Aras Open Source PLM--Will its Business Scale?

The ZDNet article on PLM/BPM vendor, Aras, covers reasons this former proprietary vendor decided to open source its Innovator products. Two points that stuck out for me, concern what open sourcing enabled Aras to do.

According to the article, using an open source development model allowed Aras to develop its software much more quickly--it cites Aras as being "one of only 10 ISVs to gain full certification for its software running on Microsoft’s forthcoming Windows Server 2008 and SQL Server 2008."

Second, the change allowed Aras to pick up new customers, which it might not have been able to previously obtain. These customers were leary of some of the upfront capital costs but Aras's new subsciption model has apparently been more palatable to them. Furthermore, the article states that Aras has been "picking up steam" in the midmarket.

Consider this in light of a recent InfoWorld post suggesting that open source business models don't scale. In that post, author Savio Rodrigues, discusses how a support-only based model doesn't grow very well past $50M but that a company has to have some other sort of offering only available to paying customers. A lot of people have responded to this viewpoint, in particular, Shaun Connolly's post about scaling a software business, in which he mentions that JBoss "...sold 75% subscriptions, 15% training, 10% consulting."

Aras's shift may be an interesting case to follow as a counter example (though certainly not the only one) to the Rodrigues notion against open source business model scalability. The article on Aras features some commentary from the company's VP of marketing, Marc Lind, praising the predictability and scalability of the subscription model. The company lists three sorts of subscriptions that include varying levels of services. They range from basic services like regular updatesfor various packages, to more involved services including greater accessibility to support, to dedicated and unlimited support, training programs and events.

I'll be curious to see how Aras's move plays out with respect to another point Connolly made in his post.
"Once you've got momentum going on one product, you scale the business by:

  • Expanding your footprint (new products, product lines, solutions, etc.)

  • Expanding your reach (channel business, partners, geographies, etc.)"

On the first bullet, as an open source solution, I'd expect Aras to have at least one advantage over a proprietary vendor in that it may be able to foster a greater breadth of development for the products through combined efforts of its community. And recall what I pointed out at the beginning of this post regarding the speed with which the article states Aras was able to accomplish ISV certification.

On the second bullet, Aras is listed as a Microsoft partner so let's see how else its reach expands. Especially if it is the case that the company's change in model has made the offering more palatable to its potential customer base, one might expect greater demand.
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