# Module 2.9 Taxonomy of FOSS Business Models
## Duration

1:30hrs

## Delivery method

For instructional purpose, it is advised that trainers/lectures use lectures and debates as a major means of delivering this module. In addition, presentations and exercises are also suitable method of delivery for this module.

## Introduction to FOSS Business Models

FOSS offers opportunities for a wide range of business models. Each model deriving value from the freedom businesses and individuals have in using, modifying, sharing and redistributing legal copies of the software. One element common to all FOSS business models is that more profit is made around services instead of sales of already developed software products. At the level of service-based business models there is actually little or no significant difference between FOSS business models and proprietary business models. A proprietary software oriented company may give the same quality maintenance services to a client as that provided by an FOSS company. The main difference lies
* in the way the company generates revenues,
* how customers benefit from the company's products and services. FOSS provides access to the source code and the right to modify it, proprietary software does not, and
* the cost model employed
There are also some differences regarding the core capabilities needed to run the business model. FOSS business models require FOSS skills and (at least some) interaction with the community. But there are no necessary differences between FOSS and proprietary business models regarding the partner network, the markets / customers, the distribution channels, the relationship to customers and the management of these relationships.
The fact that the source code of FOSS is open while the source code of proprietary software is closed does not matter if the FOSS client does not want or is not able to check or modify the code. The main business advantages of FOSS are not so much on the demand side but on the supply side. A proprietary vendor is limited to mostly few or one type of software provider or developer. FOSS is usually provided by a much larger community of developers and testers, or vendors. This community provides a powerful test bed and developer pool that allows FOSS businesses to interact with this community in a meaningful way to shorten development cycles and time needed for customizing software to clients' needs. To interact with the community in such a meaningful way is however bound to two fundamental conditions:
* The community supporting a company's FOSS services must be large enough, and it should also show some degree of professionalism, such as the capacity to stick to schedules or the existence of key players in the community that can be contacted to change the software, fix bugs, to organize work within the community, etc. The most essential company-community dynamics is that the company must consider itself as being part of the community, and reciprocally, the community must see the company as responsive to their needs and aspirations.
* The second point is crucial when FOSS businesses in many developing countries are considered. Evidently, a company selling services on top of FOSS products will be able to get more and better support from the community if it continuously interacts with the community, participates in communications and events, maybe sponsors some events, sends bug reports or patches to the community, etc. A successful FOSS company MUST NOT just download the software from a project's website or forge but MUST remain visible to the project’s community in anyway it can. The most extreme form of cutting the company off from the potentials provided by community support is to create a fork of the community software, as forks are usually not welcome by many FOSS communities (See module 1.1).
In Europe and North America businesses have all opportunities ranging from full FOSS collaboration to forks. Forking a project might be a useful strategy for a company if, for instance, the community does not support functionalities the company wants to be integrated in the software, or if the release schedule does not fit in the company's plans. The disadvantage of forking a project – which may lead to the loss of community support – is less pronounced in niche markets (where communities are small anyway) or in communities that are large enough to split and to provide support for the original FOSS solution as well as for the fork.
However, in many developing countries businesses face a very limited choice of opportunities. Because the communities are often very small, businesses have difficulties to find effective local community support. The situation of FOSS businesses in many developing countries can be compared to a company in an unintended fork situation, they rely on their own capacities to understand and modify the code, to find and fix bugs, to adapt the software to customer needs and so on. As a result, while FOSS enables firms in Europe and North America to use the community in order to save software development and deployment time, firms in developing countries often do not have these opportunities.

