- Marty Heyman
Oracle Lays off Mission Control Team after Open Sourcing Product
Last week, Slashdot carried a story about Oracle Open Sourcing a product line as an opportunity to let the developers go.
THIS IS A STORY-LINE WE HAVE BEEN WATCHING FOR YEARS.
Commercial software companies develop products to fill a void or improve on an existing offering. They take it to market and price it to quickly recover their development expenses and make a (hopefully big) profit. The market takes it up in a familiar adoption curve … but that curve has a peak. As product adoption declines new license revenues decline and the profit contribution tails off. Eventually, the product’s contributions fall below the MBA green-eyeshade tests and staff is reassigned or let go.
The cycle is not usually as clearly signaled as in the story referenced at the start of this blog post. The big commercial developers are financially structured to be highly dependent on the high-margin (ultra-profitable) licensing fees from new products and new enhanced releases of existing ones. The revenues from Technical Support don’t cover their costs of basic sustaining engineering and technical support. Their cost of doing business makes that too high.
So when license revenues tail off, the staff is given other stuff to do and the software ages. It gets less and less attention and that’s fine as long as the users are happy. There is a lot of that kind of software around in Oracle, Microsoft, CA, SAP, and their friends.
This is like the Open Source dead-project situation. We have too many important packages with no active developers and no project owner any more. Unlike the commercial products, nobody is being billed for license fees for them.
The code-base Oracle is “contributing to” (dumping on) the Open Source community will likely have and/or get contributors. But the team members who have been laid off may or may not be among them. And their loss means a significant loss in “institutional memory” about the code.
A CIO’s strategic staff should be constantly reviewing their portfolio of commercial software looking for those products most likely to be decommissioned like this. It could mean months, years, or permanent loss of technical support for key enterprise infrastructure.
The emergence of professional technical support offerings for Open Source, like Symas’s support for OpenLDAP, offers an alternative. Symas and similar technical support firms are structured to thrive on the modest income each contract offers. From that, sustaining engineering and professional technical support can be provided, year on year.
We think that is a more sustainable model, overall, for the future.
Marty Heyman | COO