Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi Consulting Corporation Open Source and XBRL
Written by Brian DeLacey Posted January 23, 2007
Brian DeLacey is the Founder of Interactive Securities. He has worked on mainframes, minicomputers, and PCs since the dawn of the digital era. Mr. DeLacey worked at Lotus Development and IBM for 13 years, and on research involving information technology and the adoption of new technologies at the Harvard Business School for eight years. He can be contacted by email.
How do you make money from something that is free? That could be the key business question of the early 21st century.
Open source software has roots in the establishment of open standards which served as the guiding principles of the early internet. The U.S. Government established the Advanced Research Projects Agency (ARPA) in 1958 and increasingly sponsored information technology research in the 1960s and 1970s. The fundamental work from these programs grew into a widely used platform for shared communication in the 1980s known as the internet. This, of course, provided the communications infrastructure for the phenomenal launch of the World Wide Web in the 1990s. (More history and the anticipated future of open source can be found at the website of NetAction.)
There are numerous legal and practical definitions of what free and/or open source software is. In general, it refers to software that is intellectual property, is available for your use in source code and/or binary form, and requires no advance purchase or payment. There are a number of organizations providing more details and precise definitions on these aspects of open source (there are a multitude of licensing options). Two expert organizations are The Free Software Foundation (FSF) and The Open Source Initiative (OSI).
A recent study from the United Nations University estimated that free and open source software could represent 32% of all IT services in the EU, and 4% of the entire European GDP, by 2010. Open source is thus truly a technological earthquake with aftershocks affecting not only the methodologies and processes developers follow in creating software, but also the business models supporting a customer’s use of software. Harvard Business School Professor Marco Iansiti and co-author Gregory L. Richards recently released a working paper titled The Business of Free Software: Enterprise Incentives, Investment, and Motivation in the Open Source Community. (An interview with the authors is also available online.) This would be an excellent place to begin a detailed search on learning more about the business of free and open source software.
In June 2006, in response to a call for open comment from the SEC, I submitted a letter expressing hope that open source would play a role in the move toward interactive data. Two leading companies recently announced plans to provide their XBRL engines as open source. Rivet Software announced plans to release their XBRL Viewer as open source in early 2007. (Rivet’s software, which is being developed under contract to the SEC, enables investors to view XBRL documents residing on the SEC’s website.) UBmatrix released an open source version of their XBRL processing engine on January 9, 2007.
The same guiding principles which fueled the amazing growth of the internet are now at work in the domain of application and systems software development. In sum, open source represents a fundamental wave of change that’s well worth paying close attention to and becoming actively involved in.