Ann Schlemmer, CEO at Percona.
The International Monetary Fund has raised concerns about the global economy, citing extremely low levels of growth. According to the April 2023 World Economic Outlook report, baseline growth is projected to be 2.8% in 2023, followed by 3% in 2024. Advanced economies, in particular, are expected to experience meager growth at just 1.3% in 2023. This challenging economic landscape is compounded by persistently high inflation, which is not anticipated to decrease before 2025. As a result, it is evident that difficult times lie ahead.
Under such circumstances, companies are seeking ways to reduce costs and enhance profitability. Traditionally, the IT sector benefits from such situations, as businesses leverage new technologies to trim expenses or explore innovative approaches to expand their market presence. Tech companies often invest heavily in research and development as well as hiring to gain a competitive edge.
However, the current scenario is different. The technology sector has witnessed significant layoffs. Crunchbase estimates indicate that more than 154,000 positions in the U.S. tech sector were lost in 2023 as of writing. Additionally, funding for technology startups plummeted by 53% year over year, dropping from $162 billion in Q1 2022 to $76 billion in Q1 2023. This overall reduction in talent, resources and funding will have an impact on the market as a whole.
So, what does this mean for companies grappling with innovation challenges? I’m the CEO of an open-source database software, support and services company, and over the past decade, I have seen companies use open source to get started and go from startups to multi-billion dollar enterprises. They used open source to innovate at lower cost compared to the overheads that come with with more traditional software licenses.
The Opportunity For Open Source
Enabling companies to cut costs and still innovate is vital during challenging times. I think open source software holds the key. According to OpenLogic’s 2023 State of Open Source Survey, nearly 77% of organizations increased their use of open source software compared to the previous year. Red Hat’s 2022 State of Enterprise Open Source report revealed that 80% of companies anticipate expanding their utilization of enterprise software for emerging technologies in the next two years.
One primary reason companies turn to open source is cost. In my conversations with customers, I have found that the allure of free software is powerful. However, cost should not be the sole factor guiding decision-making, as selecting the wrong solution can lead to higher expenses in the long run. When working with open source, think free as in freedom, not free as in cost.
The value of open source lies in its ability to demonstrate that you have the right tools to address specific problems. Developers overwhelmingly gravitate towards open source software because it allows them to evaluate projects and gauge the strength of the associated community. What kind of support is offered, and how large is the community of skilled developers? Does the software provide robust documentation? Are there complementary tools available to address potential issues or facilitate successful integration?
Providing Stability
Amid the current economic environment, adopting open source software is a logical choice. The flexibility to build without significant upfront costs provides a distinct advantage. Once these projects demonstrate success, companies seek to scale up. This is when additional support for production deployments becomes necessary.
Open source software empowers companies to develop, test and deploy services, thereby substantiating market demand and economic viability. Furthermore, it reduces costs for essential elements like databases within these services. By leveraging open source, companies can accelerate their progress and focus on innovation rather than being burdened by initial expenses.
However, open source is not perfect. Projects are designed for the community, so you may need help to get started or pick the right approach. Making the right decision here is about more than technology itself. Any decision you make can have an impact over years, even decades.
To solve this problem, adopt a long-term mindset and think about scale early. For example, we have worked with a major search and online service provider around their database performance for a decade; this involves both technical and business decisions, but it has proven to be a strong relationship over time.
Alongside this, you have to consider the availability of skills in the market. In the database space, for example, there are thousands of professionals with skills around SQL, but other options may have less people available.
How Companies Can Support The Open Source Community
In today’s economy, the open source community requires greater support. Some individuals who have been laid off by technology companies were active contributors to open source projects, while others have curtailed their contributions. This may impede the pace of innovation in the broader open source ecosystem. In response, companies like Bloomberg have aligned their corporate social responsibility programs with their technology needs by establishing contributor funds that directly invest in vital open source projects like Curl, which often rely on small teams of contributors.
While direct funding is always welcome, there are other ways to help. For example, documentation is a perennial issue. Keeping user guides and manuals up to date is an ongoing effort that can be overlooked. This is a great opportunity for those who are not coders themselves to support and manage the community.
For businesses, establishing an open source program office (OSPO) can make contributions easier. Rather than relying on individual developers, an OSPO manages a company’s contributions and support around open source in a more directed way. This acts as a force multiplier for company efforts and makes those contributions more effective, benefiting both the community as a whole and the company.
During a period of heightened economic hardship in the technology sector, the need for speed and innovation is paramount. The age-old adage of doing more with less has never been more relevant. Open source stands to gain significant opportunities, but the communities involved also require sustained assistance and support. Given the grim growth predictions for the coming years, open source can help everyone achieve their objectives.
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