## Taxonomy of FOSS Business Models

Taxonomy is systematic way of naming and organizing content into groups that share similar characteristics. In classifying African FOSS business models, a faceted topology is considered. A faceted taxonomy is a star-like structure with each node in the star being associated or linked with the item in the center of the star. For example; Apache being the center of a star with each node or sub-project (HTTP Server, Ant, Harmony, Jakarta, Tomcat, etc.) representing one of it’s over 70 projects. In the FOSS business models taxonomy represented in the figure 2.8.1 below, the four essential FOSS freedoms (see module 1) and business value are at the center of the star. Protruding from the center are nodes or business models which are found to be in operation in the case studies.
Table 2.9.1 below summarizes business models captured in the case studies. In the table, the following legend is adopted: SSL = Software Selection, INS= Software Installation, INT= Software Integration, STR= FOSS Training, MAS= Maintenance and Support, MIG= Software / Systems Migration, CON = Consultancy, LOI = Software Localization and/or Internalization, DEV = FOSS Development and Customization CET = Technical / Legal Certification.
| Module | Company | Business model in use | Business model in use | Business model in use | Business model in use | Business model in use | Business model in use | Business model in use | Business model in use | Business model in use | Business model in use |
| SSl | INS | INT | STR | MAS | MIG | CON | LOI | DEV | CET |
| 2.1 | OpenWorld | Yes | Yes | NA | Yes | Yes | NA | Yes | NA | NA | NA |
| 2.2 | Global Image Ltd | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | NA |
| 2.3 | Future Software Resources Ltd | Yes | Yes | NA | Yes | Yes | NA | Yes | NA | Yes | NA |
| 2.4 | Linux Holdings | NA | Yes | NA | Yes | Yes | NA | Yes | NA | NA | NA |
| 2.5 | Linux Solutions | NA | Yes | NA | Yes | Yes | NA | Yes | NA | NA | NA |
| 2.6 | Amest Santim Systems PLC | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | NA |
| 2.7 | CENFOSS | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | NA |
| 2.8 | Zalongwa Technologies Ltd | Yes | Yes | NA | Yes | Yes | NA | Yes | Yes | Yes | NA |

## Software Selection

Revenue is made in the software selection business model by charging services associated with helping customers select the most appropriate FOSS application for a given task. Daffara, C. (2007) highlighted that software selection is really a multi-step phase, starting from the identified needs and knowledge of the software market to the selection of packages that minimize the amount of code that needs to be developed. There is ever increasing proliferation of FOSS and often more than one type of software is available to perform the same task. For example; both OpenOffice and KOffice are suitable word processing suits.
A company wanting to offer this kind of service may need substantial investment, in terms of knowledge of the different packages and tools available, forges and projects offering the software solution, communities behind the software, security issues, and be able to evaluate the selected software against international standards such as the ISO 9126 - reliability, functionality, maintainability, portability, usability, and efficiency. Furthermore, argued Daffara, C. (2007), most projects do not have an explicit “marketing mechanism”, which spreads information on features and capabilities on a software package like commercial software firms. This means that companies that want to offer software selection consulting services must dedicate a certain effort just to monitoring web sites and mailing lists, and extract from there information on new versions or new packages. All, but two of the companies from the case studies are adopting this business model.

## Installation

One of the most common FOSS businesses is to offer to install FOSS for customers who do not possess sufficient skills in the installation and maintenance of FOSS solutions. With GNU/Linux operating systems in particular, there are lofts of different interactive and non-interactive package installers in use which makes software installation and upgrading much easier. Package management systems (eg. dpkg for Debian / Ubuntu or deb packages; RPK for RedHat/Suse rpm packages) and installers (e.g. Synaptic with APT) are used to install, remove and obtain software information. While money can be made by installing software, care should be taken that companies do not charge much for this service. Rather, software installation should be seen as “gift” service and the company should FOSS installation as a means to cultivate a critical mass of customers for future activities such as the maintenance of the installed software or the training of clients in the use of the software. All the companies studied are adopting this business model, with some variations.

## Integration

The business model behind FOSS integration involves charging customers who want certain components to be integrated into their (new or existing) systems. In order to be involved in this type of business, companies need to have the expertise and skills needed to understanding how a particular solution or software works as a unified system. Complex software systems are made up of many small bits and pieces or components. Often components need to be added or remove so that the software system operates in the way the customer wants it. Daffara, C. (2007) pointed out that software integration businesses may need to adopt a two-step approach to this type of business. Developing and mapping “specific configuration step necessary to “fit” an open source component in an existing structure and to the custom development necessary to add the missing functionalities or correcting the incompatibilities”. Thus, software integration as a business requires a lot of technical and software competence; although there are Enterprise Application Integration (EAI) tools such as openadaptor. In the case studies, only three companies are involved in the software integration business.

