Zinnov-Penetration OSS Enterprise US Market

8/6/2019 Zinnov-Penetration OSS Enterprise US Market

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1

AGENDA

Focus of Discussion

• Evolution of Open Source Software (OSS)

• OSS Market Analysis

• OSS Penetration in Enterprise Market (sample)

• Key Drivers for OSS

• Open Source Enterprise product catalogue

• Major players in enterprise OSS integration (sample)

• Going forward - Open source revolution

• Zinnov Research



2

Open Source revolution began in Early 90’s with the landmark release of

Linux

1960’s2000 andBey

1970’s 1980’s 1990’sond

• AT&T announcesplans tocommercializeUnix

• Decision to re-write

Unix in the Cprogramminglanguage.

• Linus Torvaldsproduced a freeoperating systemkernel called Linux.

• Netscape announces

plans to make thesource code forCommunicator free onthe Internet

• Term "Open Source"is coined in Palo Alto,CA.

• Eight core contributorsformed the foundationof the original ApacheGroup

• PHP which wasoriginally designed as

a small set of Perlscripts, followed by arewritten set of CGIbinaries written in C.

• MIT, AT&T Bell Labs,and GE worked onan experimentaloperating systemcalled Multics

• ARPANET founded.The precursor to theInternet, it allowsresearchers to sharecode andinformation.

• Bell Labs, writes the

first version of Unix

• Free SoftwareFoundation wasestablished at MIT

• FST established theidea of "copyleft" and

the General PublicLicense (GPL)• Minix, a version of

Unix with Source codewas released

• Industry group calledX/Open was formed to

standardize Unixsystems.

• First company toprovide customengineering andsupport services for

free software i.e.Cygnus

• Linus Torvaldsreleases the highlyanticipated 2.4 Linuxkernel.

• Red Hat officially

announces its entryinto the enterprise withthe "Enterprise-ReadyLinux“

• Sun Microsystemsalso released an opensource version of

Solaris, called“OpenSolaris”

Source: Webopedia, Literature search



3

Open source is moving up the stack, and much more quickly than many

could have predicted Phase IV

Development &Commercialization

Products & Supportservices

Adapting to Marketorganized approach

Source: Zinnov Analysis, Literature search

• Term "Open Source" is coinedin Palo Alto, CA.

• Red Hat distributes Linux• Eight core contributors formedthe foundation of the originalApache Group in 1995

• PHP which was originallydesigned as a small set of Perlscripts, followed by a rewritten

set of CGI binaries written inC.

• Open source companies willsoon get the chance toprove just how mainstreamtheir software have become.

• Companies will soon targetthe top of the applicationstack, CRM and ERP.

• Industrial-grade applicationsin areas of ERP, CRM arenow emerging E.g.Compiere

• Complete end to end, costeffective IT solutions based

on Open source products• SME’s and Governmentswill adopt open source tolower TCO

• More services organizationsproviding mainstream opensource Products, support &consulting will beencouraged.

• Companies explore

service based revenuemodel

• Open source companiesconsidered an ecosystemby Venture capitalists.

• Enterprise ready productsbacked by strong support

• Services companies totest and certify opensource stacks

• Suite of ready to useEnterprise products tocompete with proprietary

software i.e. SugarCRM

Research & CommunityInitiatives

Phase II

Phase III

Going Forward - Open

source won't be about thesoftware at all--it will beabout the packaging &services

Phase I

• Free Software Foundationwas established at MIT

• Linus Torvalds produced afree operating system kernel

called Linux.



4

AGENDA

Focus of Discussion








• Zinnov Research



5

Market Overview

Open Source software market is growing fast with leading market share in application servers. In operatingserver domain OSS have secured a good second position and is growing to exceed $35 billion by 2008.

Highlights: Open Source Software Market

•Open Source accounts for close to 10% of market share in RDBMS.Together MySQL and Firebrand has a market share of 80%, with almostequal share. Moreover It is estimated that open source database marketwill grow from present USD 300 million to USD 1billion by the end of 2008.

