On Monday, March 23rd, Microsoft hosted its 3rd annual Open Source ISV Forum, co-hosted by SD Forum. The FACCSF was present to listen to industry experts share their predictions and views on open source development:

Open source is a safe bet
The future looks bright for open source – its integration is rapidly progressing in commercial software and applications. In 2006, open source software comprised 13% of a $92.7 billion software market – 27% in 2008.

Internationally, governments prefer open source initiatives because they circumvent expensive licensing agreements, and create a pool of indigenous IT knowledge. The latter serves to develop home-grown engineers that can appropriately determine the direction and character of a country’s development. Indeed, open source’s ability to produce tailored solutions is pushing established economies to adopt the same policy stances as emerging economies.

The same grassroots nature preferred by governments has already taken the innovative sector by storm. Indeed, open source is indispensable for engineers, who select open programs and build upon them. Companies that attempt to control usage from the top may miss out on efficiencies and innovations arising therefrom.

Leaner budgets
Businesses need to cut costs, and they are looking to open source as an answer. The most startling example of proprietary/licensing vs. open source was cited by Michael Doyle of Medsphere. Virginia hospitals have reduced their expenses from 90$ Million on IT spending for one single hospital to 9$ Million for the totality of the state’s public hospitals.

Money matters
With a positive future in store, how are you going to finance your open source business?

Venture funding has consistently gone up, and investors are signalling their interest by following startups at an early stage. Yet, the mood of investors towards open source companies can be described at only “cautiously optimistic.”

“The returns just haven’t been there…” explains one panellist – but the desire still remains. Venture capitalists are setting their bars higher, looking for several key elements that indicate both less risk, and greater potential:

• Strong community presence: the community around the technology must be strong, active, and innovative.

• Clear and compelling monetizing solution

• An iconic leader, who is tapped into the community, and can facilitate the transition.

A warm word of thanks to Microsoft, SDForum, and the colloquium’s wonderful speakers for a fascinating conference. For entrepreneurs, we encourage you to look into the FACCSF’s conference on Alternative Financing Strategies – designed to give Silicon Valley startups the upper-edge in maximizing their funding.

Written by Victor Liang

After nine months of internship and many breathtaking articles in the newsletter, Victor is leaving the FACCSF team for Law School. For his last day, he offers us a final article and a unique chance: seeing him using the photocopier for the first time. Thank you and we wish you the best for the future.