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How open-source software transformed the business world?

James Huang | 2021.07.23

Eric S. Raymond, one of open-source's founders, said in his seminal work, "Every good work of [open-source] software starts by scratching a developer's personal itch." There's a lot of truth to that. Vital programs such as the Apache web server, MySQL, and Linux began that way and numerous smaller programs did too.

Today, vertical companies focused on narrow interests also embrace open-source methods and software with open arms.

A recent McKinsey & Company report, How software excellence fuels business performance, found, the "biggest differentiator" for top-quartile companies in an industry vertical was "open-source adoption," where they shifted from users to contributors. The report's data shows that top-quartile company adoption of open source has three times the impact on innovation than companies in other quartiles. In other words, successful companies don't just use open-source programs, they actively work on their industry's open-source projects.

This notion still stumps many business leaders. How can contributing actively to something their rivals can use possibly help them in the market? What they don't get, even now, is that as President John F. Kennedy said, "a rising tide lifts all boats." When we share our resources, our work, and our expertise in open source, everyone benefits. But the companies which make the best of it are the ones which actively participate in open-source projects. 

Think that's nonsense? How many of you are using Unix today instead of its open-source twin Linux? Look at almost any kind of software and you'll see open source dominates. Look at all the top tech giants, Amazon, Google, Facebook, and, yes even Microsoft, all of them are either built on top of open source or use it extensively.

The Linux Foundation in its latest report, Software-defined vertical industries: Transformation through open source, explained how this has worked. The Foundation has found vertical industries, such as automotive, motion pictures, finance, telecommunications, energy, and public health initiatives have all switched to open-source approaches. 

Savvy enterprises are benefitting from continually upgraded skillsets.

In what's now called "digital transformation," they take the core business models and processes and transform them into open-source software and services. There are many ways to do this: Code, application programming interfaces (API)s, cloud assets, and containers. At the end of the day, though, they all are turning business processes and assets into software-defined services. 

Today, over 70% of the world's mobile phone users are using services built on  Linux Foundation's open-source projects. Altogether, the telecommunication companies' programmers have contributed 78 million lines of source code to LFN projects over the last six years. Using a Constructive Cost Mode (COCOMO) valuation model, those contributions would have required a research and development cost of over $7.3 billion to create using conventional proprietary methods.

You'll find similar stories of competitors coming together to save billions of dollars from public health to energy to financial tech. Yes, these vertical industries are all very different and face unique challenges, but they also share a common thread. As The Linux Foundation put it, "All of them realized that open collaboration presents opportunities reducing costs, time to market, increasing quality, and opening new areas of competition. The ability to achieve these results on a collective basis pushes innovation forward across respective industries."

If you're not using open source in your business yet, you should be. Your business future depends on it. It's no longer just a good idea, it's a necessity in today's ever-changing, ever faster business economy.

How open-source software transformed the business world?
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