•Linux based operating servers boast of 30% market share, second onlyto Windows. Within, Linux Red Hat is the clear leader with close to 50%market share. According to IDC forecasts Linux is supposed to be thefastest growing operating server.

•At 67% market share Apache is the numero-uno in web server domainwith second being Microsoft at distant 20%

•Absence of license fees in open source makes it multiple times cheaperthen proprietary counterparts. A good example is open source applicationservers, which are 2.5 times cheaper than their proprietary counterparts.

Open source softwaredemands only aninvestment in humancapital, a cost thatcan be controlled bythe organization itselfrather than a third

party.

Source: Evans Data survey, Literature survey



6

The biggest surprise in open source database market is that Firebird has

nearly tied with MySQL in number of installations

Oracle, 41.3

IBM, 30.6

Microsoft,13.4

NCR, 3.1

OpenSource &

Others, 8.5

Sybase, 3.1

Market Share of RDBMS in 2005Percentage

39

38.7

11

3.62.54.3

0.9

Open Source RDBMS Market SharePercentage

SAP DBGNU SQL

Berkeley DB

PostgresSQL

Firebird

MySQL

Other

Market share

The open-source

database marketalone was $300million last yearand is expected toreach $1 billion by

2008- Forrester

Source: Evans Data survey, Literature survey



7

Linux is forecasted to be the fastest growing server operating system

environment

Source: Netcraft Survey

Apache,

67.11

Microsoft

, 20.61

Sun, 2.5Zeus,

0.75

Percentage Market share of Web Server in 2005

Windows

, 51.5

Linux,29.6

Solaris,

7.2 BSD, 6.3 Other

Unix, 2.5

Non unix,

2.9

Percentage Market share of Operating Systems

Comments

• IDC predicts the overall market revenue for desktops,servers, and packaged software running on Linux willexceed $35 billion by 2008.

• Linux is forecasted to be the fastest growing serveroperating system environment, and the overall Linuxsolution stack is growing at a commensurate rate.

• Apache now powers more than 50 million sites andcontinues to maintain a large lead in both active sitesand hostnames.

RedHat,

49.7

Cobalt,

20.3 Debian,

15.9 SuSE,

11.8

Mandrake , 1.3 Gentoo,1

Percentage Market share of Linux Operating Systems



Total Cost of Ownership (TCO) is 2.5 times lesser than proprietary

software for application servers Illustrative

0

100000

200000

300000

400000

500000

600000

700000

800000

Intial First Second Third Total

Software Licenses Hardware Support Development Professional Services

Training Testing Operations Staffing Maintenance Contracts

0

100000

200000

300000

400000

500000

600000

700000

800000

Intial First Second Third Total

TCO for J‘Boss Application Server TCO for alternate Proprietary Software

7625041200

11115049100 277700

296250

99200

176150

104100 675700

Source Literature search, Zinnov Analysis, J‘Boss TCO Calculator



AGENDA

Focus of Discussion








• Zinnov Research



Angel investors and VC firms have increasingly shown interest in open

source companies

C A G R

1 0 7 %

24

70

145

2003 2004 2005

6

12

18

2003 2004 2005

* Open source Business conference

Source: Zinnov Analysis, Literature search

Number of companies Funded

Total Investment in Million Dollars

• Venture capitalists have pumped nearly $400 millioninto 50 open-source companies.

• Funding has been in all software offerings i.e. broadbusiness applications like business intelligenceprograms to very specialized applications, like runninga hospital's computer systems.

• Three open source start-up companies were selectedas "Ones to Watch“ by OSBC* i.e. Splunk,

Project.Net, rPath.• The leading venture capital companies showinginterest in open source are North Bridge VenturePartners, Accel Partners, Matrix Partners, Mayfield,Kleiner Perkins Caufield & Byers.

