Jan 22

The impact of open source on business and social good

I vividly remember that my early opinions about open source software were built around certain questions that made most natural (and perfect) sense to me at that point of time in my life. The questions like “why would someone sell a software product for free” or “Why should anyone participate in a project that does not reaps any financial rewards” formed the basis of my rationale . That was the time when I had not embarked on my professional journey and as a consequence not experienced organizational life. My myopic view towards the open source methodology of developing projects and the profound impact this methodology has on the business world in general and the organizational structure in particular began to broaden after my first intense exposure to the Linux operating system in Bank of America Merrill Lynch. My understanding about the magnificence of this operating system and the  the process by which it is constantly iterated made a 180 degrees transformation. This  consequently cultivated appreciation for the entire process of peer production and the impact it has on today’s businesses, both big and small.

Today, mass collaboration is changing the foundational structure of businesses and reshaping the way these entities operate in our highly competitive environment. Collaboration, fuelled by open methodologies and peer production is forcing management to rethink their strategies. Organizations that have previously created walled cities are breaking the barriers and creating public spaces where all can grow and contribute to push forward the boundaries of their businesses as well as the boundaries of industries they operate in.

In his excellent article “The nature of the firm” (1937), Ronald Harry Coase, the great British economist made a strong argument that one of the reasons for the structure of vertically integrated organizations is the “cost of transaction”. Perform a transaction inside your firm only if it is cheaper than performing it externally or in the marketplace.  The internet boom and the development of open source software and pooled infrastructure has made it possible for the web based businesses to keep these transaction costs low. Don Tapscot, the author of Wikinomics, dissects by saying “Transaction costs still exists, but now they’re often more onerous in corporations than in the marketplace.”

Despite of all the benefits in terms of quality, speed and wealth that open source and the collaborative mode of undertaking projects have generated, there is still some misunderstanding and gap in the appreciation of these significant changes. Some people and business still restrict their comprehension of open source as free software that sucks up the wealth of a healthy capitalist society. These people and businesses do not see the forest for the trees. They see the free software as a threat to the enterprise but miss the multi billion dollar ecosystem that this free software has created from which businesses of all sizes and types are benefiting.

Following are two cases which reflect the impact of “open source way of doing things” on the businesses:

The rise of collaborative organizations:

The digital revolution, also called the third revolution, has changed the entire landscape of the business world. After the industrial revolution, no other revolution has changed the fabric of the society as the Internet revolution has changed it. It has given rise to organizations that thrive on volunteers, peer production, and collaboration. Wikipedia, the Mozilla Foundation, WordPress, Red Hat, and many more are competing today with some of the best financed and resourceful enterprises across the globe. The parameters of this competition are not only governed by cost but defined by quality as well. In 2005, the British Journal Nature conducted a comparative study and found that Wikipedia is as accurate as Encyclopedia Britanica. A Wikimedia trafic analysis report in 2012 shows that Google Chrome has a larger market than Internet Explorer and my second  favorite brower Mozilla Firefox has a significant market share. Likewise, Red Hat Enterprise Linux is widely implemented in almost all the big financial corporations not only because of the cost but also because of the stability it adds to the complex technology infrastructures in financial companies.

Even some of the organizations that have a history of opposing and harpooning open source developments are now opening up to collaborations to create win-win situations. Microsoft is the biggest example. Its wholly owned subsidiary, Microsoft open technologies group, follows a community driven approach to create innovative solutions. One of its recent announcement was the launch of VM Depot, a community driven catalog of open source virtual machine images for Windows Azure. IBM, a company that became a giant by selling everything proprietary, is another big example and its engagement with the Apache web server project and Linux are well known. In 1999, IBM announced its support to the Open source Linux project and since then has contributed consederable financial and technical resources to the Linux comunity. It played an instrumental role in establishing the Apache software foundation and the Linux development group. Not only did the “big blue” save millions that would have gone into developing its own operating system, it learned and mastered the workings of a new type of business model that was set to change the software industry forever.

Organizations and institutions across sectors are opening up for new partnerships and utilizing the vast amount of “unique skilled talents” not available within the confines of their companies. Initiatives like InnoCentive, Human Genome project, MIT and Harvard University’s edX, offer platforms and opportunties for world changing innovations.

The big boost to entrepreneurship:

The internet is one of the best things that have ever happened to humanity. Not only it has opened the world to an individual (and vice versa), it has become a nucleus of global economic activity. More and more people today are making their living by selling bits and bytes. The cost of starting a web based business is extremely low relative to starting businesses that relies on physical channels. This low cost of bootstrapping a business combined with the creative nature of the internet has encouraged millions to launch their own ventures. The low cost of starting a web based business has become possible primarily because of the availability open source software and infrastructure. The free LAMP software stack, which constitutes Linux, Apache, MySQL and PHP, have made it possible for creative and thoughtful people with ideas to start businesses on the internet which are playing a positive role in pushing forward human race.

Open source movement and methodologies have contributed significantly to the business world and created ecosystems that have positively impacted all the industries and billions of people across the globe. This movement has largely been fueled by thousands of volunteers. These volunteers contribute to these projects for a wide range of reasons which include growing their networks, enhancing  their resumes, refining their skills and just for doing social good. In the words of Jimmy Wales, the founder of Wikipedia, “We are gathering together to build this resource that will be made available to all the people of the world for free. That’s the goal that people can get behind”. What struck me as I finished the last sentence was a quote from the movie Pearl Harbour, “There is nothing stronger than the heart of a volunteer”.

This article of mine is also published here on opensource.com.