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Open source is a simply
software distributed with a source code (Coppola and Neely, 2004). It
basically allows the users the freedom to run the program for any purpose,
to study and modify the program, and to freely redistribute copies of the
original or modified program (Coppola and Neely, 2004). In another term
given by Forfas (2006), it is “software that is
created by a development community rather than a single vendor”.
However, there is
a great misconception that open source is simply free. The fact is, not
all open source are free, but instead, all software of this type can be
manipulated freely by the user without acquiring any type of license
(Coppola and Neely, 2004). In open source software, access to the source
code is all about freedom or choice.
In comparison
with propriety software, open source software allows consumers and
providers equal access to the product. Vendors are always in control in
propriety software, thus giving more chances for the costs getting locked.
It means that software price can go high depending on the market value of
the product (Coppola and Neely, 2004). Furthermore, open source software
is more rapid and diverse compared to propriety software because a
community of developers and users work in parallel (Coppola and Neely,
2004). Another advantage of this type of software is that it will always
be available as long as it serves a purpose to a large community. On the
other hand, propriety software depends more on the vendors’ decision and a
single failure can cause the abandonment of the product (Coppola and
Neely, 2004). Also, open source can be more secure and reliable because of
the fact that is being reviewed by a larger community group. Updates can
be done in an instant without the need to seek the approval of the vendor.
Because of the
potential of OSS to outdo commercialized software products, many OSS
companies have emerged throughout the years. However, it is still
unexplored how these companies operate or what types of management
strategies and system they use. The aim of the project is to evaluate
several business models of open source companies.
STATEMENT OF THE PROBLEM
OSS
can also be a source of return for firms who choose to commercialize OSS
software. For instance, in the study of Dahlander (2004a), it was found
that some firms do commercialize OSS products to generate return. Such
firms take advantage of the benefits that OSS can give, and to make sure
they generate income, they make sure that they are agile enough to the
changing business environments (Dahlander, 2004a). Dahlander (2004a) also
found that firms commercialize
OSS by means of consultancy,
education, support, licensing, and black-box. Firms do focus on their area
of expertise for each commercialization approach. However, it is
questionable on whether OSS firms that commercialize their products ever
achieved success. It is understood that as source codes are open to
public, everyone can get the source code and make their own change. As a
result, open-source companies cannot maintain their core competitive
advantage by holding their software copyright. What management strategies
do OSS companies use to handle the nature of their business? This question
will be explored in the study.
RESEARCH QUESTIONS
The main research
question that will be explored in the study is: What business models do
OSS companies use to handle the nature of their business? Specifically, it
will explore the following supporting questions:
Ø
What management
models do OSS companies use?
Ø
What marketing
framework do OSS companies implement?
Ø
How do OSS
companies handle human resources?
Ø
What are the
advantages and disadvantages of the business models they use?
Ø
How do OSS
companies manage quality and customer satisfaction?
These questions will be
explored by conducting a literature review and by conducting a survey on
several prominent OSS companies in the Internet today.
Importance of the Study
OSS is currently
in-demand and this could be taken advantage of by commercial OSS
companies. Forfas (2006) stated the following as the main reasons why
firms choose OSS over propriety software: user organizations buy software
and services based on the derivation of business value, not based on the
features associated with the particular piece of software or service; user
organizations now consider the particular features of software licensing
models as a source of business value (e.g. lower cost) and this will be an
increasing area of interest over the next few years; and that cost is a
major factor when considering open source, but flexibility and return on
investment (ROI and especially payback time) become the critical factors
over the lifetime of a project.
Garzarelli (2002) stressed that OSS is different from propriety software
because it has no hierarchy and has no ownership structure. Furthermore,
it is based on the concept of self-regulation and self-organization.
Garzarelli (2002) argued that what makes propriety software more difficult
to use than OSS is that the former
relies on a traditional and
corporate approach to software development is centred on
hierarchical relations. The decision of what software to develop,
test or improve comes from the top of the
hierarchy (Garzarelli, 2002). Conducting this
study will help determine the type of business model that these companies
adopt. Many claimed that OSS companies move faster and less hierarchical
than propriety companies. Through this study, their strategies will be
documented, which can serve as a guide to future OSS company aspirants.
OBJECTIVES OF
THE STUDY
The study will try to achieve the following objectives:
Ø
To
identify the business models of OSS companies.
Ø
To
identify the difference of OSS companies from propriety companies in terms
of operation.
Ø
To
be able to make a list of strategies that OSS companies use to keep their
business running.
Ø
To identify the
advantages and disadvantages of those business models and the critical
success factor of some famous open source companies will be evaluated.
Ø
To
give possible recommendations on how OSS companies can maintain or improve
their business models.
Methods and
Procedures
The study will conduct quantitative research to meet the
objectives of the study. Induction research strategy will be used as the
aim is to discover more about OSS companies instead of proving a
particular hypothesis.
Data Collection
The study will explore a
targeted total of 10 OSS companies. Selection will be made using the
internet – by browsing through and looking for potential subjects. They
will be selected through convenience sampling. A letter of consent will be
sent to each potential subjects.
Secondary data will be
collected through literature search. Literatures will be reviewed.
Data Analysis
Data will be
analyzed qualitatively by critically reviewing the gathered literatures
and interpret their relevance with the findings of the survey. Survey will
be statistically analyzed but no comparison of data will be conducted.
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