Open Source – Investors Ecosystem

"As young companies, they arealready gaining tremendous marketmomentum – setting new precedentsand capturing customer attention withtheir innovations. We look forward to

watching them grow and mature overthe coming year."- Bryce Roberts, OSBC

C A G R

5 0 %



Banks are increasingly exploring opportunities to use Open Source

software

• Company• Head Quarters• FTE’s

• Revenues• Other Information

Background and Business Description

• Operating System – Linux

•Web server – Apache

• Scripting tool – Perl• Development Tool – Eclipse Foundation's development environment• Application framework - Struts Web application framework• Others

– Deployed an open source tool, the tcl scripting language back in 1995 – Apache and a host of Apache-related tools to run the Fidelity.com Websites,

which generate about 30 million daily page views.

Open source Software used

• "We're heavy users of proprietarysoftware, and that won't change,but there are times you need amotor scooter, not a truck" -Charlie Brenner, SVP, FidelityCenter for Applied Technology

Comments

• Fidelity Investments• Boston, MA• 36500

• $10,470 MM• Fidelity Investments Institutional Services Company

(FIIS) distributes products and programs throughbanks, insurance companies, securities brokers,financial planners, and other financial servicesproviders.

• Total Internet development spend is $350 million

• Fidelity has more than a dozenopen source packages inproduction and is willing to

evaluate open source options inalmost any application.• Created a policy and governance

structure that gives open sourceand proprietary products equalconsideration in buying decisions

• Looking at open-source database

management systems andassessing what applicationsmight make sense

Future Plans

Source: Zinnov Analysis, Company website, Literature Search, general web search





AGENDA

Focus of Discussion








• Zinnov Research



OSS due to its inherent advantages fosters competition amongst vendors

and propels growth

Greateradoption &migration to

OSS

Cost Advantages

• Lower TCO for the customers.• Most open source software is

copyright, but released under licences

which allow free re-distribution.

Simple Legal\IP Laws

• More service companies providingcompliance and license managementservices around open sourcesoftware.

• Evolving economic principles are

proving that legal fear is largelyunfounded.

Illustrative

Anti lock-in

• Open source licences are not anti-commercial, they are anti lock-in.

• At no stage do open source licencespreclude the commercial exploitation ofthe software.

Open Source Education

• Efforts to educate more user

communities globally on theproducts, technology etc.• Community workshops to improve

support, maintenance and upgradation.

By 2008, 95 percent of Global2000 organizations will haveformal open-source

acquisition and managementstrategies.* - Robert Igou,Gartner

“Open source software is creatingnew market opportunities and newcompanies are springing up to takeadvantage of these opportunities”

- Kim Polese, CEO, SpikeSource

Reliability and Security

• Test results have proved that OpenSource Software has the potential tobe more secure than its closedsource counterparts.

• Open source services companiestesting and certifying the code tomake it enterprise ready.

