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Thu 6 Nov 2008 04:00 AM

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Open season for open source software in region

Open source software developers and distributors have always had their work cut out in the Middle East and it's only over the last couple of years that specialists in this field have invested in ramping up their business.

Open source software developers and distributors have always had their work cut out in the Middle East and it's only over the last couple of years that specialists in this field have invested in ramping up their business. Channel Middle East talks to some of the big names in the business and asks why the channel should care about open source?

Only six of the world's 268 governmental open source initiatives originated in the Middle East, which means you are a little bit behind here."

That was the rather damning verdict of open source adoption that Scott McNealy, chairman and co-founder of Sun Microsystems, gave at a recent keynote speech in the UAE.

And Sun should know, because as McNealy also claimed, the vendor is the biggest benefactor of open source software having donated more source code to the open community than any other business.

So, the question of whether open source adoption is as high in the Middle East as it could be, is really null and void. The much more pertinent question to ask is, what should the level of adoption be?

And what should systems integrators and distributors that work with open code do to ensure they drive the adoption rate upwards? Or even, is it in their interests to do so?

Those who are heavily invested in the success of open source here, such as Red Hat or its master distribution partner Opennet, are confident that the market will start migrating in their direction. They could be right.

The exact implications of the global financial crisis on the Middle East might be unknown, but it is certain that 2009 is unlikely to be a year of carefree spending. Business leaders will be looking to tighten belts.

Thus, one advantage that advocates of open source are keen to point out is the relatively low cost of ownership that open source promises its users. This is, of course, a value the channel can manipulate as part of the sales process, whether into greater margins or to soften the blow that heavy costs can inflict on the end-user.

The value proposition of open source is very strong as channel players can look to develop their own unique solutions and offer their skills at a premium.

Also, it must be noted that as Linux adoption in the region is low - and the same can be said for the number of skilled technicians - the value in terms of trained staff and the opportunity to garner extra revenue from knowledge transfer is high.

This also means that systems integrators can develop continued revenue from service contracts as it seems only the very largest enterprises are likely to invest in training their own staff on Linux.

Then there is the potential to provide managed services, an option that enterprise CIOs might well begin considering if they are confronted with budget cuts.

Interestingly, there are also those that suggest open source has a moral place in the market, pointing out that it is a prime opportunity to develop local intellectual property.

Market experts claim there is a worrying lack of intellectual capital emanating from this region - a concern that could be quelled as systems integrators go about developing their own solutions around the likes of Red Hat's operating system or add-ons to Oracle's E-Business Suite.

So, with all of this, and McNealy's comments in mind, it may be the case that open source is the future software choice for SIs and ISVs targeting the region's SME community.

Here is what some of the most influential companies adorning the Middle East open source landscape have to say on the matter. Opennet

Opennet has served as the Middle East agent for Red Hat for the last five years and, if the latter is to be believed, represents "a little bit of Red Hat" due to the heavy investment it has made - both philosophically and in terms of promoting Red Hat's Linux-based operating systems and software in the region.

Opennet naturally remains a vehement cheerleader of open source software's potential.

"In our last financial year we were 100% up on the previous year and I hope the growth continues, but basically that says the uptake is generally heating up," claimed David Allinson, general manager at Opennet.

It must be noted that this growth fails to indicate the exact level of Red Hat adoption that has taken place, although experts say it is likely to be in the single digits.

Still, Opennet is adamant that specialising in Red Hat offers channel partners a great opportunity for revenue generation and that one of its key USPs for SMEs is its low cost.

"People talk about this quite a lot," said Allinson, when asked if the low cost reduces a partner's profitability.

"The model is more of a services one," he explained, pointing out that subscriptions offer partners a chance to garner repeat business.

Allinson says the channel here is opening up to the Linux route, reflected in the fact that it has begun highlighting "committed partners" that will be encouraged to further specialise.

Why does open source software warrant the attention of the Middle East channel at the moment?

