Changing the rules of enterprise software

I spent some time on the phone Wednesday with Mike Herrick of the Collaborative Software Initiative. I knew Mike back when he was at Liberty Mutual, building out its open-source team. When Mike left to join CSI, I wondered what would cause someone with a great job in a Fortune 100 enterprise to join a start-up.

Today, things became a bit clearer.

Remember Avalanche? It was an open-source co-op formed by several major enterprises (Best Buy, Wells Fargo, etc.) to share code in areas of common need (call centers, for example) but little to no competitive overlap. The idea was to share code and thereby improve innovation while lowering costs.

CSI is similar in its aims, but I think it's a better approach to the problem because it should do a better job of coordinating collaboration. CSI's mission is to:

build communities of like-minded IT leaders to reduce software development costs, accelerate compliance and consolidate project timelines.

CSI does this by helping to bring different companies to collaborate on IT projects that each individually needs, but that can be done more cost effectively as a collective. So, for example, perhaps CSI found that Credit Suisse needed to develop a trading platform. As it turns out, this is a common need for Merrill Lynch, Morgan Stanley, Goldman Sachs, and other financial services companies. So, CSI would then approach these other companies to gauge interest and then to coordinate the development.

This sort of idea would fall apart quickly but for one very important ingredient: a management team that has a killer network. Between Stuart Cohen, former CEO of the Open Source Development Labs, and Evan Bauer, former CTO of Credit Suisse First Boston, the two have connections into a wide range of enterprises that make this sort of needs discovery and project coordination possible.

CSI's model then proceeds as follows:

1. Develop the application for an individual company or in conjunction with a group of companies
2. Require that the application be open-sourced
3. Provide paid support for that application
4. Find other organizations that need the applications CSI has developed and provide paid support for them

Is CSI a services company? Sort of. Is it a products/software company? Kind of. It's both and neither at the same time.

Importantly, everything that CSI writes will be made open source. This is a potentially game-changing approach to the software industry:

The CSI introduces what in the years to come will be commonplace in the software market--collaboration among like-minded companies (in many cases competitors) to develop essential software where competitive differentiation is not required. With increasing government and industry standards demanding more work from IT organizations and outsourcing becoming more risky and expensive, the CSI helps business managers and IT organizations explore new ways of doing business by using the success of the Linux and open-source software models. This will drastically reduce costs for IT departments and spur innovation among peers.

Most software is written for use, not for sale. It's written by the enterprises that also buy a small fraction of their software from Oracle, IBM, etc. If these organizations can be helped to pool resources and solve problems collectively, they win, CSI wins, and the industry wins (because the code is open source).

Very interesting. Very cool. I really hope this works. If Mike's enthusiasm for it is any indication, it very likely will.