## Training

FOSS training as a business is the most common business model in Africa and is captured in 100% of the cases studied). FOSS training has a success factor due to the nature of the FOSS phenomenon, development process, and community dynamics. The FOSS phenomenon is a relatively new concept, warranting substantial investment in training people on FOSS basics. FOSS projects in general have poor documentation and even where documents are available, the style of presentation and content is often very difficult to understand form a non-technical or novice perspectives. Software help is always available in forums and mailing lists. However, many users, especially in Africa, do not have the experience to participate in FOSS forums and mailing lists. This makes it difficult to obtain help from FOSS projects. Active participation also requires Internet access and good connection, which has remained a potential barrier for full participation in FOSS projects activities. These FOSS barriers have turned out to be good avenues to establish and conduct FOSS training. The FOSS training business training can take many forms (see module 6), ranging from training for certification to training customers in the use of FOSS solutions. Daffara (2007) concords that companies installing or supplying an FOSS solution also need to train the customer alongside. Training is usually personnel-intensive, and requires some effort for the creation of the initial training material to be used during the courses. A good estimate of work needed is that it is necessary to invest around 3 to 8 hours of course material preparation for each hour of training delivered.

## Maintenance and Support

Software is like a car with open hood (as in FOSS) or welded hood (as in proprietary software) and needs to be maintained. Users need frequent support when the software malfunctions or performs as unexpected. Daffara (2007) offered a comprehensive narrative on the maintenance and support business model by highlighting that in most complex systems there is a continuous need for support and maintenance, both for feature enhancements and for the adaptation of the system to the changing IT environment. Support contracts usually are time-based and level-based. Levels are commonly three (corresponding to “bronze”, “silver” and “gold” support services), with varying degree of guaranteed service.
The support model is used by many companies that turned a commercial package (not completely successful in the commercial market or unable to completely fulfill its market potential) into an open source one; the underlying idea is that the authors of the code are supposed to be the most qualified experts for support it. The first famous example of this model was the Zope application server, with many others in active existence (for example, the computer aided design OpenCascade toolkit, Compiere, Alfresco and many others). It is interesting to notice that contributions from the outside are usually received from outside participants even in the case of very specific application areas, like for OpenCascade. All the companies in the case studies provide support and maintenance for their customers.

## Software Migration

Similar to integration services, migration is based on the deep knowledge of both the starting and end IT environment. Most migration services are based on software packages that help in automating the migration (for example of user configurations), or on pre-configured “packages” of OSS that provides complete substitutes of proprietary environments. Examples may be mail/groupware systems or desktop operating system replacements. Migration services usually require a specific integration step in addition to the base migration, and for some large scale effort may require coordination among different companies, offering coordinated service (for example, one specialized in porting custom code, one in migrating mail services, etc.). The Case Study below shows software migration of Department of Computer Science and Information Systems (CSIS). Uganda Matyrs University.
Migration Case study: Department of Computer Science and Information Systems (CSIS). Uganda Matyrs University
* Free and Open Source Software at UMUUganda Martyrs University, Nkozi is the first organization in Africa to adopt a Free and Open Source Software policy. This was done through research from the department of Computer Science and Information Systems and in very close collaboration with the ICT department.Rising licensing costs, improvement of ICT capacity development and the belief that software should be available for all people, made the university decide to make Free and Open Source Software the standard at the university. This means that the university uses software that is available free of charge and that can be copied without compromising copyright laws.At present most of the university has been migrated to Linux (SuSE), OpenOffice, Mozilla and other free and open alternatives for expensive software without compromising of the functionality and compatibility with other computer users. The university recently received praise and an award from the Uganda Communications Commission for it's outstanding contribution to the ICT capacity development in Uganda. For more information visit: http://www.fiuc.org/umu/index.php/general-faculties/cs-is  (available 8th Sept., 2009.)