Source: Zinnov Analysis, Literature Search



AGENDA

Focus of Discussion








• Zinnov Research



OSS has wide range of products to alternate to almost all commercial

software products. Illustrative

Proprietary Software

ERP

CRM

Open Source Software

• SAP

• Oracle Applications• Baan• JD Edwards• Peoplesoft

• Microsoft Dynamics CRM• Siebel CRM• Salesforce.com• SAP• SunGard

• Oracle

• Compiere

• Fisterra• Value• OpenMFG• Open for Business• E/AS: Enterprise

Automation

Software

• Compiere• GNU Enterprise• Sugar CRM• Nola• Facturalux

• Value• Dolibarr• ERP5

• Life

• Facturalux• Linux Kontor• GNU Enterprise

(GNUe)• SQL Ledger• Tudo

• ERP5

Middleware• JBoss Enterprise Middleware System (JEMS)• XmlBlaster• Zope

• IBM• TIBCO• webMethods• Vitria Technology

Source: Source



OSS has wide range of Products & has become a major interest both for

the software industry and for economic theory Illustrative

Proprietary Software

Database

BusinessIntelligence

BusinessProcessManagement

Open Source Software

• Oracle

• IBM• NCR• Sybase• Microsoft

• SAS• Cognos• Business Objects• Informatica

• Oracle• Tibco• Action Technologies

• Berkeley DB

• Cloudscape/Derby• Ingres• MySQL• PostgreSQL• Firebird• Innobase

• SQLBase• MaxDB

• jBPM• Agila• OpenWFE• Bonita• EnhydraShark

• BI one• Pentaho

Source: Source



AGENDA

Focus of Discussion








• Zinnov Research



SpikeSource is one-stop destination for business ready open source

infrastructure

• Establishment• Facilities• Other Information


UpgradeMaintenanceSupportTestingStack

• Enterprise Starter Kit• Spike Stacks• Spike Net• Spike Support

• SAM (SpikeSource Asset Manager), an open-source, cross-platformframework for identifying and reporting locally installed open-sourcecomponents.

Service Features

• Dresdner Kleinwort Wasserstein

Clientele

• SpikeSource leads its closestcompetitor in market awareness

and partner relationships.• The annual fee starts at under

$1,000 and increases to some$25,000 for Gold support.

• Three under lying principles – Supporting open source

development and use; – Vendor neutrality; and – Profitability.

Comments


• 2004• Redwood City, CA• SpikeSource offers three pre-built stacks i.e. LAMP

Stack, Servlet Stack & J2EE stack• Spike Stacks include more than fifty open source

components in six programming languages• Offers wide range of services and clearly geared

towards giving assistance to the community

• Service Partner - CognizantTechnology Solutions

• Technology partner – Intel, JBoss,SugarCRM

• Community Partner - O'ReillyMedia

Partners



Red Hat to launch certification and support services for leading open-

source LAMP and Java stacks

• Establishment• Facilities• FTEs

• Other Information


• Web Application Stack - for simple web sites and applications, and includesthe key LAMP components Apache HTTP Server, MySQL database and thePHP scripting language on top of Red Hat Enterprise Linux

• Java Web Application Stack - for more dynamic web applications andsupports all the components of the Web Application Stack - in other words

LAMP plus PostgreSQL - as well as the Apache Tomcat servlet and JSPContainer.

• Red Hat Enterprise Java Stack - will have all the components of the JavaWeb Application Stack plus support for a full Java application server

Service Features

• To launch certification andsupport services for leading open-source LAMP and Java stacks

beginning in the first quarter of2006.

Comments


• 1993• Raleigh, NC• 1150

• RedHat pure-play open source company pioneered thesupport model

• Stack’s will be certified and supported on Red HatEnterprise Linux and delivered in a subscription model.Pricing will start at $599 per server.

• IBM• Dell• HP• Oracle

• Sun• Fujitsu• Intel• NEC• Hitachi• BEA

Partners

UpgradeMaintenanceSupportTestingStack



Marketplace for Open Source Software support is heating up in the last 2

years

Source: Zinnov Analysis, Literature search, Company website

“Most companies don't

have supermen inhouse. They don'thave the ability to dothis on their own”- Anne ThomasManes, VP BurtonGroup

Covalent currently

supports more than50% of Fortune 500and 70% of Fortune100 companies.

Product StackTest

Tool

Product

SelectionConfiguration Integration Maintainance

Technical

support

Upgradation

services

SpikeSource Open source IT infrastructure(LAMP) X X X X X X X

SourceLabs SASH Stack X X X X X X X

OptarosAdvisory Services, Sourcing

strategies, Integration and supportX X X X X

ActiveGrid LAMP Stack X X X X X

CovalentApache, Tomcat, Jeronimo and Axis

supportX X X X X x X X

Gluecode(IBM)Portal, Database and an application

serverX X X X X X

ObjectWebCorporate Web portal and a content

management applicationX X X X X X

Category

Support

Specialization

Opensource Product Implementation

"In the LAMP stack,the evolutionarypowers make sure thatonly best-ofcomponents survive."-Marten Mickos, CEO,

MySQL



Established professional services firms are raising the stakes and are

expanding their services offerings for open-source components. Illustrative

Professional Services companies

• HP plans to certify, support and jointly sell two of the best-known open-source projects on its

hardware, the MySQL database and JBoss application server• HP issued Linux Reference Architecture software stack, which is based on open-sourcetechnologies

HP

• IBM has committed to evolve the Gluecode Standard Edition platform* & particularly contributeto Apache Geronimo, the open-source Java application server.

