Thursday, March 27, 2008

Google Redlining

I remember when corporations chose not to serve poor people... banks, supermarkets, phone companies.

And now even web 2.0.

Can you tell where the poor people live?

Saturday, March 22, 2008

Open Source as a way to compete against market leaders

So I had a chance to talk with the MPower folks, the topic of my last post, at the NTC.

Overall, they have the right idea, seem like good folks, and their primary driver is building a profitable business (as opposed to mission-based technology). NOTE: I in no way think for-profit vendors don't care about their customers. I simply think that non-mission-based players choose not to serve those that don't pay them. Interestingly enough, an open source license means that the the vendor (MPower) helps nonprofits that don't pay them. This doesn't make MPower a mission-based technology provider, but they are making a critical contribution to the mission of providing better technology to the entire nonprofit sector (regardless of their checking account balance).

We'll see how MPower develops... to my mind, true open source is made up of actions, not press releases. They have taken the most important action... a reasonable license and download.

So what is important about this:

  1. No Vendor Lock-In. The source code of MPower, the software, is available to the customer. If an ecology develops around the software, you will not be wedded (or locked in) to working with MPower... you can just hire another company to work on your stuff.
  2. Commercial Support. MPower, the company, is providing a high level of service and support for the software. This has been the Achillies heel of the CiviCRM ecology... it can be difficult (but is getting far easier) to write a check and have a vendor to blame when your implementation doesn't work so good or purchase a 1-800 number to call and get product support.
  3. Autonomy. Want to extend the MPower software's functionality? Simple. Pay them or pay someone else to code what you need. No permission from MPower necessary.
Now, of course, the devil is in the details. Here are the details that will make or break whether this has a big impact from a mission perspective.
  • Gross margin. MPower is a business. License fees and subscription revenue generate higher gross margins than service and support. Lets all hope that (a) they have a spreadsheet that clearly maps this out, (b) they have investors that aren't looking for big gross margins, (c) they aren't looking to go public. If (b) or (c) are true, then they are going to build a subscription revenue stream.
Some "open source" business plays, most notably SugarCRM, have seen their intentions collide with the reality of revenues and growth rates. The most important thing in my entire conversation with MPower was that they said they were patient... they have patient capital that can wait the many years it takes to build a large, fast growing business on an open source business model.
  • Permission. People are going to do things that the MPower company will not like. When another company launches a 1-800 number supporting the MPower software in direct competition with MPower the company, what will they do? How will they react? How will they compete?
Hopefully, they will be comfortable providing great service and being confident that they are they best provider there is. (As opposed to limiting competitor access to the community or some other such tactic)
  • Community. How do they engage? Who do they engage?
Looking forward to the next few years. We live in interesting times.

Friday, March 14, 2008

Yet another creative use of open source...

So this vendor, MPower systems ( has "the only full-feature, open source constituent relationship management (CRM) software specifically designed for nonprofits." First of all, they must not know how to use Google to make that statement with a straight face, but hey, whatever.

Marketing tip: "the easiest full-feature, open source constituent relationship management (CRM) software specifically designed for nonprofits" would at least be defensible.

So its open source, eh? They must use an existing license, right? Nope.

Their license has these gems:

1.03 Unless explicitly stated otherwise, any new features that augment or enhance the current Software, including the release of new properties, shall be subject to terms of this EULA
This suggests that if I contribute, my contributions become the property of the vendor. Mmmmm...
2.01 This License allows you to install and use the Software. You may make one copy of the Software in machine-readable form for backup purposes only, provided that the backup copy must include all copyright or other proprietary notices contained on the original.
So if I want to do any development on their "open source" software, I need to do it on my production instance. Mmmmm...
2.02 Except as expressly permitted in this EULA, you agree not to reverse engineer, de-compile, disassemble, alter, duplicate, modify, rent, lease, loan, sublicense, make copies, create derivative works from, distribute or provide others with the Software, in whole or part, or electronically transfer the Software from one computer to another or over a network.
Sure seems like I can't create derrivative works, but I'm looking for the part of the EULA that allows this.
2.03 You may not sell, transfer or communicate the Software to any third party without our prior express written consent.
So not only can I only modify my production instance, but I have to get permission to share any modifications from the vendor. Definitely an open source best practice ;)

And from a quick scan of the license agreement, there are not open source provisions that would allow me to "...have access to MPower’s source code so they can develop features and functionality to meet their organizations’ individual requirements, as needs arise."

This just makes me angry. Do they think their customers are stupid? Do they feel like it is OK to just lie? Did they "forget" to change their license agreement? Are they so cynical to think it doesn't matter?

Looking forward to the next vendor fantasy land definition of open source...

NOTE: They just announced yesterday, so they might have led with the marketing without worrying about anything else. Still seems pretty cynical.