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Open Source Software Business in Finland

- Results of the National Survey 2008

Nina HelanderMikko RönkköMikko Puhakka

OpenMind 2008

These slides are available online at http://www.sbl.tkk.fi/oskari/Publications.html

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Research interests

1. To provide an estimate of the degree of use of open source software in the software industry

• Understanding the patterns of adoption

• Defining the determinants of adoption

2. To provide an estimate of how common and what kind of open source business models exist in the industry

• How is money made

• What is the relationship with community (if one exists)

Different OSS user types

OSSAPPLICATION

UTILIZERS

OSSAS TOOLS

IN R&D

OSSCOMPONENTINTEGRATION

LAUNCHINGNEW

COMMUNITIESOTHERPUBLIC/PRIVATE

INFLUENCE

SOCIOLOGY

TECHNOLOGY

OSS CONTRIBUTION INCREASES

ACTIVEPARTICIPATION

& MANAGEMENTOF OSS

COMMUNITIES

COMPLEXITY OF THE OSS MANAGEMENT FRAMEWORK INCREASES

BUSINESS

LAW

Source: OSSI Research Project 2006

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Research process

National Software Industry Survey• A survey of all Finnish software

product firms and a large part of service firms

• Mailed to 3 639 firms in April 2008, 660 respondents

Follow-up study on firms that are involved in open source

• A survey of the firms that indicated involvement with open source software

• Mailed to 430 firms

Statistical analyses

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More information about the National Software Industry Survey can be found online at http://www.sbl.tkk.fi/oskari/

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Examples of survey questions

Main survey• Five questions concerning the

user of open source software and relationship to developer communities

Follow-up survey• In-house use of open source

software• Adoption of open source

software• Open source software as a

part of offering• Relationship to developer

communities

Industry characteristics

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The amount of companies represents 88 % of the total revenues of the whole software industry

The average age of the companies was 9 years

Location: the industry is very concentrated● Capital area: 54% of the companies, 79%

of big companies (revenue of SW product business > 3 M €)

Profitability: average 10,4% (5,6%)● In 27% of the companies over 15% (22%)● 12% of the responded companies were

unprofitable (17 %)Size: most companies are small or medium-sized

● 71 % of the companies: revenue of own SW product business less than 300 000 €

● Total revenue/total personnel 110 000 € (110 000 €)

● 45% had less than 5 employees (41%)

Responding companies size distribution according to revenue from software product business

67%

15%

8%

5%5%

0-<0.3M€0.3-<1M€1-<3M€

3-<10M€10M€-

N=545

Revenue from Software Product Business

Demographics of the sample7

Revenue of SW product business grew by 8,6% and was 1,52 billion

International revenue grew by 12%* and was 45% of total revenues of the industry

The value of domestic business increased by 5%*

050

01,

000

1,50

0R

eve

nue

(M

ilj. €

)

2000 2001 2002 2003 2004 2005 2006 2007

Domestic and International RevenuesIndustry Level Revenues 2000-2007

Domestic International

* Extrapolated to match industry total amount

Development of the Finnish software product industry 2000-2007

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Results from open sourceanalyses

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Some empirical highlights

• 75% of responding firms use open source software

• Firms that have open source components in their offering rated themselves more innovative

• There is no statistically significant difference between different size classes

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Empirical insights, continued

• A bit less than half have some open source components in the offering• Has previously been at around 20%

in this survey

• Building and maintaining solutions based on open source components the most common business model

• Open source product businesses are uncommon

• Again, open source is evenly used in smaller and larger firms

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Conclusions

• Open Source systems and applications seem to be main stream currently

• 75% of firms have some open source activities

• Up from approx. 13% in year 2000

• Businesses that are based on open source, although growing, are still minority

• However, depends largely on how one defines open source business

• Open Source firms are mainly project houses

• Some fast growth and high profit firms

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Sponsors and partners ofNational Software Industry Survey

In addition to financing partners above, the following parties provided their expertise:

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Thank you for your attention!

Questions, comments, please!

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