## Consultancy

FOSS based consultancy services is one of the most common business practice documented in the case studies. However, most of the companies utilizing this business model are doing more consultancies in the proprietary software domain. In the FOSS world, FOSS developers who want to be independent start a consultancy business. This business model is seen as a means to make a living and become independent but at the same time keeping an eye on what goes on in the FOSS world. Consultancy business takes many forms; ranging from domain name registration, web design and hosting, installation and configuration of learning management systems, to server maintenance and the supply of hardware with Linux (mostly Ubuntu) installed. Thus, FOSS consultancy is rarely a standalone business, but rather operates in juxtaposition with other business activities. This being the case, it is important to bear in mind the following tips:
* What are your competitors doing?
* How much are they charging for services similar to what you are offering?
* Consider sub-contracting services
* Get marketing and business skills
* Understand the legal aspects of doing business in your area.

## Localization and Internalization

Localization of a piece of software is the process of modifying or changing specific parts of the software (e.g. adding a company logo) so that it meets the needs of local markets or customers’ requirements. Localization enables software users to interact and identify themselves with the software in a language and culture which is native to them. Localization is more than just an FOSS business practice, it is philosophical and patriotic. Properly done, it gives the users the feeling of ownership and control over the software and business. Internalization is the process developing or modifying a piece of software so that it meets the needs of different locales or language requirements. Software internalization has wider implications and much broader than localization. Most often the terms localization and internationalization are used interchangeably. According to World Wide Web Consortium or W3C, internalization entails:
* Designing and developing in a way that removes barriers to localization or international deployment. This includes such things as enabling the use of Unicode, or ensuring the proper handling of legacy character encodings where appropriate, taking care over the concatenation of strings, avoiding dependence in code of user-interface string values, etc.
* Providing support for features that may not be used until localization occurs. For example, adding markup in your DTD to support bidirectional text, or for identifying language. Or adding to CSS support for vertical text or other non-Latin typographic features.
* Enabling code to support local, regional, language, or culturally related preferences. Typically this involves incorporating predefined localization data and features derived from existing libraries or user preferences. Examples include date and time formats, local calendars, number formats and numeral systems, sorting and presentation of lists, handling of personal names and forms of address, etc.
* Separating localizable elements from source code or content, such that localized alternatives can be loaded or selected based on the user's international preferences as needed.
As a viable FOSS business model, the case studies demonstrate that it only makes business sense to internationalize software if there is market for it. It makes little business sense for an FOSS company in the Gambia, for example, to spend considerable time and effort in translating Mozilla Firefox to the Fula language when the official language and majority of the business community speaks English. However, localization is a big business throughout Africa. Customers want to have ownership and want their logos on their product and they feel much better if they can click in Swahili Anza (Start) or kufungua faili (Open File). However, many users would rather welcome “This program has stopped responding” than the Swahili equivalence “kuacha kukabiliana”. This shows the sensitive nature of localizing software and companies should take great care, know the ethics of their business milieu and consult with customers before engaging in any localization business activities.
* Resources and tools for localization of FOSS is available at: http://www.iosn.net/l10n
* Sasikumar, M., Aparan, R., Naveen, K., Rajendra, M. (2005). Free/Open Source Software. Guide to Localisation. International Open Source Network. Centre for Development of Advanced Computing, CDAC Kharghar Mumbai, Maharashtra 400614. Available at: http://www.iosn.net/l10n/l10n-howto-toolkit/guide.pdf

## Software Development and Customization

The FOSS development paradigm leverages the internet and a community of volunteers to develop, customize and deploy software of high quality within a shorter development cycle. The software is assumed to be better in quality, responding to different customer demands overtime. Innovation in happens because X individual or company with competent skills downloads the source code and customizes the software according to (customer) needs. The software is then released with the ‘improvements’ to the customer or community via the project website or through a software forge (e.g. SourceForge, Gforge, Freshmeat, etc). However, for most small businesses fine-tuning software or applications functionalities according customers’ needs is limited to “development – via- customization”. In this process, a company does not work with or change the core of the software, but just customizes the graphical user interface (GUI) to meet client’s need. In some cases, a company with expert software development staff can develop their own software and release it as “Free for download software”. Customers can download and use the software as is or pay the company for further customization. However, customizing FOSS does not always give an FOSS SME autonomous freedom. For example, if a company or individual uses Zimbra collaboration Suite Open Source edition license, and have modified the software, the company is required to use the Zimbra Inside logo on the web client interface.

