Thursday, May 03, 2007

You for Riehle?

Still playing catch-up since my return, but I've made a comment on Nick Carr's blog which I reprint here.

Nick talked about the recent article by Dirk Riehle on the economic effects of open source. Riehle's arguments are sound in my view, and he hints at the rise of talent

Great Article, worth reading.

[reprint of my comment - tidied up a bit]

Open source tends to drive the adoption of new ideas because of its free and open nature. This accelerates the transition of new genres of software (and ideas) from being a potential source of competitive advantage, being novel and new, to being (if useful) a cost of doing business due to its ubiquity.

Open source also accelerates the adoption of new standards - for example REST over SOAP. Do you believe that the world wide web would have been anywhere near as vast if HTTP had been a proprietary licensed product?

The interesting thing about common and ubiquitous services, is that they allow for new ideas to be built upon them. You need commoditised power, communication and data processing before you can have something like Google.

Imagine building a virtual web business, if the first thing you need to focus on is how to manufacture a microchip, installing communication lines to customers etc. At some point, each of these concepts were novel and new - the real power of these "infra-structural" goods only becomes apparent when they are ubiquitous.

Open Source drives this transition from novel and new to common and ubiquitous ideas and services, which in turn encourages new ideas and services based upon them. I'd argue that open source drives innovation in a society and I'd agree with Riehle that open source tends to diffuse knowledge and increases competition.

But what if I'm a programmer spending all my time developing CODB (cost of doing business) like applications - does this threaten me? Of course it does, but then again the spread of any idea from novel and new to common and ubiquitous always threatens those who make their living from keeping that idea, that concept, that software service to a niche few.

An example of this is ERP. A very lucrative industry, which is often sold as providing a source of competitive advantage or strategic value, despite almost every company having ERP systems. The reality is more likely that ERP is just a CODB. Any advantage of customisation should be weighed against the cost of customisation. Being ubiquitous and common, I would suggest that any advantage can only be gained through being "cheap as chips" or "cheaper than your competitors".

I would argue that much of IT is now CODB. Hence the tendency to offshore, buy off the shelf or ideally rent on a utility basis (SaaS).

Of course, as a company, one of my concerns is always vendor lock-in and exit costs. Hence for example, though I think Amazon's EC2 is a great idea, my problem with it is that there is no Google EC2 or Microsoft EC2. There is no open standard, no portability for my applications other than spending CAPEX on building my own infrastruture or entering a contract negotiation with a hosting vendor. So for CODB like apps, I'll always seek the lowest cost with the most portability between vendors. Hence, open source, which tends to create emergent standards, supported by vendors, is my natural preference.

However, I am also always seeking for the novel and new, something to give an genuine advantage over others. Who better to help create it, but the same people who build those emergent standards, who are well versed in the leading edge of technology and of whom I can clearly see their capabilities - the alpha geeks.

Hence, I use open source communities as a hunting ground for real talent.

This is a growing trend, at almost every open source conference that I've attended in the last year - the banners, even the presentations by companies saying "we're hiring" were everywhere. Head-hunting of top open source developers also seems rife within Europe.

To give a pertinent example, a well respected open source developer announced one morning on his blog his intention to leave his job. By the time I got through to him in the afternoon, the offers had been flooding in. The competition for the most talented and skilled developers - individuals who can make a real difference - is intense, something which I have never experienced before in the world of IT.

As for those who don't fit into those categories, well I don't want to pay large amounts of money for something which is really a CODB and whose price is over-inflated because it is kept arcane and proprietary with no open standard. I'm afraid their future does look fairly gloomy because with open standards you can only compete on talent.

That's the real beauty of open source for any programmer - because everyone can see your work, you get to find out if you really are that good or not. Unlike the old days, where everyone said they were an expert.

I know of a few concrete examples of top open source developers who loved what they were doing and have been head-hunted by financial institutions. In every case, they weren't interested but the banks wanted them and asked them what it would take to make them move. In every case, they give what they thought was a ridiculous figure, the sort of sum earned by a broker, to get rid of the bank.

In every case, they got that amount.

For the really talented - it means you can write your own meal ticket.