An email conversation with Open-Xchange CEO Rafael Laguna de la Vera, who discusses his Tuesday afternoon presentation "SaaS and open source: A Match Made in Heaven" at next week's HostingCon.
By David Hamilton, theWHIR.com
In advance of HostingCon 2008, we're contacting some of the speakers presenting at the event and asking them about the content of their sessions in an effort to give readers a sense of what to expect from HostingCon, and perhaps help them choose which sessions to attend.
July 25, 2008 -- (WEB HOST INDUSTRY REVIEW) -- Open source software provider Open-Xchange (open-xchange.com) appointed Rafael Laguna CEO at the beginning of 2008. As co-founder and prior chairman of the board, Laguna initiated the company's development partnership with SUSE Linux back in 2001 and was instrumental in the company's more recent partnership with 1&1 Internet (1and1.com).
Noting his company was at a pivotal junction, Laguna came to the CEO position a clear direction in mind.
"Open-Xchange is positioned at the crossroads of three mega-trends: software as a service, open source and mobile devices," Laguna said. "Enterprises and system integrators have known for years the cost efficiencies and business benefits of Open-Xchange. Now, Open-Xchange also delivers what the telcos, hosters and service providers need to compete with Google, Microsoft, RIM and others to deliver higher level services to their customers."
As major corporations such as Microsoft (microsoft.com) and Google (google.com) enter the business software services market with such SaaS offerings as advanced email, groupware, collaboration and office Applications, Laguna will explain who can benefit from open source software sold as a service and how to turn a profit from new and current customers.
At HostingCon, Laguna will present his case for distributing open source software as SaaS applications, offering some of the knowledge and experience he has amassed over his three-decade-spanning career.
"SaaS and open source: A Match Made in Heaven" will take place Tuesday, July 29 at 4:30 in room 325.
In your presentation, you will explain how hosters, telcos and internet companies can benefit from Open source software sold as Software-as-a-Service. Could you briefly explain specifically how SaaS and Open source are "a match made in heaven"?
RL: ISPs, telcos, mobile carriers, web hosting companies and service providers have a lot of experience running open source software -- the whole Internet with its 150 million websites and 1.5 billion email accounts is built with it. It made the Internet what it is today.
Web hosting companies have the opportunity to deliver additional services to their existing customer base and realize additional revenues. Those up sell opportunities utilize the web hosting companies' core competencies around building and running large scale on-demand data centers. These additional services require software.
SaaS is one of the key trends that change the way we all are going to use software. If web hosters, ISPs and telcos don't start to offer SaaS now, Google, Amazon and Microsoft will move in and get that business instead.
Is there any reason why Open source is particularly relevant to SaaS as opposed to traditional distribution?
RL: With SaaS offerings built on open source software, hosters and telcos retain price control, branding, keep their customers, and enter into a new, fast-growing market. The open source supplier gains access to a customer base thereby reducing the sales and marketing expense and lowering the barrier to entry in the marketplace. These inter-dependencies make a great partnership between SaaS providers and open source software makers.
How difficult is it for customers to switch from software they buy outright to SaaS and what do they stand to gain?
RL: I can speak from our experience with Open-Xchange collaboration software. End user customers tend to be private individuals, and small and medium-size businesses. They gain collaboration capabilities that were previously only available to enterprises. For example, mobile email support on Blackberry or iPhone that a small business could never afford previously.
In terms of the migration to SaaS, customers can continue using their same data so there is no disruption.
Earlier this year, The Big Picture author Nick Carr said, "For a lot of the traditional companies, whether it is software companies like Microsoft, Oracle and SAP, or hardware companies like Dell or EMC, it's going to be a very tough transition to go from the old world to the new world." How difficult is it for companies to switch their distribution model that they have held for so long?
RL: SaaS is a disruptive technology that represents a great opportunity for us smaller open source software companies. For the largest traditional software suppliers, such as some of those you've named, it could indeed be a difficult transition in terms of maintaining their revenue flow and holding onto customers. I don't see much impact on the hardware companies.
What do you see as potential pitfalls for software developers that decide to switch to open source? Can you give an example of a case where a company's business model does not support open source distribution?
RL: The obvious example is the largest software company in the world -- Microsoft -- and I think they are hard at work trying to figure it out. We see some examples where they are taking new steps to deliver their software as SaaS -- less so as open source. We compete with Microsoft Exchange and have a compelling alternative for small and medium-size businesses delivering our software as a service in combination with hosting providers. So far this year, we've experienced a 4 times increase -- from 2.4 million paying seats last year to 8.4 million paid mailboxes this year -- as a result of deals with: - 1&1: the number 1 hosting company worldwide - Network Solutions: the number 3 hosting company in the U.S. - OVH: the number 1 hosting company in France - Hostpoint: the number 1 hosting company in Switzerland
What can businesses do to mitigate this risk? In what ways can a software developer ensure they turn a profit?
RL: The one thing the open source software maker has to watch is the business model that he uses. It needs to scale with the business of the service provider or he will never make money. Revenue share with an upfront fee to cover setup-costs will do, for both the open source maker and the service provider.
