Building a scalable open source business model
Brothers Aleksander and Bård Farstad founded eZ Systems with a strong belief in open source in 1999. At that time, there were no scalable open source business models, so they developed and pioneered their own while developing eZ Publish, an Enterprise Content Management System.
Their vision was: an open code-base, high value on customers, and rapid open innovation. And, their core values were: openness, sharing, and innovation.
As a member of the eZ community and the Community Project Board, I can provide insight into how they started and developed their commercial, open source business model.
An open source company is born
During the first few years, the company operated as a service integrator, providing professional services such as consulting, training, audits, and more. A community was formed, and both the company and community grew.
The market for eZ Publish was expanding to Germany, Denmark, and France. And in 2003, the eZ Publish 3.x release set a milestone, becoming a feature-rich CMS based on a framework. This brought the product into a higher-end market where the partners, customers, and community were based on openness, just like the business model. This made it possible to reach out, through the partners, to other countries to expand our footprint in those markets. Having an open community gave eZ Systems a clear competitive advantage.
In 2007, the first major change in the business model took place. It was clear that providing professional services would not be enough for the business to thrive, and a subscription based model was introduced. From it, eZ Systems gained a more reliable and longer term prediction in terms of income.
In March 2011, eZ Publish 4.5 was split into an enterprise release and a community release; this triggered another major change to the business model. The enterprise product comes with support services and high quality assurance; the community product has a stronger focus on innovation and was an opportunity to open it up to contributions. The code-base was moved to Github and it became far easier for everyone in the community to contribute to the product development and its innovation.
In addition to these releases (enterprise and community), eZ Market was launched (comparable to an App Store). It provides enterprise customers with extra features they can add to the their content management system, thus providing another level of added value to the business model.
Reflections on open source business
When comparing with traditional software, I have to admit open source is also simply more fun. You get energized by the community and have a fun time. But, because we are also serious about business, we decided to make eZ Systems an Enterprise Open Source company.
—Bård Farstad (Founder), 2011
eZ Systems has a unique, vendor-backed open source community. This requires a delicate balance between commercial and open source interests, where the community adds value through contribution to product development, and the company, in turn, invests money back into the community through infrastructure, events, etc.
Governance of this community is established through a Community Project Board with members from both eZ Systems and the community. Its mission is to lead the community and foster innovation. And, of course, to implement the company and community core values: openness, sharing, and innovation.
This community is where the open source business model truly comes to life. Anyone in the community can contribute at their own level and expertise, and they can see the contribution being added to enterprise software—further benefiting them in terms of recognition, career opportunities, and intellectual challenges.
eZ remains committed to the open source paradigm, this is in our DNA!
—Gabriele Viebach (CEO), eZ Summit, February 2013
Published under a Creative Commons Attribution-ShareAlike 3.0 Unported license, originally published on opensource.com.