Challenges of making money from open source
Hobbs, Roberts and Freeman all believe there are challenges involved in basing a business around Drupal, but the challenges are more to do with making money from open source software. And, they say, it’s worthwhile in the end.
“The real challenge is that you are dealing with clients that want to be provided with a warranty and open source doesn't work that way,” Hobbs said.
“Also, the closed source companies can lean on yearly license fees which enable them to have an ongoing income. We don't have that option. Everything has to revolve around the awareness that there will be no recurring revenue so you can't easily hire sales people and peripheral talent.”
Hobbs said the real challenge for an open source company comes down to how to ensure that there is ongoing money coming from the client that allows you to do ongoing maintenance.
Even though it might be harder to make a profit, the payoff for basing your business on open source is the freedom and flexibility to do interesting things and be at the cutting edge, Hobbs said.
“You just need to make sure that you cover your time and pay everyone at the end of the day.” That, he admits, is an ongoing challenge.
“We are still pretty small. There are other shops out there that have their own internally developed tools and they might have about 80 staff. We might look successful in that we have been around for a while now and we are well positioned in the open source market and the Drupal market in Australia. It's a learning process and we're getting there but, most importantly, I very much enjoy what I do.”
Roberts thinks the challenges around legalities, licensing and warranties with open source are becoming less of an issue as Apache, Linux and PHP become increasingly 'mainstream'. However, there is still a challenge, he said, in selling the open source ethic to clients.
“I haven't had a problem selling Drupal as such, but there is still a little bit of a cultural difference when dealing with corporate customers. Some clients will let you distribute interesting modules back to the community. Other clients will want to hang on to it and not let you donate it back to the community because they are thinking that their software is part of their competitive advantage,” he said.
“I will often try to negotiate with these clients and explain the benefits of releasing code back to the community. I would say that more than half of my clients will eventually contribute modules back to the community because they realise that by doing that they suddenly have hundreds of people willing to maintain and extend this module which they don't have to pay for.”
Roberts points out that the viability of a business is through the business model and not through the implementation of software.
“It is reasonably straight forward to make a clone of sites like Facebook or Twitter or MySpace. The actual code used to make those sites is not the differentiator. There are plenty of clones of those sites, in fact, but none are doing as well as the original,” he said.
Freeman, siding with Hobbs, says that the challenges of being an open source company are still significant.
“I looked at a government tender earlier this week and the tender was for a document management system. The requirements stated that it must be a proprietary system, but one of the appendices was an open source software guideline which stated that the government must consider open source software,” he said. “So you have one hand not knowing what the other is doing.”
Freeman says that public government tenders often state a requirement to comply with their infrastructure which normally is normally Microsoft-centric and rules his company out from bidding straight away. “You can actually run Drupal on Microsoft servers – even on SQL servers - and integrate it, but they will still generally find a reason to knock you out of the running.”
Agileware's success, Freeman says, in gaining enterprise and government contracts is largely to do with the fact that it partners with the likes of Novell and Red Hat and occasionally IBM.
“Those companies will go in with their platforms and hardware and you get in to the enterprise that way but unless you have someone on the inside that is on your side or you have a unique business case - where there is no proprietary company doing the same thing - it is really hard to get in.
“From a government's perspective, most of the IT is outsourced, so its hands are really tied in terms of what the contractor is prepared to do. There is not much flexibility for change.” Freeman points out that as an external contractor for government, it is easier to write web applications than it would be to fill most other IT roles.
“That does take a lot of the walls down straight away because you don’t need to write anything on their desktop or impinge on their infrastructure, you just need the Internet access. Then it just comes down to the client deciding whether it is ok for the data to be housed and managed outside of its data center so there's opportunity there.”
Freeman said that while there may not be a lot of money in open source, working in the area keeps life interesting.
“It is a challenge and I think someone has to do it. You learn a lot as well. As a software developer, peer review is really important so getting the feedback from open source communities is crucial and being able to learn from others,” he said.
Freeman said that Agileware's most challenging Drupal implementation was the one it did for the Australian Medical Association, the AMA.
“We took them from a Lotus Notes-based content management system, migrated all the data, massaged it, reformatted it, and put it back into a Drupal site. We had that on a repeatable process fairly early on. It was an interesting one because there was so much data moved across but then we also had to show people how to use Drupal and use Drupal as a social platform for their members,” he said.
“We've also done some interesting one with Defense where they are implementing a social portal internally which is an interesting project that has been in production for six months.”
There's already a strong core of the Drupal community in Australia with regular meet-ups in most capital cities. This is also growing community forum online at Drupal Groups, with 484 members.
Hobbs thinks that Drupal might be at a tipping point in Australia, spurred by the launch of the Prime Minister's site and the ABC sites.
“For a long time Drupal was just another product but we've had a couple of key wins with the ABC websites and the Prime Minister's website. Those sort of high profile websites don't just happen if there is no precedent. Generally, there is someone from inside the organisation or department to champion open source and Drupal,” he said.
“The PM's site was a bit of a surprise. I'm sure the prime minister doesn't know that his site runs on Drupal but it forms a great precedent, particularly for the use of open source in government.”
Hobbs said that there are well attended Drupal meet-ups in Melbourne, Canberra, Brisbane and Tasmania. There is also talk of an Oceanic Drupal meet-up and also an official Drupal conference in Australia. Roberts agrees that Drupal's star is on the rise.
“It's been a bit behind the growth in the US and it has also been behind Joomla and WordPress in popularity locally but it seems like we are catching up. We've had a few meet-ups and camps now and there is now always a bunch of us from Australia at the international conferences,” he said.
“Clients are beginning to come to us asking specifically about Drupal as opposed to just asking for a website or a solution.”
Freeman also senses an increased activity around Drupal.
“There are more companies getting on board and the whole community is growing quite rapidly. Government departments are recruiting Drupal developers internally now, so that is good. Land and Water Australia, unfortunately, is being wrapped up at the end of the year, but those people will move to other departments and champion Drupal from the inside.”
Lansbury agrees that there is a spike in Drupal based projects launching in Australia.
“Over the past six months [there have been sites] as diverse as the Prime Minister, Lonely Planet, Fairfax Digital, Sanyo and even McDonalds using Drupal in various ways. Globally, there's been an enormous shift to Drupal across most industries, from universities like Harvard and MIT, major government sites for the Obama administration, entertainment sites including Universal Music, Sony and the Emmy awards, and non profit organisations such as Amnesty International, Oxfam and Greenpeace,” he said.
“The main reason for this uptake is clients have now realised they don't need to pay hundreds of thousands of dollars for a CMS product to get a rich suite of functionality out of the box and a stable framework on which to develop customised features. This also means that Drupal based sites can be pushed to market faster and that most ongoing maintenance of a Drupal site can be managed by an existing internal team with a bit of HTML/CSS and PHP skills.”