Carefully Structure Product Offerings
I have been a student of the open source business model for the past year. I came out of the traditional enterprise software world which made money by charging upfront license fees and service contracts. Of course, open source is very different.

I spent a significant amount of time talking to more than 20 open source CEOs to find out how their companies worked. No exact "model" for open source success emerged, but all strategies involved carefully structuring product offerings to match what the customer would perceive as delivering value.

In order to be considered "open source," a fully-functional, open source release - including the source code - must be available for download free of charge. This facilitates customer evaluation and, for companies with internal IT skills, the ability to obtain a base ERP platform which can be evolved internally to meet the individual needs of the company.

On top of the free version, our analysis led us to determine that we could offer three different value-added support subscriptions for Compiere. This enables customers to engage at one of three levels on an annual subscription basis, depending on the level of service desired. Matching the various product offerings to the market is critical in order to build a profitable business.

Compiere is in a unique position because we own all of the intellectual property used in the product. This gives us the flexibility to offer an open source license or a standard commercial license, depending on the customer's preference.

Capitalize on Innovation
Compiere is more than an open source company. We are an innovative ERP and business solution provider. Our software utilizes a powerful model-based application platform. This enables Compiere to define all of the business logic of the application in a data dictionary. The platform allows customers to modify, extend or build on top of our system by simply specifying the business logic in our dictionary. It is rapid, productive, and results in higher-quality applications.

In general, smaller businesses lack the skill or desire to tailor a particular system internally. These companies like the idea that they can customize apps but don't need to do it themselves. Generally, this type of firm turns to a business partner for customization. On the other hand, large companies like the flexibility because they do have staff capable of performing customization and the unique flexibility of Compiere gives their business a competitive advantage.

As a result, Compiere delivers more than just open source ERP software. We offer a solution that gives customers unprecedented adaptability, rapid deployment and low cost of ownership which is backed by a stable vendor and a global business partner network.

Embrace Partnerships
One of the advantages of open source software is that it opens new avenues of collaboration and partnerships. When the product was still a "project," the founding team did not need to do outreach to find partners. Partners found Compiere.

Unlike some open source applications, ERP products can be fairly complex and often require some level of assistance to implement. Compiere Partners were key to helping customers succeed with Compiere by adding needed capabilities such as language packs, support for local tax laws and implementation assistance.

Partners remain critical to Compiere's success. Compiere has a large variety of partners and supports their differing business models. Some partners function as traditional systems integrators, while others are complete VARs. We also have partners that OEM the product and build vertical solutions on top of it.

Our current focus is on expanding the number of partners with broader geographic presence to meet the demands of our larger global customers. We've found that when Compiere was more of a project than a company, the large SIs weren't interested. Now that we've become a viable commercial entity, we anticipate that we'll be able to move up the ladder in terms of the volume and capability-level of partners we attract.

Optimize Communication
The nature of open source and the ease at which customers can evaluate applications does not necessitate a large sales force, but it does require easy access to information about your solution. As a result, all open source marketing and selling efforts start with the Web. The Web site must be very good at articulating the value of the offerings because it will always be the primary means of communication with customers - and potential customers.

I was surprised by the degree to which customers manage their own open source sales cycles. No sales team flies out to run a two-week demo. Instead, customers download the product and a set of demo data and drive their own evaluations (sometimes with the assistance of a partner). For this model to succeed, we need to provide as much information as possible to help customers embrace our product.

In this model, Compiere succeeds and profits by maximizing innovation and minimizing cost of sales. Customers benefit from an economical solution, with free source code and without vendor or implementation partner lock-in.

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