• IBM WebSphere Application Server Community Edition is a free lightweight J2EE applicationserver built on Apache Geronimo

IBM

IBM is asserting its support foropen-source initiatives byreleasing somelow-level patents and underscoredits position as a major ITinfluence.

* Gluecode Standard Edition Platform - represents a fully integrated open-source solution stack, from app serverto middleware to management to database

Source : Literature search, Zinnov Analysis



AGENDA

Focus of Discussion








• Zinnov Research



Going Forward

Illustrative

Open source will play a major role in

• Developing countries has the opportunity to escape from technological dependence on

developed countries, but also a challenge to build up local expertise.• The biggest markets in developing countries are particularly China, East Asia, India andSouth America.

Developing

Countries

• Micro financing companies can leverage the advantages of IT by implementing cost effectiveopen source software

Banks

Web Services • As ASP model for web services become more popular, companies would require numerousservers and economical software to support their applications. Open source servers and

software would be an ideal answer to address these issues

Source : Literature search Zinnov Anal sis



Going Forward

Illustrative

Open source comprising 11% of thesoftware market in 2010, up from 3%

today. With the overall marketcontinuing to grow, that translates to700% growth in open sourcerevenues during that time.

Survey of 140 of the largest U.S.companies by Forrester Research

found that 56 percent of them useLinux or open-source software insome part of their operations.Another 19 percent plan to use itsoon.

By 2008, 95 percent of Global 2000organizations will have formal open-

source acquisition and managementstrategies.

Global 2000 IT organizations will use

open-source products in 80% of theirinfrastructure-focused softwareinvestments and 25% of businesssoftware investments by 2010



AGENDA

Focus of Discussion








• Zinnov Research



27

Zinnov – About us

• We are a knowledgeservices and consultingcompany with offices bothin US and in India.

• We help our clients reduce

the time, money and risksinvolved in organizationalinitiatives usingcombination of consultingand knowledge solutionsdelivered by global teams.

Market ResearchCompany Overview Knowledge Services

• Dedicated KnowledgeCenters (DKCs):

We provide dedicated teams thathelp our customers in the areas ofmarket research, competitoranalysis, business research, data

analytics and pre-sales support.DKCs act as an augmentation toour customer teams and providecost effective and high valueservices.

We have provided our research

and consulting solutions to morethan two dozen customers. Today,our client roster included reputedNASDAQ listed companies, smallto medium sized independentsoftware vendors, strategyconsulting firms and other large

enterprises in domains such asBFSI, IT services andInfrastructure management.

• Research services

Customized market studies

Competitive Benchmarking

Data Analytics

Market Intelligence

• Go-To-Market Services:

Help companies enter the Indiamarket by helping them scopeand segment the market,provide on-ground sales and

marketing support to tap into thelocal market.





29

A. Market Research: Zinnov has a very strong Market Research Capability

with expertise across the value chain, specifically in the high end spaceIllustrative

CompetitiveIntelligence

Go- to- MarketStrategy

Analytics

CompetitiveBenchmarkingCustomized

Market StudiesGrowthForecast

IndustryDynamics

Customized Market Studies

CustomizedMarket Studies CustomizedMarket Studies

Z i n n o v

E x p e r i

e n c e

a n d

E x p e r t i s e

• Rich experience withHigh end marketresearch enablingstrategic decisionssuch as go-to-market

strategy

• Excellent primary andsecondary researchcapability

• Excellent pool of

resources with strongcapability to createcustomized reports forclients in any sector

Zinnov’s Differentiators

Level of Complexity



30

B. Financial Analysis: Zinnov has a strong Financial Analysis Capability

which complements both market and business research

• Balance Sheet

• IncomeStatement

• Cash FlowStatement

FinancialStatements

RatioAnalysis

Profitability ratios Turnover ratios

Liquidity ratios Solvency ratios

• Returns - Return onequity; Return onAssets, etc.