## Certification

Daffara (2007) discussed technical suitability and legal certification is viable FOSS business models. He went on to argue that technical suitability certifications is mostly done by integrators and external consultants, and may come in two shapes: certification of adherence to an international standard (for example security or quality standards) and certification of suitability for a specific environment. In a sense, in both cases the integrator provides an insurance that the software package complies with a specified set of rules, and is legally liable for such compliance. Limited scope certifications, like security assurances, are quite within scope of SMEs, while large scale quality assurance of components is quite difficult to attain if the open source project itself does not have an in-place explicit mechanism for project management. Most Linux distributors perform this suitability test in a very simple way, by selecting the most plausible candidate version of a source code package depending on the distribution target (for example, in so called “enterprise edition” distribution only stable versions are used, while for "bleeding edge" distributions the latest unstable version is selected).
Legal certification, according to Daffara (2007) is a relatively recent model, which emerged from the perceived problems of mixing code from multiple licenses, and from several lawsuits. Legal certification is related to the following areas: correct use of OSS and commercial licenses, patent certification, other intellectual property certification. The first area is related to the mixing and correct use of components, which may have different licenses and different restrictions. While more than 70% of the open source code is actually released under the GPL, more than 50 other licenses exist, and some fundamental components are released under a non-GPL license (the Apache foundation software, Mozilla/Firefox or the Eclipse integrated development environment).
When using and integrating many different components, it is fundamental to be able to verify that all code is properly used and accounted for. This is really a task that requires legal capabilities, more than technical ones, and for this reason is perceived by the FOSS community to be a “tangential” model.
Due to the inherent nature of technical suitability and certification, non of the companies in the case studies reported generating revenue from business activities in this area. However, the African FOSS business market shows promising signs in these areas.

## Other Business Models

Some new and hard-to-categorized “African FOSS Business Models” emerged, which participants believe to have huge business potentials.
1. In the area of FOSS packaging
* FOSSCDs (www.fosscds.co.za) forge business.
* Pack schema....vs freedom toasters, opencafe concept.
2. In the area of FOSS marketing
* Build a FOSS repository of goods and services
* FOSS companies can use and benefit from incubator
* Others assorted business models
* Provide FOSS documentation
* FOSS Strategic management,
* Policy advise, legacy issues for start-up companies
* Specializing of FOSS for Mobile devices
* Data archiving, storage
* Data processing
* Accounting, survey, tax and census data analysis

## Status of FOSS Policies in South- and East Africa

The table below shows the status of open source policies captured in the South and East African region. Note, apart from South Africa and Kenya, no known FOSS policy exist even though FOSS businesses are thriving in these countries. How did that manage to do this? what are future implications for operating FOSS business without policy backing? what should come first, establish a policy and encourage business practices around it or use existing business environments to build policies to help protect those businesses and make the uptake of new ones much easier?
| Country | Government FOSS Policy |
| Rwanda | Unknown |
| Burundi | Unknown |
| Kenya | Although an official FOSS Policy has not been adopted by the Kenyan Government, Acts related to procurement have been amended to ensure that FOSS solutions are not excluded from tenders. There is also a growning awareness of FOSS, and support by certain MP's |
| Uganda | Unknown |
| Tanzania | Unknown |
| Mozambique | Unknown |
| Malawi | Unknown |
| Botswana | Unknown |
| Zimbabwe | Unknown |
| South Africa | Yes. The South African Government officially approved a FOSS policy in February 2007. Subsequently, the Minimumum Interoperability Standards (MIOS) for Government has been published. For more information: http://www.gossrc.org/geographical/africa/south-africa-1 |
| Namibia | Unknown |
| Lesotho | Unknown |
| Swaziland | Unknown |

# Module 2.9: ASSESSMENT

* Exercise: Use available resources (internet, contacts, local news, etc) to update and fill out the 'unknown' information in the table in module 2.8.2. Provide the same information for countries you may know and are not listed in the table
* Discussion 1: Using your knowledge of the respective countries in Africa, Do you think the companies in the Case Studies are addressing the market demands for each of their industries?
* Discussion 2: Do you think the fact that there are / are not FOSS policies in place are a major stumbling block for these companies?
* Discussion 3: What more do you think the companies can do better in the countries where FOSS policies are not in place?

