We have been involved in enterprise software for a long time. In that time, we have seen many business models come and go. Some have come and gone very quickly. However, the tried and true model that we have known for so long, the old model of expensive sales force, big ticket sales and a distribution system that convinces customers that they want software, is now dead. The evidence is everywhere as software companies continue to struggle. Except for open source.

When I was an engineer at Ingres, one of the first relational database systems, we used some of the first open source software available. In fact, the Ingres system ran on the first Unix system outside of Bell Labs. US government funding for the Ingres project required that the University of California make the source code freely available except for the cost of production - making a 9-track tape. Ingres was widely distributed to the academic and military community and actually pulled along what would become the Berkeley Software Distribution of the Unix operating system. This was arguably the start of the open source movement.

However, in the early 1980s, this was not considered an effective model for commercial software distribution. The cost of development was extremely high and required license revenue to support it. People could not possibly know that they required a relational database, so they needed a sales force to educate them that they needed it. Technical support required a long chain of people writing things down and tracking issues. In other words, the industry needed a big commercial organization to fulfill unmet demand. These were times when the internet ran on 1200 baud modems, a megabyte of memory cost over $10,000, a 300 Megabyte drive was the size of a washing machine, and amazingly, the right for a single person to use a relational database was over $2000.

That kind of money was addictive to the commercial companies. A 500-seat deal was a major cause for celebration since it was worth a million dollars. Champagne flowed regularly. Larry Ellison's magnificent houses were not built with inherited money. Content management in the early days was similar, but starting at a more modest $500 per seat. Even today, it can be $200 per seat in even big enterprise deals.

The Internet and Moore's law have since intervened. Customers no longer require a sales force to either discover or be convinced that they need any particular software. In fact, they do not like being told that they need software, especially if they are cutting costs elsewhere. Customers do not need a long and complex supply chain to provide them with software when they can download complete solutions themselves from their desk. More importantly, the chain of customer requirements to ultimate creation of software does not require armies of people to record ideas, wants and complaints and to translate them for software developers to turn them into software fixes and releases.

The enterprise software industry must now face the fact that the world has changed. Customers have a choice and they will exercise it. The largest players are protected by the brand that they have developed over the years. The smaller players must adapt or disappear. Customers are just not willing to accept the old model and enterprise content management is no exception. It is inevitable that new forces change the nature of an industry in the midst of technological change, such as easier distribution and cheaper means of production and use.

Harvard Professor Clayton Christensen in his book, The Innovator's Dilemma, noted that mature industries hit a point where functionality is good enough. What customers want is convenience, reliability and low cost. The automobile industry has hit this point, so has the airline industry. The software industry is not immune to this cycle. Open source has become the new means of production and innovation that puts pressure on all, but the largest manufacturers.

Enterprise Content Management has had a good run over the last decade. Usage has grown dramatically, but customers are not willing to spend as much as they had in the past. A recent survey by the Institute for Information Architecture asked what the barriers to adoption to content management were. The survey listed the high cost of commercial software, the flexibility of systems and ease of use. This is a clear indication that the Innovator's Dilemma is in effect.

Open source as a distribution model and an innovation model is the natural evolution of the enterprise software industry. It establishes a very efficient sales, marketing and distribution mechanism that allows customers to discover software that they need for themselves. They can access, try and test the software before they invest in it. They can also establish a much more efficient conversation between users and developers that introduces changes, fixes and innovations in a fraction of the time. There is just no way that the old model can compete.