We have come to a period in the market where there has been a lot of testing and sampling and we have started to see real uptake.

We have got significant customers in the likes of Emirates Airlines and the RTA.

The technology is proven and now the opportunity is starting.

There is going to be serious pressures on IT budgets and when you have this pressure you look at more cost-effective means and open source is demonstrably that.

What skills and knowledge must a partner have in order to work in the open source field?

Today, they [systems integrators] have business development skills and selling skills. They are ultimately transferable, but what they need is some expertise in the product set.

We are here to support appropriately-qualified candidates to get there. In return for the skills, they will benefit from their ability to sell those skills in the market place.

The business skills are there so it's really about getting themselves submerged in the technology so that they can understand it and implement it. Sun Microsystems

"All markets are increasing their usage of open source considerably at the moment," asserted Gerard McDonnell, software practice manager at Sun Microsystems Middle East.

The financial upheaval affecting businesses around the globe has a lot to do with this, he claims, and this is no less the case in the Middle East.

"Economies of scale are driving enterprises to invest in the skills of IT staff around open source so they can deploy it to good effect and benefit from local skills and no vendor lock-in," said McDonnell.

He is confident that partners would also do well to evaluate open source.

Similar to Linux-touting competitors, Sun says the main plus to open source is the overall cost reduction and widely-quoted view that end-users benefit from a drastically reduced TCO.

But, on top of that, McDonnell claims partners will reap the rewards of a strong value proposition and thus, high margins. Also, according to Sun, open source, including its MySQL application, is highly flexible, meaning partners can tailor it to suit enterprise needs.

And finally, it allows channel players to develop their own intellectual property. "One of the major concerns of Middle East ruling authorities is the lack of local intellectual capital. Open source is a fantastic medium to learn and develop with.

There's a need for local applications developed and supported by local people.

By developing local IP, our channel is investing in a long-term, sustainable source of skills and buy-in from the local stakeholders. This gets the attention of local CEOs and demonstrates a strategic interest," he said.

What skills and knowledge must partners have in order to work in the open source field?

Mostly technical. They need staff that can take a piece of technology into a lab somewhere and learn how to deploy and use it. Motivated and innovative individuals will find this easy to adopt and specialise in.

The next stage will be taking it to market, but no special open source skills are needed for this. The channel needs to clearly understand what is in it for customers and themselves.

What do you think the future holds for the open source market in the Middle East? What will drive its growth?

The current market pressures are driving rapid growth in this space.

The number one value proposition of open source is cost reduction. Our channel partners could initiate the concept of a survey with customers and explain the value proposition. We can help with this. Alpha Data

Alpha Data is a systems integration partner of Opennet and Red Hat that is rather sceptical about the extent to which Linux-based software and operating systems have taken off in this region.

Gigi George, business unit head for value and enterprise computing systems at the company, prefers to take a wait-and-see approach to open source at the moment.

"It represents 5% of our business or even less," admitted George. "The main thing we need to see for us to focus on it more is the customer to start asking for it.

They [Opennet] need to do a lot of the right interaction with the customer and get the right comfort factor for the customer," he said.

George is, however, firmly onboard with the idea that Linux adoption might increase as firms tighten their belts, but says this is much more likely to happen in large enterprises that might have IT staff with the appropriate skills.

"Typically, the reason for adoption is cost. The TCO, when you have a product like Red Hat, remains low compared to proprietary products," argued George.

In fact, he reveals the conventional Red Hat operating system customer is an enterprise organisation because they can dedicate man-hours to Linux accreditation and development.

Distributors aligned to Linux will have to work harder to convince the likes of Alpha Data the services model is the proverbial pot of gold.

"As far as margins or our business is concerned, there isn't much income for us because the requirement is relatively small."

Why does open source software warrant the attention of the Middle East channel at the moment?

As an organisation we are not particularly focused on it at this point. We have not yet seen the uptake of Linux into the enterprise.

