COSS BI: Open Source, Open Core or Openly Naked?

Peter Yared wrote recently a BusinessWeek guest blog post called “Failure of Commercial Open Source Software.” Not surprisingly his post caused a lot of angry replies from people who work for COSS companies. “The emperor is not naked” they argued.

I believe that the COSS emperor is openly naked. And the discussion shouldn’t be whether COSS is a complete or a partial failure just because there are few successful exits that Peter neglected to mention. At the end of the day Peter’s comment that “selling software is miserable” is true. Every sales rep involved in selling COSS would agree (I’m interviewing many of them now). Selling COSS is no easier than selling any other form of software.

Any company using the word “open” should be able to explain the true cost of delivery (this is one of Peter’s points). And there is an obvious litmus test of openness of COSS companies: One that I would call “open pricing.” COSS companies should openly publish their price list and clearly mark what’s free and open and what’s paid and closed. Otherwise OSS is just a bait-and-switch to a familiar proprietary software tactic of customer lock-in. This is what OSS was supposed to get rid of in the first place.

Let’s take a look at some of COSS companies in the Business Intelligence space. The bait and switch is in a full swing here:

Jaspersoft: Let us prepare a custom quote for you.

Pentaho: Request a Quote

Talend: A Talend account manager will be in touch shortly to provide information and/or a detailed quote.

We announced GoodData pricing earlier today and I would actually argue that we are a more open company than any of companies listed above. Our customers know exactly what service they get and how much it will cost.

We stick to our company motto: GoodData = BI – BS. And at there is a lot of BS going on in COSS space. It may actually be its biggest failure.


Full disclosure: I have been a big believer in open source since we opensourced NetBeans more than 10 years ago.

Bad economics are difficult to shake off

Terry Pratchett once wrote that “Gravity is a habit that is hard to shake off”. We could make a similar comment about the financials of SaaS BI companies. As much as startups in this field would like to shake off their bad economics, reality always catches up. We’re seeing one after another SaaS BI startup to go out of business. Back in June it was LucidEra and earlier this week Blink Logic ceased operations. But anybody who only briefly looked at Blink Logic’s finances (it was a public company) shouldn’t be surprised by this event.

Why do so many of the attempts to marry BI and SaaS fail? The problem is that Saas BI sounds simple … simple enough to take an existing BI asset (integration engine, open source analytical engine, columnar database, dashboarding, even domain expertise & consulting) and just host it! All it takes is VMware or an AWS account, web server and Flash or JavaScript. Some people call this a paradigm shift, I call it window dressing. LucidEra was essentially restarted Broadbase, BlinkLogic was once called DataJungle, PivotLink recently changed their name from SeaTab, Cloud9 Analytics has a secret history as Certive, Success Metrics morphed into Birst. I could go on…

Why do SaaS BI companies have bad economics? It’s an attractive market – one of the last few open spaces in software. BI requires dealing with lots of data, lots of compute power and many users. SaaS + BI seems obvious. But truthfully, it’s such a difficult opportunity that it requires a new approach, yet everybody is taking shortcuts. SaaS BI isn’t just hosted BI just as email is not just better faxing, wikis are not just simplified Microsoft Word. Some time ago I wrote a case study on how my former company, NetBeans, was able to successfully compete against giants like Symantec, Borland or IBM, this case study is very relevant to our SaaS BI discussion.

The SaaS BI paradigm shift needs to be truly transformational in order to be successful – something that will get BI above the 9% adoption flatline it’s been at for years. Not everybody gets this. One of the best analysts in this space Boris Evelson wrote a blog post earlier this week where he focuses on differentiation of SaaS BI startups. His first question is: VC backing. Is the firm backed by a VC with good track record in information management space? But LucidEra was very well funded by leading VCs. The correct question that Boris should have asked is: Are the backers of the company funding innovation? Do they understand that it takes three years to become an overnight success?

At the end of the day, it’s about economics. At Good Data, our economics are simple – cloud computing, multitenancy and adherence to customer development. We’ve spent two years investing in innovation. That is what I tell my investors every day. And that is how we are going to avoid the startup death spiral.

Leading Healthcare Information Provider Licenses Good Data for On Demand Business Intelligence

We made the following announcement earlier today and it is obviously a very important milestones for us. And I absolutely believe in what I said in the press release: “Intelimedix’s expertise, combined with Good Data’s on demand collaborative analytics, form an unbeatable combination for healthcare organizations,” said Roman Stanek, founder and CEO of Good Data Corp. “This is a great opportunity to show how solution providers benefit from incorporating Good Data into their offerings.”

Leading Healthcare Information Provider Licenses Good Data for On Demand Business Intelligence

CAMBRIDGE, Mass. – December 2, 2008 – Good Data Corporation, an emerging provider of on-demand (SaaS) collaborative business intelligence solutions, today announced its first customer agreement – with Intelimedix LLC, a leading supplier of business intelligence solutions for health insurers.

Good Data, which recently completed a $2 million initial round of funding from private investors, delivers a cloud-based platform for business intelligence projects. The company is launching a public beta of its hosted service in December 2008 that will offer data analysts in any company immediate and inexpensive access to the power of collaborative business intelligence.

