Pioneering the Commercial Open-source Business Model

Pioneering the Commercial Open-source Business Model

eZ has, from its inception 14 years ago, been a commercial open-source company. We founded eZ on the belief that the open-source model is superior in innovation, development speed and distribution. Whilst also being a commercial company from day one, we needed a business model that could generate revenue.

Now, in 2014, we still believe in the value of open-source. We see the strong value an open content platform, with open source, open standards and powerful APIs can bring. We actually see it as being THE fundamental platform for modern digital business solutions.

When we started out, the perfect open-source business model did not exist. Other pioneers in open-source business models, such as Red Hat and MySQL, were not directly comparable as they provided low-level software like operating system and database, while eZ delivered both an application platform and a solution with its Content Management System and Framework.

The first version of our business model was based on selling services. We distributed our software, and sold services to support it. This, however, was not a scalable model, and software is not necessarily the same as a product. Nevertheless, it paid the bills and allowed us to grow and develop our software platform.

In 2007 we introduced the first version of our subscription services. At the time, it was still based on the same software with the same features for both community and subscribed versions. Value was provided through support and maintenance.

The next evolution introduced the software in two versions, where the Community Project had a monthly release for rapid innovative open development, and the Enterprise edition had two yearly releases based on the latest Community Project, but having undergone a full Quality Assurance process to make it Enterprise grade. These still came with support and periodic updates, critical bug-fixes and security packs.

When, in 2011, eZ took the step into the Customer Experience (CXM) market, launching solutions for personalisation, recommendation, advanced analytics and, later, marketing automation, there was a differentiation in features between the Community Project and Enterprise subscription. The CXM solutions are delivered as a service and only available for the Enterprise subscription.

We have had a consistent average annual growth in subscription revenue of over 30% since 2007, and have learnt a lot from being a commercial open-source business model pioneer. We have learnt what is really valuable for our customers, what they are willing to pay for and how best we can deliver this. In the end, that is what all business is about: creating value that our customers are willing to pay for.

The first lesson is that what is of value to a business owner is what helps him improve his business, either by selling more or cutting costs. In truth, he does not really care that much about open source itself; rather, he cares about the value of reduced risk and cost, as well as improved flexibility from having a system capable of fulfilling his needs and solving his problems.

However, for the developers or integrators of digital business solutions, having the freedom and flexibility of open source does matter.

This brings us to the next evolution of our commercial open-source business model, aiming to simplify it through fine-tuning and make it more efficient. We will introduce a new commercial product on top of the open-source software platform we have been building over the last years. This new product will still be delivered as a subscription (including support & maintenance) and will focus on features and services that really bring value to business users.

This product will be more integrated, more packaged, will provide better user experience and new capabilities to business users, and will rely completely on the open-source software platform that we are targeting with the next major version of eZ Publish - referred to (for now ;-) ) as 'eZ Publish 6'.

So we will end up with two products: a 100% open-source platform, targeted toward developers, with APIs and user interfaces close to the current eZ Publish (for non-business end-users), and a commercial product based on this, targeted toward business owners and business users, that will by nature be more packaged and integrated, offering more business features, but that will be based entirely on the open-source platform AND be extensible relying on it.

The line is clear: simplicity and focus in our product portfolio, letting us bring more value to both business owners and developers via focused features and interfaces. The expected outcome is a reinforcement of our commercial open-source business model and of our competitiveness, as well as a boost in innovation and speed to market.

In an upcoming blog post we will elaborate on our new products and roadmap. Stay tuned...

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