split out our business. The way that we work with the customers and the way they consume the software are very different. It’s a month-to-month subscription support charge, but no license charge.

Gardner: It’s interesting to me that Progress with FuseSource recognizes that there is that little bit of apples and oranges going on, and perhaps keeping them separate is in the best interest of the users and the community. But, we're seeing the opposite in other companies, where people are looking to fold open source projects and products into a larger family or stable of commercial products.

Do you think that we are going to see that trail off in the market? I guess the question is: what about these mega vendors and the direction of how an open source model and a commercial model should or shouldn’t overlap or exist together?

Very difficult

Moynihan: There are a lot of opinions out there on whether or not open source can be successful in a hybrid model within a single mega vendor. My view is that it’s very difficult, especially because the business model is different. If you're a company and you're out there selling a large portfolio of products, where only a small amount of it is open source, you have a team of people trying to sell, market, and grow business around that portfolio. They're going to focus on the license product.

They're going to have a tendency to focus on those products that are going to drive revenue in the short-term, from a business perspective. It has nothing to do with whose model is better.

I'm very happy that Progress has decided to separate out FuseSource. We already had our own sales team, but now we can be completely focused on working with our customers to help them adopt open source, and when it makes sense, they can work with us to get support and to get training.

It’s a very consultative partnering model. In the early days we really like to provide everything someone needs to get going at no cost. You can come to FuseSource.com and get a lot of documentation, and you can get a lot of training webinars for free. We have weekly webinars that show you how to get going on our products, and that’s nothing that you would see in traditional commercially licensed software.

Gardner: Debbie, tell me about what a customer should expect. If you're a user of FuseSource and if you're in the community, how will this move towards autonomy actually impact you? Will you perhaps not even notice too much?

Overall, it will be really good for our customers. We've talked with them, and they're pretty excited about it. We're all excited about it.



Moynihan: From a customer perspective, this change will have a small but significant impact. We are continuing to do everything that we have been doing, but as I mentioned earlier, we will be able to have even more independence in the way that we do things. So it will all be beneficial to customers.

From an administrative perspective, our email address will change to FuseSource.com and invoices will say FuseSource instead of Progress Software, for example. But, from who they're going to be working with, who their account managers will be, who is developing the software, and who is providing the services and the support, it’s going to be the same people that they have been working with.

We have also launched a new community site at FuseSource.com, which we're pretty excited about. We were planning to do that and we've been working on that for several months. That just provides some additional usability and ability to find things on the site.

Overall, it will be really good for our customers. We've talked with them, and they're pretty excited about it. We're all excited about it.

Gardner: Let's get back to looking at the overall market for infrastructure, open source infrastructure in particular. Rob, tell me a little bit about what's going on in the market?

We're seeing a lot of interest in clouds, private clouds, hybrid clouds. We're certainly also seeing a great deal of emphasis on reducing costs, particularly from the service provider, where they are going down to minute margins in some cases. They really need to make to sure that they're doing this in the most cost-effective manner. Then I have to imagine that if the service providers are able to provide IT-as-a-service at a low cost, the IT enterprises themselves will have to follow suit.

Help me understand the new economics of IT and how open source infrastructure fits into that.

Disruptive in the market

Moynihan: From a market perspective, at a high level, open source is really disruptive in the market in that it's affecting how people are buying software. Generally, we've seen a lot of changes over the past 5 to 10 years anyway, where license costs seem to be coming down with more and more discounting, and people are looking at it.

Historically, software vendors looked at license revenue as the premium part of the business to focus on. More and more they're realizing that a lot of value really does come from the services side. Why? Because that’s where you partner with your customer. That’s where you get to know them. That’s where you help them select the right solutions.

In the open source community, that’s how it works. People come to the community and work with the developers directly. It eliminates a lot of the cost involved in large, complex software organizations, where you might have to wait to schedule time of the product manager, who then would have to spend time with the engineers understanding what's happening with the products, so that he could then relay it to the account team, and then they would meet with the customer.

Open source just breaks down a lot of barriers and eliminates a lot of the costs involved in getting the best software to the users. Why? Because people are talking directly to the developers in the community. The developers are getting the feedback directly.

While we do have some level of product management for open source, a lot of it is based around packaging, delivery, licensing, and these types of things, because our engineers are hearing directly from customers on a moment-by-moment basis. They're seeing the feedback in the community, getting out there, and partnering with our customers. So, from an economic perspective, the model is different.

You pay as you go. You scale as you go. And you don’t have that upfront capital expenditure cost.



Just from the overall "how it works" from a buy-in perspective for the customer, it's very different. It's very attractive in these times that we are having right now, because upfront you don’t have the capital expenditure costs. You can get going. You can go to an open source community site, download the software, and try it out.

We've actually seen people get to proof of concept before they have even spoken with us. We've seen people build our stuff into a product as an application provider, as an OEM, and then come to us. That will tell you how easy it is for people to consume and use open source without having to spend a lot trying to select or figure it out, before they even can try it out.You can try it before you buy it, and when you go to buy, you pay as you go.

That’s also the reason people like cloud. You pay as you go. You scale as you go. And you don’t have that upfront capital expenditure cost. For new projects, it can be really hard to get money right now. All these benefits are why we're seeing so much growth in FuseSource.

Gardner: Are there some salient examples that demonstrate what you've been talking about? I'll throw this out to either one of you. Some of your customers might be good examples of how this can work, both from an economic, technical, and innovation freedom perspective as well.

Moynihan: I'll mention a couple of examples. They are kind of similar and something that we are seeing more and more. Sabre Holdings delivers a lot of applications for various airlines. They have a lot of partners, travel agencies, and airlines. Also, the Federal Aviation Administration (FAA). Those are two of our customers.

