Open Source ERP Profoss, part I and the definition of success.

Yesterday was probably the best Profoss session up to now. Too bad, only 30-ish people showed up, but the quality of the discussions was pretty high. It was also one of the first Profoss’es where business models and market promises of Open Source software vendors stood central. Too bad, however, that all four speakers (OpenBravo, OpenERP, Compiere and Adampiere) were not very proficient in English. You could tell after 5 words where they came from (The Netherlands, Belgium, France and Germany). :-)

One thing which got stuck in my head was a remark form the Microsoft representative in the audience. He mentioned that all the industries in Europe where we’ve been doing very well and are successful with worldwide, are in sectors where Intellectual Property rights are very well protected and laws are in place to do so. He gave the pharmaceutical industry and the GSM communication standard as examples.

Now, he might be right for certain definitions of “success”. They are the industries where venture capitalists like to live. They are the sectors with the so called money-printing companies. But, as someone in the audience gave as a remark, haven’t they stretched the limits of profitability too far? Isn’t the financial crisis we are in right now a symptom of that?

The Microsoft guy went on to express his fear that by adopting the Open Source idea so quickly, Europe is putting itself in a more vulnerable position as compared to the rest of the world where huge companies are still being formed around (software) patents. And that’s where I strongly disagree.

I believe, and not only for the software industry, that the Open Source philosophy forms the best sustainable business models, as a whole and in the long-term. Janssen Pharmaceutica might never have been so huge without it’s patents on the medicines they “invented”, but now it appears that for the last 25 years the whole company just survived on those few patents. Now that they have expired, all of a sudden Janssen is in trouble and recently had to lay down some thousands of people. However… now that alternatives for those medicines are allowed, they all of a sudden become far cheaper as the factor of choice appears. So which Europe (or Belgium, for that matter) is the most “successful”: the one where huge companies can get monopolies and allow some to get astonishly rich, or the one where medicines are affordable by anyone (without the need of too much medical insurance intervention)?

Isn’t the reason that Europe became what it is right now because of the rapid and free expansion of science and exact knowledge? ( As a matter of fact, I agree with Michael H. Hart that Isaac Newton has had a greater influence on our every day life than Jesus Christ. But that’s a different discussion. )

But… doesn’t Janssen deserve to be paid back and generate revenue to support further research and development of other, great medicines? Well, of course they do. But why didn’t they do it then? Why are they now, after 25 years of artificially stretching the time constraints of their patents, getting in so much trouble? Haven’t they had the time to invent something else profitable? ( One could also argue that for matters as health and hygiene, research should be left to public entities as universities. Again, that’s another discussion. )

The other example I want to tackle is the GSM one. GSM is, in my eyes, one of the great failures of humanity. Compare it to, say, TCP/IP. Both are communication protocols. One is proprietary and heavily regulated. The other is open and free. A couple of years after it’s existence, TCP/IP shaped the Internet, changed our entire world and allowed millions of business and even completely new business models to flourish on top of it. On the other hand, with these stupid mobile phones, after 10 years we still can’t do anything but calling and sending crappy text messages. MMS was supposed to be a big innovation. Ironically, we had to wait for TCP/IP to arrive on our mobile devices, before we could start doing useful stuff with them. Before we could do fun stuff that we didn’t have to ask permission for. Before we could be free.

Why is the iPhone such a success? Surely not because it supports GSM.

Just like Janssen, the great mobile operators might get in trouble when everybody starts using VoIP on their mobile phones. Sitting on top of their governmentally protected industries, they have done nothing to protect themselves.

Yes, GSM regulation has made it possible for huge companies to form where, in Belgium, Mobistar, Proximus and Base are offsprings off. But it has killed all innovation around it.

So again, what’s the most successful Europe?

Those Open Source ERP vendors might not get the big venture capitalists backing them. And none of their CEO’s will be the next Bill Gates. But they are forming the shape of the software business of tomorrow.