# Assignments and Answers

TASK
Use the template below to interview a FLOSS-based company in your country.Some examples from participants
Company Name:.Mount Batten...... Country:Uganda............................ Year Founded.2005.................................. Website:. ... Services offered: Software customization & Website hosting................ :
| Section 1: Outlook and Experience report | Q1. When was you company founded and how many people are employed by your company? This company was founded in 2005, by one person with the support of another and a pool of consultants who were willing to make time when work was available. Q2. In your years of operation, what problems (e.g. getting start-up capital, getting loans to finance some aspects your activities, building a client base, hiring employees, finding office space, getting company documents, etc.) have you encountered? AND possible solutions We worked from a home living room and did not consider looking for capital because we knew we would not qualify. Q3. Looking at other companies (in and outside your country) who may be offering similar services as you do, what would you say works well for your company? We customize and continue to support the client until they are fully comfortable sometimes this takes a year and more, our pricing is also competitive and our overheads are very low. Q4. What is your advise for someone building business around open source software in Africa in general, and your country in particular? They should ensure they start at a very low cost because income is not made instantly, it may have to be spread over time and several clients. The financial institutions are also not interested in financing this area. Lastly it requires a lot of technical skills. |
| Section 2: Revenue generation | Q5. Which services (e.g. training, marketing, technical support, hosting and software development, consultancy, etc.) is your company offering Software customization including - website - Client management - Maps - Other database applications - Hosting websites, mail and databases Q6. Which of the services in Q5 is generating more income for your company? - hosting - website development & training Q7. What is the annual turnover for each of the service sectors? 200,000 to 250,000 USD Q8. What are some of the difficulties, if any, you face in getting paid for the services you offer? Our services are least important in this part of the world (Africa) |
| Section 3: Service line and FLOSS motivation | Q9. What is the motivation for going into open source as a major business? I like being able to customize software and making additions that suit my needs, and being in control of providing what the client needs. Q10. Are you developing new products (software and/or training materials) or customizing existing open source solutions (bespoke software) to fit your customers’ needs? Yes cafe management software Q11. What are some of the strategies you use to market your products and services? Client recommendations and referals Q12. Who are your most prolific customers and the types of services they request most? Private medium size organizations, schools and civil society organizations asking for websites, database applications & records management. Q13. Are you localizing (translating into local languages) some of your products? Yes mostly web brousers Q14. How would you describe your company, "pure open source company" developing, distributing and providing services around open source software or a “hybrid company” developing, distributing and providing services around both open source software and proprietary software? Purely open source – I am an open source software advocate Q15. What are some of your business plans for the next few years to improve the competitive standing of your company? I will not be able to tell you that now. |
Company Name:.Linux Solutions..Ltd................................ Country:...Uganda........................................ Year Founded.................2000.................. Website:..www.linuxsolutins.co.ug................................................. Services offered:..SOFTWARE AND HARDWARE SALES............................................... :
| Section 1: Outlook and Experience report | Q1. When was you company founded and how many people are employed by your company? It was founded in 2000 and employs 10 people Q2. In your years of operation, what problems (e.g. getting start-up capital, getting loans to finance some aspects your activities, building a client base, hiring employees, finding office space, getting company documents, etc.) have you encountered? AND possible solutions 1. . Getting start up capital: The company had to rely on revenue generated. Linux solutions started small and used little savings as a start up capital with an intention of generating the revenue from services and capitalize the company. Its start with few employees and for market purposes, it relies on private sector (business people) who come up through net working and talking to them one by one. Basically unlike other business where you find a leveled market with open source it has to be build. Building a client base with open source only. i.e sticking to the vision could not work in a country where proprietary software is dominating. This called for flexibility by providing both software’s and clients migrated at slow pace after realizing the benefits. Hiring employees full time was not easy so it had to contact external consultants when needed. Q3. Looking at other companies (in and outside your country) who may be offering similar services as you do, what would you say works well for your company? Offering quick support and being able to address customer’s needs as they arise. Q4. What is your advise for someone building business around open source software in Africa in general, and your country in particular? I would advise to Diversify |