In both of those cases, they started looking at open source at the project level, but eventually came to standardize on open source for their common integration infrastructure, and to recommend it - not just within their own organizations - but in both of those cases, to their partners.

Integration is easy

That’s the really nice thing about open source. Integration within your own company is easy. You can have any crazy interface and you'll figure out how to do it. But when you partner, you can't tell your partner how to build their interfaces. But, you can have a common integration platform and say, "Can you transform your stuff so it can connect to this platform?"

With open source, they don't have to have a license for that. So, it's quite nice. They can get going, try it out, and see how it works without requiring their partners to pay any cost. From an economic perspective, they could try it out, get going, look at some proof concepts, test it out, and then rolled it out for a standardized infrastructure internally for some major projects. Then, work with partners to roll it out further.

Gardner: To your point Rob, we've heard a call for more standards in the market around cloud, such as common operating environments and standards for interoperability. In lieu of having those structured standards develop rapidly, we have the open source fallback position. We can't always know what the commercial underpinnings are for services across an ecosystem of cloud consumers or providers, but having a common open-source infrastructure base might very well serve that purpose. Is that what we are finding technically?

Davies: That’s really on the money, Dana. There is this trend as well. When you look at cloud, there are different issues you have to overcome. There is the issue about deploying into the cloud. How do you do that? If you're using a public cloud, there are different mechanisms for deploying stuff. And there are open source projects already in existence to make that easier to do.

This is something we have found internally as well. We deploy a lot of internal software, when we are doing our big scale testing. We make choices about which particular vendors we're going to use. So, we have to abstract the way we are doing things. We did that as an open source project, which we have been using internally.

You have to have choice. You can’t really dictate to use it this way or the other way. You've got to have a whole menu of different options for connecting.



When you get to the point of deploying, it’s how do you actually interface with these things? There is always going to be this continuing trend towards standards for integration. How are you going to integrate? Are you going to use SOAP? Are you going to use RESTful services? Would you like to use messaging, for example, to actually interface into an integration structure?

You have to have choice. You can’t really dictate to use it this way or the other way. You've got to have a whole menu of different options for connecting. This is what we try to provide in our software.

We always try to be agnostic to the technology, as much as how you connect to the infrastructure that we provide. But, we also tend to be as open as we can about the different ways of hooking these disparate systems together. That’s the only way you can really be successful in providing something like integration as a service and a cloud-like environment. You have to be completely open.

Gardner: It sounds as if we've been able to capture the best of both worlds, with FuseSource being based on mature Apache software projects with the model around the FuseSource support, which is several years old and very well demonstrated in the market. But now that you are autonomous, you're also getting the benefits of being a startup, of being innovative, being able to move, being fleet, being able to be agile.

Debbie, is that a fair characterization? By going autonomous with FuseSource, you're getting the best of a mature, established mission-critical enterprise supplier, but also, you're able to move quickly in a rather dramatically changing market.

Best of both worlds

Moynihan: Definitely. We're really excited about it. Definitely being backed by Progress Software provides us the benefit that customers can have that assurance that we're backed by a large organization. But, having FuseSource as standalone company, as you said, gives us that independence around decision making and really being like a startup.

Sometimes, we get ideas, we want to make it happen, and we can make it happen. We can make it happen, the same day or the next day. We'll be able to move as quickly as we want. And, we'll be able to have our own processes in any functional area that we need to best meet the needs of the open source users.

Gardner: Rob, from a technical perspective, how do you view this best-of-both-worlds benefit?

Davies: From a technical perspective, it’s really good for us. The shackles are off. There’s a lot of suddenly reinvigorating that seems to move forward. We've got a lot of really good ideas that we want to push out and roll out over the coming year, particularly enhancing of the products we already have, but also moving onto new areas.

There's a big excitement, like you would expect when you have got a startup. It just feels like a startup mentality. People are very passionate about what they're doing inside FuseSource.

Because those shackles have been taken away, it means that we can actually start innovating more in the direction we really want to drive our software too. It’s really good.



It's even more so, now that we have become autonomous of Progress. Not that working inside Progress was a bad thing, but we were constrained by some of the rigors and procedures that you have to go through when you are part of a larger organization. Because those shackles have been taken away, it means that we can actually start innovating more in the direction we really want to drive our software too. It’s really good.

Gardner: Well, great. How can people learn more about FuseSource? You said earlier Debbie that you have a website that’s been refreshed. Are there some URLs or directions that you would point people to in order to learn more?

Moynihan: Yes, I would point people to FuseSource.com. They can always contact us directly as well. Rob and I would be happy to speak with anyone that has questions. You can send an email to info@fusesource.com and we would love to talk with anyone that has any questions or wants to hear more about it. FuseSource.com is the place to get information on the web. We have a Twitter account, twitter.com/fusenews, that you can follow as well.

Gardner: I want to thank you both. We have been discussing how a newly autonomous FuseSource is evolving to meet the need for open source infrastructure in a rapidly changing marketplace, and of course in an environment where cost and low risk are all very much top of mind.

So, thanks again to Debbie Moynihan, Director of Marketing for FuseSource. Thanks, Debbie.

Moynihan: Thank you, Dana.

Gardner: And also, Rob Davies, Director of Engineering for FuseSource. Appreciate your joining us, Rob.

Davies: No problem. Good to speak to you, Dana.

Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. You've been listening to a sponsored BriefingsDirect podcast. Thanks for listening, and come back next time.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor: FuseSource.

Transcript of a sponsored podcast discussion on the status and direction of FuseSource, which is being given its own corporate identity by Progress Software. Copyright Interarbor Solutions, LLC, 2005-2010. All rights reserved.

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