Open-source innovation in a recession

Open source will win in this economic crisis because it enables its adopters to innovate through the downturn.

Nat Torkington over at O'Reilly Media suggests that a recession will be very kind to open source as companies seek to lower their IT costs while continuing to service business needs.

I think he's right, and every day I see the proof behind this hypothesis.

For example, I moderated a panel on Thursday with the U.S. Small Business Administration (SBA). The SBA needed a system that would allow it to iterate and innovate even if its budget withered, so it couldn't afford to go with a proprietary system that required new licenses for every change in direction (and consequent change in the number of servers used). It chose Alfresco to power in part to save money upfront, but also to enable flexible innovation over the life of the project. (Disclosure: I work for Alfresco.)

It is this need to innovate through a downturn that will continue to push IT spending to open source. As notes:

Returning to business fundamentals begins with delivering a great value proposition. In challenging times, this becomes even more important. Customers need more value if they are going to part with their valuable cash...Returning to business fundamentals requires optimizing the operational efficiency of the enterprise. After decades of leaning down, companies have to look for new approaches to operationalizing efficiency.

Open source breeds communities, which in turn add value to the software, making this innovation more of a group effort (and, hence, potentially a less costly effort). In turn, open source should be a big winner in this downturn, just as it was in 2000 to 2001, as points out.

So when I read reports like this one from ZDNet that IT spending is tightening, I will admit to being encouraged, not dismayed. Value will find a buyer in even the most trying of circumstances.

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