| Section 2: Revenue generation | Q5. Which services (e.g. training, marketing, technical support, hosting and software development, consultancy, etc.) is your company offering Software development, Technical support, training, consultancy and marketing. Q6. Which of the services in Q5 is generating more income for your company? SOFTWARE DEVELOPMENT. Q7. What is the annual turnover for each of the service sectors? Aproximently $2,500 Q8. What are some of the difficulties, if any, you face in getting paid for the services you offer? Payments for services are poor one has to devise a mechanism of getting advance payment at the time of entering a contract. |
| Section 3: Service line and FLOSS motivation | Q9. What is the motivation for going into open source as a major business? Customization, affordability of the software and stability. Q10. Are you developing new products (software and/or training materials) or customizing existing open source solutions (bespoke software) to fit your customers’ needs? Yes CUSTOMIZING AND TRAINING. Q11. What are some of the strategies you use to market your products and services? networking, talking to clients one on one, participating in workshops Q12. Who are your most prolific customers and the types of services they request most? SMEs, Universities for education purposes. Many customers request for support. Q13. Are you localizing (translating into local languages) some of your products? Not really we started but never took off as expected. Q14. How would you describe your company, "pure open source company" developing, distributing and providing services around open source software or a “hybrid company” developing, distributing and providing services around both open source software and proprietary software? HYBRID COMPANY. Q15. What are some of your business plans for the next few years to improve the competitive standing of your company? EMPLOYEE SKILLED TECHNICAL WORKFORCE, IMPROVE ON BRANDING, CATER FOR CUSTOMER NEEDS AND MEANS OF STATSFYING THEM. |
Company Name:...Joseph Neusu ............................ Country:.......................................
Year Founded............................ Website:...............................................
Services offered:................................................. :
| Section 1: Outlook and Experience report | Q1. When was you company founded and how many people are employed by your company? The company began in July 2001. I started as a sole consultant providing application development services using open source components to build bespoke solutions to my customers' needs. Over the next 8 years the company slowly grew to the point where we now employ 10 people. Q2. In your years of operation, what problems (e.g. getting start-up capital, getting loans to finance some aspects your activities, building a client base, hiring employees, finding office space, getting company documents, etc.) have you encountered? AND possible solutions This is question one could write a book on! I will try and briefly give an overview of what I believe to be the most important lessons. The lessons can be divided into two parts, ● general business lessons and, ● technical lessons. In certain respects, the business lessons are not particular to an open source based company but rather more general. One should always ensure that you have contracts in place for any work undertaken and one should set-up internal processes for revenue collection, including setting up processes for collecting bad debt, account payments and customer query resolution. There are tons of open source solutions out there for these problems, so one can actually build their business systems using the very products for which they will sell services to other companies! Besides putting general business systems in place, just as customers are careful in selecting their suppliers, a business should be careful in selecting its customers. Not all customers or potential customers are equal and you need to ensure your limited resources are spent on those leads and customers who are more likely to be with you in the long-term. In many cases, the most demanding customers are also those who are always trying to knock down your fees. It is best to define an exit strategy with these customers which enables one to leave without any break-down in the relationship. When it comes to raising capital, one faces the challenges that any small businesses faces. Typically access to finance, even those aimed at SMEs, is difficult because one needs to find the time and understand the processes behind raising capital. More often than not, you, as the founder of the company, do not have time for this because you are busy with customers carrying out work to bring in money. Ideally, one should start a company with several partners and some money already in the bank so that you can have time to concentrate on the “bigger picture” issues, but for most small or micro companies starting out, you don't have this luxury. Ideally, I think, one should find someone who knows how the process for accessing capital, from government or commercial institutions work to expediate the process. As a company grows so you need to access more resources. There are three options: ● Find partners, ● Use consultants, ● Employ people Partners would be the best to use initially because you share the risk and rewards with them. Structuring