Original URL: http://www.theregister.co.uk/2009/03/24/whitehurst_opensource_recession/

Red Hat aims open-source at IT discomfort zone

Strike while the Meltdown is hot

By Gavin Clarke

Posted in Applications, 24th March 2009 20:12 GMT

OSBC Red Hat has told open-source vendors they shouldn't hesitate when selling against proprietary rivals during the current economic downturn.

The company's chief executive, Jim Whitehurst, has said that open-source faces a limited window of opportunity, before IT budgets recover inline with a general economic improvement.

Once there's a recovery, those who pick IT systems will retreat into their "comfort zone" and stick with what they know instead of investigating new, low-cost options.

Whitehurst, speaking on the eve of the Open Source Business Conference (OSBC), said open source must capitalize on the fact that CFOs and CIOs are currently cutting IT budgets. That's forcing those "deep down" in the IT organization to change and make do more with less instead of renew their existing IT contracts.

Open-source companies, including speakers at OSBC, have been twittering about how the current downturn is helping them sign up new customers.

A straw poll of OSBC attendees by investor North Bridge Venture Partners on Tuesday saw 96 per cent say they felt the current economic turbulence was good for open-source software.

Speaking on the Monday before, Whitehurst confirmed there had been increased interest in Red Hat from customers looking for low-price and value. Budget cuts of five per cent are one thing, but with cuts of between 10 and 20 per cent, customers are turning to Red Hat and looking for help - for something different, he claimed.

"I've been amazed," Whitehurst told press and open-source companies on Monday evening. "There are companies we've been trying to set up meetings with for years that are all of a sudden calling us up and saying: 'We need to talk.' The more desperate the industry, the more interested people are."

Such is the clamor, he claimed, customers are asking why Red Hat can't sell a complete package of EnterpriseDB and JasperSoft along with its own operating system and middleware.

Whitehurst said Red Hat got its foot in the door of many customers as a result of the IT budget cuts that resulted from the dot.com recession in the early 2000s. That forced people to challenge Unix and the expensive, proprietary hardware running it. "That discontinuity forced people to go outside their comfort zone and forced them to try something different," he said.

"People who are down deep in IT, who make a lot of the decisions, have no incentive to change what they are doing today unless they are forced. And as CFOs and CIOs are getting forced on budget and forced to question - that's good for us.

"All of us as an industry...have an opportunity to really go and demonstrate our value proposition now, because when this discontinuity stops people are happy to go back to their comfort zone.

"The people who aren't the ones who write the checks are less concerned about the cost of some of the proprietary offerings out there. So while cost is high on people's agenda, we need to go out and sell value - not cost, but value," Whitehurst said.

How long will cost be on the agenda? When will people return to their old ways? that could come this year. Speaking at OSBC on Tuesday, the chief executive of rival Novell called the current shrinking of US GDP "sobering." Ron Hovsepian said, though, that there was a "glimmer of hope" in the third-quarter of 2009.

SugarCRM chief executive John Roberts, meanwhile, refined Whitehurst's message a little saying there had been "lumpy" adoption of open source worldwide.

He said there's been too much focus on software and developers, with customers interested in packaged solutions whether that's in the cloud or on-site. Roberts' own company tries to challenge packaged-software rivals in business applications. ®