Good Data helps Intelimedix enhance its core analytic service offerings. Intelimedix plans to integrate Good Data capabilities into core applications that run reporting and analysis tools for functions including payment integrity, fraud detection, benchmarking, and measuring operational efficiency.

“In the healthcare environment, users need to be able to access information quickly, efficiently and reliably to make strategic decisions that impact their business,” said David Robinson, Chief Technology Officer of Intelimedix. “Good Data’s technology will help us improve our analytical tools immeasurably. We see Good Data as an important strategic partner that will help us deliver more flexible, effective solutions to our customers.”

“Intelimedix’s expertise, combined with Good Data’s on demand collaborative analytics, form an unbeatable combination for healthcare organizations,” said Roman Stanek, founder and CEO of Good Data Corp. “This is a great opportunity to show how solution providers benefit from incorporating Good Data into their offerings.”

About Good Data
Good Data Corporation was founded with the mission to provide a platform for collaborative analytics. The company believes sharing and teamwork allows users to move past isolated reports and arrive at the true meaning of “business intelligence.” Development of the underlying technology began in 2002 and is currently in use in large insurance and retail corporations. Good Data is a privately held company with headquarters in Cambridge, Mass., and engineering operations in the Czech Republic.

Bad Day for SaaS

Part of Amazon EC2 was down earlier today and Tripit is inaccessible since morning. Not the best day for Software as a Service…

IBM buying Cognos

This famous Data General advertisment (it actually never ran) is over 25 years old, but after a small update it can be used even today:

They Say IBM’s Entry Into On Demand BI Will Legitimize The Market. The Bastards Say, Welcome.

Notification of Potential Data Breach

Dear … Employee,

We recently became aware of an incident involving information that may affect you. A laptop belonging to an … director was lost during a business trip to Atlanta in late July. The laptop contained personal information on some employees, including you…The laptop was secured by a user name/password combination…

I received the letter above a few days ago from one of my former employers. It made me wonder what other sensitive data were on a laptop used by director of a large publicly traded company. And could this possibly happen if they used Software as a Service HR application?

SaaS will not make data on notebooks safer, but the chances are that this person would not need to download my personal information to his or her notebook. It is clear to me that incidents like this one prove that SaaS model is not inherently less secure…

Facebook Elastic Compute Cloud

I was never a big fan of Amazon Elastic Compute Cloud (Amazon EC2). I did not see a real need for it and it doesn’t even fit into retailer’s business model. Amazon EC2 “enables users to increase or decrease capacity within minutes, not hours or days”. But the growth of majority of web applications can be handled by additional hardware and faster connectivity. And even though the occasional traffic spikes caused by Slashdot or Digg can turn any site inaccessible for a day or two I am not sure it can justify a paradigm shift in the hosting platform.

But after spending a few weeks on Facebook I’ve completely changed my mind. You don’t need to build a user community on Facebook. Your users are already there and if you are lucky or smart (or both) enough to catch their attention with a new application you can see a dramatic increase in web traffic overnight. Being able to “obtain and configure capacity with minimal friction” may actually be your only option before the users go somewhere else.

Does it mean that Facebook should buy EC2 from and integrate it more tightly with the Facebook Platform? I believe so. It would make a lot of sense…

You read it here first …

It looks like someone at The Economist magazine is reading this blog! They took two of my recent posts: Can Google be trusted? and MaaS – Money as a Service and combined them into one article called: Who’s afraid of Google?:

Google is often compared to Microsoft (another enemy, incidentally); but its evolution is actually closer to that of the banking industry. Just as financial institutions grew to become repositories of people’s money, and thus guardians of private information about their finances, Google is now turning into a custodian of a far wider and more intimate range of information about individuals.

It is a good article and it fully supports my belief that SaaS can be only successful if SaaS providers behave more like banks and less like software companies…

Will I Remember the Milk?

I recently received some vaccination and the vaccine regimen requires re-vaccination in three years’ time. I don’t want to miss it but how do I schedule a task that is three years out?

I keep my to-do list on Remember The Milk and I am a huge fan of the service. I can access it from my Mac and phone, I get reminders via Skype and my to-do list is integrated with Google Calendar. On the other hand I am fully aware of the limitations of Chatswood, Australia based Remember The Milk Pty Ltd. The company can go out of business or I will switch to better to-do list management service (which is different from calendaring service).

RTM is great for my next week’s or next month’s tasks but will I trust it with my next vaccination? Given that RTM exists for last three years and they have a great track record so far I think I will take the risk. But will I remember it in three years?

MaaS – Money as a Service

Money as a Service (a.k.a. banks) exists for more than a thousand years but we still experience occasional hiccups like the current credit crunch. And so we should not expect SaaS to be perfect in the first few years of existence. But I believe that it is the right model for software. And as nobody would keep their money at home stuffed in a mattress anymore, I don’t expect users to go through the pains of installs, upgrades, re-installs and maintenance of complex software products. And possibly in a near future more companies will operate fully in a cloud. You can read more about the transition to SaaS in this article (free registration required).

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