partnerships is difficult however because, in most cases, it is about “sweat equity” being put into the business and this can be a subjective measure and when time are tight decining how to split the revenue coming into the business can be a source of tension. I think partnerships work best when there is an already established client base and you are looking to merge with another consultant who has a similarly sized client base and revenue. I.e you are already established somewhat. When it comes to consultants and employees, the main issue is to find people who are competent and reliable because ultimately it is your company that is at risk and not them.This can be a difficult task for a small business as you have to compete with larger corporates. The only advice I can give is to employ good people and learn that its better to act swiftly when you made a wrong decision to employ someone, else you end up carring the extra work and cost yourself. Q3. Looking at other companies (in and outside your country) who may be offering similar services as you do, what would you say works well for your company? Our advantage over other companies is the breadth of services we provide and our knowledge about niche applications and solutions such as Asterisk PBX. Q4. What is your advise for someone building business around open source software in Africa in general, and your country in particular? The biggest challenge in Africa is the shortage of skills in IT in general and open source in particular. In addition there is the need to inform the public and business about open source and its solutions. |
| Section 2: Revenue generation | Q5. Which services (e.g. training, marketing, technical support, hosting and software development, consultancy, etc.) is your company offering We build our service offering on our general linux admin and application development skills. ● Web Hosting, ● Firewalls, ● Mail Servers, ● Asterisk IP-PBX, ● Bespoke application development in Java and PHP Q6. Which of the services in Q5 is generating more income for your company? The best approach is to get a balance between annuity income services, such as hosting and support contracts and once off work such as bespoke system development. Currently we are shifting away from one-off project fees to more SLA based annuity income. Q7. What is the annual turnover for each of the service sectors? I do not wish to disclose this information Q8. What are some of the difficulties, if any, you face in getting paid for the services you offer? This question relates to general business praticse and to open source in particular. In general, one should minimise one risk when taking on a new client by getting them to sign contracts and some form of deposit up front. The risk in dealing with customer you already know is much less! You need to develop a “6th sense” when dealing with new customers as to whether you think it is a good idea to go into business with them. If you can afford it you can also implement credit checks to vet clients. When it comes to open source, you occasionally get customers that come to you looking for an open source solution who think open source means “free as in free beer”. It is best to avoid these customers. It is easy to identify these customers as they always expect the work to be done for ridicoulsly low fees. |
| Section 3: Service line and FLOSS motivation | Q9. What is the motivation for going into open source as a major business? I think most people who get involved in open source business have a duality to their motivation, which is inherent in open source software. The first is the compelling business value in open source software but there is also the develomental, empowerment side of FLOSS. The difficult trick is to try and keep these two competing tencdencies balanced. Q10. Are you developing new products (software and/or training materials) or customizing existing open source solutions (bespoke software) to fit your customers’ needs? We develop new products and customise existing one. We describe our company as an “open source solutions integrator or development company. Q11. What are some of the strategies you use to market your products and services? Marketing is very important but can be very expensive as well. We make heavy use of search engine opitmisation and online marketing srtategies, such as blogs and social media to get our marketing done. Q12. Who are your most prolific customers and the types of services they request most? We have developed a reputation for our Asterisk, firewall and application development skills. Q13. Are you localizing (translating into local languages) some of your products? Not at this point. Luckily most of the solutions already have great international support. Q14. How would you describe your company, "pure open source company" developing, distributing and providing services around open source software or a “hybrid company” developing, distributing and providing services around both open source software and proprietary software? Our company is more of a “pure open source company”. This may change depending on the need to bring in more revenue and if it looks like some proprietary offering will help us achieve that. Even then, however, this will just be a way to get money to finance the open source activities because this is what we enjoy the most. Q15. What are some of your business plans for the next few years to improve the competitive standing of your company? We need to find more skilled and reliable people and to consolidate our service and product offerings. We have been doing this for the last year. |
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