Bård Farstad is co-founder and CTO at eZ, the software company behind the open source enterprise CMS system eZ Publish. As CTO, he is one of the main software architects behind eZ Publish and he has also written several magazine articles and spoken at numerous conferences about Content Management, Open Source and the online media industry. We spoke with him about his company, open source content management and how it makes money selling an open source product.
FCM: Tell me about your background and your company?
BF: eZ has its roots back to 1999. Unlike most technology companies, it was started with a philosophy on how we wanted to do business. The technology itself arrived as a result of this philosophy if bringing people together to create great technology. We call this the eZ Philosophy, based on the core values of openness, sharing and innovation, where open source is like a catalyst. And it is simple; if people openly work together sharing their information and knowledge, great innovations will occur. If you are able to do this as a company, you have made a great step. And if you can do so as an entire ecosystem of customers and partners you can accomplish anything. This was our starting point, and where we are today is proof of it working.
FCM: How is open source changing content management?
BF: Open Source adds a powerful value proposition to the content management market. First, based on the open innovative development process, including customers and partners, you can create superior software at a significantly lower cost and bring it to market faster. With a lower development cost and distribution model, you are also able to create more value for your customers. Last but not least, open source gives the customers additional freedom and reduced risks.
In an uncertain economic environment, all of this is very important. Open Source CMSs are disruptive challengers to the established providers. For some customers, open source has been perceived as inferior, just because it is free, even though the abilities of the software itself have matched or surpassed the proprietary competitors. But when you have tougher budgets, forcing customers to look for alternatives to a 100,000 Euro license and you have professional companies like eZ backing the software with complete service offerings and guarantees, all at a significantly lower total cost of ownership, we will see a faster adoption of open source in the enterprise. At eZ we have found many enterprise customers this way and we expect to see more in the coming years.
FCM: What are the pros and cons of an open source approach for a potential customer?
BF: The pros are quite clear based on the value proposition mentioned above; superior software, at a lower cost with less risk.
The biggest [knock] with open source has traditionally been that there is no responsible provider. It might work well for small or medium sized companies to use a open source web publishing tool without a company behind it. But when you are talking about major financial institutions or media groups, running mission critical enterprise content management installations, they need to make sure their investment is guaranteed, supported and maintained. This is the core idea of the eZ business model; to bring together the best of both models. We call it enterprise open source; full freedom of open source with total product responsibility.
FCM: How do you make money offering a product for free?
BF: The last sentence of the former [response] is the basis of our business model. We have one software, but two versions; you can either download it for free, then install it, use it, maintain it and invest your own time and risk. Or you can buy eZ Publish Premium, which is the same software functionality, but with guarantees, maintenance and support. So you invest money, but with no time and limited risk. We are experiencing triple-digit growth rates in eZ Publish Premium sales, which has made eZ into a profitable company in 2008.
FCM: You have a lot of media customers and a growing financial services market. What do you think is attracting financial services companies to open source?
BF: Most of our clients within the financial industry, as well as media industry, do not choose eZ because of it being open source, even though that is always a plus. We won these deals in head to head competition with top tier proprietary players, because of a combination of functionality, flexibility and usability; total cost of ownership and fast time to market. Our strongly growing reference base is also helping us in this process, as we have proven our capabilities for these customers.
FCM: What affect if any will a CMIS standard have on your company? In general, what impact will a standard like this have on the industry?
BF: In general, standards are a good thing and eZ Publish is a CMS based on open standards. However, a standard has low value until it is used by a critical mass. In the case of CMIS, we see that as a positive initiative but we are still unsure about how wide the adoption will be. We are waiting a bit to see how it evolves before supporting it.
It's also hard to see if vendors start a standard because of a real need or for PR/marketing purposes. This is also why we prefer waiting. We see, from our side, more of a content exchange standard based on REST/Widgets. We may look into that ourselves if the demand for such concepts continue to grow as is the case now in our ecosystem.
Related Article:
One on One with Content Management's Movers and Shakers [1]
Links:
[1] http://www.fiercecontentmanagement.com/one-on-one#section6