• Margins - GrossMargin; Net Margin

• Total Asset turnover

• Fixed asset turnover

• Working capital

turnover• Inventory turnover

• Current ratio

• Quick ratio

• Cash ratio

• Debt to equity

• Debt to total capital

• Interest Coverage• Total Coverage

• Share Price

• Market Valueof Equity

• EnterpriseValue

Market

Valuation

MultipleAnalysis

Trading Multiples

Transaction Multiples

BusinessResearch –CompanyPerformanceEvaluation

Market

Research –CompetitiveBench-marking andIntelligence

Illustrative



31

C. Technical Research: Owing to its rich and diverse experience with

multiple IT R&D companies, Zinnov also has a strong Technical Researchcapability Illustrative

RichExpertise

Research onTechnology

sectors• Rich experience with Technology R&D

companies

• Rich experience with recruitmentoutsourcing for technical (IT)requirement for some of its clients givesZinnov a very good exposure to

researching technical questions

Zinnov’s Differentiators

• Zinnov has the requisite researchexpertise to do IP research

• Zinnov has also written a whitepaper onIP protection environment in India

Zinnov’s Capabilities

Researchingtechnicalquestions

Patent

Searches



32

D. Business Research: Zinnov has a strong Business Research Capability

as well, covering various facets of business

BusinessResearch

FinancialAnalysis

SWOTAnalysis

BusinessStrategy/ Plans

M&AAnalysis

ExecutiveMovement

Era Analysis Projections

Best PracticeAnalysis

Illustrative

Strongcapabilityto doBusinessResearch



33

E. Market Mapping – Competitive Mapping and Benchmarking

Illustrative

Financial Strength and Soundness

Margins - Gross

Margins - Operating

Margins - Net

Returns on Equity

Returns on Assets

Returns on Capital EmployedSolvency ratios - Debt to equity

Solvency ratios - Debt to total capital

Solvency ratios- Interest Coverage

Liquidity ratios - Current Ratio

Liquidity ratios – Quick Ratio

Liquidity ratios - Cash Ratio

Top line - Compounded annual growth rate(CAGR)

Trading Multiples

CompetitiveBenchmarking

Best

Practices

Capability Analysis

Management Team Expertise

Technological CapabilityProducts/ Services

Quality Processes

Market Share

R&D Investment/ Initiatives

Marketing Strategies

Geographical Presence

Years of existence

Personnel

Past successes and failures

Future strategies/ plans

Clientele

Alliances/ Partnerships/ M&A

Enterprise Business Solutions



34

Our clients are benefited by cost and time effective research that Zinnov

offers

Customized MarketIntelligence

Increased focus oncore-competencies for

Client

Competitoranalysis -

customizedresearch &

analysis

Go-to-market

strategy toenter newmarkets

Higher Client Impactat lesser cost



35

Zinnov is proud to maintain 100% client references. Our clients include

reputed consulting firms and industry organizations

Your comprehensive report on ourcompetitors enabled us to make informed

and objective decisions on penetratingglobal markets-SVP, Marketing

Incentive Management Software

Thanks for the quick turnaround of the surveyanalysis. We look forward to your help in

producing similar reports for all our industrysurveys- Executive Director

Industry Organization

The level of details you capture and analyze isgreat.

- VP, OperationsEmployment Screening Company

The quantitative analyzer is one of the mostflexible model I have ever seen. We used itfor analyzing ‘what if’ scenarios in ourmeeting with the client and they loved it!

- Principal

Management Consulting Firm

You help us compete with McKinsey in India- Principal, Management Consulting Firm



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