But if this financial downturn makes customers look more closely at how much they spend on software we would definitely give more attention to it, but at this point we do not have any clear plans.

What do you think the future holds for the open source market in the Middle East? What will drive its growth?

At the end of the day, we will give the market what it wants because we are an integrator.

So if Red Hat is able to create that requirement in the market we would definitely invest in that direction. We don't see that as being our direct responsibility. Red Hat

Until recently, Linux applications and operating systems developer Red Hat was content to tackle the Middle East through distributor-cum-agent Opennet.

Anuj Kumar, general manager at Red Hat Middle East, says this is changing as it opens a regional headquarters - a move that he claims is an indication of the market's potential.

"Think about it this way," begins Kumar. "If Red Hat is putting in four or five people and they are all expats, it is obviously not going to be cheap for the company.

As a public company, if an employee is not generating US$3m to US$4m [of revenue] per head as a minimum there's no reason to invest. It has to be in the millions for us to be able to move in here."

If Kumar's convictions are accurate, Linux adoption is a warming trend in this region and even gaining traction in the smaller markets. Apparently, it is not difficult to hook channel partners in these countries and, furthermore, partners are Linux-aware and skilled up.

"You would be surprised. We do find some gold nuggets in the channel and they have actually come to us and said, ‘we want to do open source,'" said Kumar. "It means they have qualified it, met the customers and researched how they can buy it and develop it."

Red Hat cannot overstate the message that Linux offers a path to sustainable revenue - a point, it claims, the channel has yet to grasp.

"If a CIO has US$100 to spend, they will spend less than a dollar on the OS, a dollar on hardware, US$25 on applications and the rest on resources.

Partners are only addressing the US$1 and we are giving them access to sell the US$25 of applications and build services."

Why does open source software warrant the attention of the Middle East channel at the moment?

This is the one part of the world that is getting new investments in dollars and if you look at the banking industry we all know it is likely to see consolidation.

That is a huge opportunity that doesn't exist in many other markets and we clearly see that this market, over the next five years, is going to spend huge amounts of money on technology to, not only catch up, but also make new applications.

What skills and knowledge must a Middle East partner have in order to work in the open source field?

One is the awareness of all of the technology that we bring to bear outside of Linux.

I would say that partners are aware, but not fully. Secondly, understanding that the sale of Red Hat is usually long-term because of the subscription. It is not ‘sell and forget'. IBM

IBM is under no illusions that open source has a long way to go in the Middle East before it is firmly established, but the company still says it forms a major part of its mainstream business.

Support, expertise and further services surrounding open source, maintains IBM, are an opportunity that systems integrators neglect at their peril.

"Everybody knows that you will make no money from selling Linux and the licence, but the money is actually in providing the knowledge and the expertise around it, as well as the support," explained Bashar Kilani, head of IBM's Software Group.

For IBM, when it comes to training its staff, and indeed those of channel partners it tutors, Linux education is something that must not be overlooked.

"When we certify an architect we expect them to know how to operate on Linux," commented Kilani.

"Our partners know and understand that working with Linux is really part of their education and it is expected from them to be able to support their customers on that."

Kilani upholds many of the reasons why Linux should be the coding language of choice in the Middle East's IT domain.

"Linux today is a very mature operating system and you can drive performance and mission-critical applications on Linux and that means that you become hardware independent," he continued.

"If you have your application developed on Linux it gives you more flexibility."

Why does open source software warrant the attention of the Middle East channel at the moment?

Because the market today views open source as mainstream, especially on the server side.

It has value for the customer, it has value for the integrator and value for the ISV. It is a market that is only growing and it is very important to make the investment.

What skills and knowledge must a partner have in order to work in the open source field?

Any architect today who doesn't have open source as part of their education experience and resume will not be skilled to play in that market.

This is mainstream today and you need to do it as part of your education to become an architect.

There is a minimum to get certified on Linux - it only takes about two weeks.

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