Matt Asay on Alfresco business practices

This blog is supposedly at least partly about Open Source business models. Here is a LinuxWorld interview with Matt Asay about many interesting actions taken in running Alfresco as an Open Source company. While this is a must read for anyone doing Open Source business, I'll summarise the key points here. (The article is rather long, but again, everything is worth reading.)

  1. There is a high correlation that if someone is using Alfresco they are also using other Open Source software. Like Alfresco running on JBoss and MySQL or PostgreSQL (52%). Main reasoning seems to be, that if you decide to use Alfresco instead of some very expensive CMS system, why would you then spend tens of thousands on a big Oracle server, when MySQL is more cost effective. Even when said customer uses Oracle or SQL Server for other things.
  2. Sales cycle of an Open Source product: Users download your product, not just some fancy whitepaper. They try it out, and when they like it, then they contact you. So you don't hire salespeople to go around "knocking on doors", you need salespeople to close contracts with customers who already know they want you. This makes the sales discussions circulate more around technical details -> So you need sales engineers who will show the customer that it will work.
  3. In other words, the software should sell itself.
  4. "One of the problems with open source is that suddenly your customers know a heck of a lot about your product and you can't BS anymore."
  5. "it means you need to train sales people to be very candid and forthright with the customer. And I think, in our experience, and this may just be where we are right now in our products trajectory, I think it means you need to have more of these solutions engineers or sales engineers than you do of sales people."
  6. Alfresco doesn't commission sales engineers on closing deals. This is to promote honesty. If Alfresco shouldn't be the right solution to some customer need, sales engineer should say so.
  7. Alfresco sells services for their product. They use a model of service integrator partners around the world. The interview doesn't tell what the economical arrangement between them and their partners is.
  8. Alfresco had 600 000 downloads last year. They have 5000 "registered customers", which means not all of the 5000 are paying customers, they may have just registered to download a whitepaper or something. -> Downloads to customers ratio is less than 10%.
  9. Apparently, some company paid 3M$ for a proprietary CMS system! Unbelievable!! Then they tried 3 years to get it working, but failed to do so. Even more unbelievable.
  10. Alfresco gives sales people equal commission on renewed subscriptions as new subscriptions.
  11. Red Hat is kicking Suse Linux ass.
  12. Suse growth slowed down at the same moment Novell made the Microsoft deal. We cannot prove these two are connected in any way, but there is a clear correlation.
  13. Another reason might be that Alfresco is a Java application, and JBoss is a popular server for it, and Red Hat bought JBoss some time ago. So Red Hat might just be more prominent within the Alfresco userbase.
  14. Alfresco has good Microsoft Windows integration. [just look at their screenshots on alfresco.com]
  15. Alfresco does not see a need for patent deals with Microsoft Windows. They are part of the Open Invention Network to get some level of patent protection.
  16. "And every time that we start to get comfortable and want to reach out to Microsoft, Microsoft does something like this Fortune article kind of getting aggressive over Linux. And it's just caused us to shrink back and say, "You know what? We don't think we can trust them." And I don't like saying that because I think Microsoft, generally speaking, is a good company with good people there. And our customers expect interoperability. But you know what? We have worked with Microsoft on interop without doing any sort of a patent deal; as has Sugar and MySQL and Zend and these other companies. We work directly with Microsoft for a customer of ours to insure SQL Server integration with Alfresco. Didn't have to sign any patent deal with them to get that done."
  17. "Now when you show off Alfresco and customers look at this very slick integration with the Windows desktop and Office environment, do customers ever say to you, do you have some kind of a patent deal with Microsoft? Never. Literally I'm not exaggerating -- we have never, ever had a customer ask about that."
  18. Licensing: Alfresco started with a combination of GPL + prorpietary addons. It felt uncomfortable. They then changed to SugarCRM's infamous "badgeware" license, which got much criticism - even to Matt's surprise. Then they decided to just use GPL2 for everything. After going with GPL: "leads went up, page views went up, downloads went up, our registered community went up in significant percentages. Our sales went up 50 percentage. Our average sales price went up 25 percent, meaning the size of the deals went up. We're now getting a thousand, two thousand leads per week. So everything was positive from it. we've made more money, not less. We have more community, not less. More community involvement."

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