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Towards Open Systems


January 24, 2011

Doug Hadden, VP Products

There was an interesting tweet moment at the FreeBalance International Steering Committee meeting last week requesting a transcipt of some comments about open systems made by our President and CEO Manuel Pietra.  Manuel’s viewpoint was that developing software using open systems enables FreeBalance (and others) to more easily extend applications. That’s because the nature of software development has changed over the years from very explicit “use cases.” Software was developed with an end in mind. Workflow, rules and reports were developed to meet the articulated need. This methodology is changing to where software components could be reused for purposes beyond the imagination of the software developer. Open systems will become the norm because of this efficiency provided. It breaks the economy of scale advantage that large companies hold in the software industry.

Technology Transition to Open Systems

We are in a transition period from closed to open systems in the software industry. In the closed system era, integration within the product suite was considered paramount. Enterprise software companies competed on the basis of horizontal and vertical functionality.  Economies of scale meant that the largest vendors provided the best extensibility. Proprietary middleware was used to lock customers into the entire “stack”. Open systems were presented as risky because proprietary standards tended to be faster.

The software industry is in a transition period where proprietary systems are opening up. This is often seen as a way to extend proprietary systems by the larger vendors. There is a concerted effort to build out an eco-system of partners who add value to proprietary systems. We believe that this will transition to fully open systems. Software companies will compete on openness and customer processes rather than lock-in.

Transparency Transition to Open Systems

We also appear to be in a transition period in government transparency. Governments have begun to publish information in document or machine readable format rather than relying on access to information requests as the primary method of transparency. The press is becoming “disintermediated” thanks to transparency portals. And, more governments are realizing that publication of government data can act as an economic engine, or, as Tim O’Reilly calls it, “government as platform.”These two trends in open systems an open government are more than coincidental. It is difficult and expensive to create open data from closed systems. That’s why many open government projects run into problems.

Historical Perspective

Software systems have become more open over time. Early computing did not have the luxury of processing and memory that we have today. The environment was closed and applications were closed systems.  Applications were focused on high value elements of business processes. Software has become more open as the software footprint has grown.

1990s to early 2000s saw the rise of Enterprise Resource Planning (ERP) software replacing  previous business systems. These applications covered multiple horizontal and vertical markets (as defined as ERP II by Gartner Group). Instrasuite integration became a competitive differentiator. The “dot com” era saw a boom and bust of e-commerce applications. The key problem in for dot com providers was the need to create the entire transaction infrastructure. This left some winners like eBay and Amazon who were able to achieve the economies of scale.

We are currently in the early days of “cloud computing” and “Web 2.0″ eras. Although there remains some closed systems, the software market is moving rapidly to open systems. This includes the use of open source middleware like MySQL, Linux, Hibernate that enables organizations to develop extensible and robust transaction systems. Middleware has become commoditized.

The Future of Open Systems

Government Resource Planning (GRP), transparency portals and enterprise software are transitioning to open systems. The next era will be characterized by:

  • Component-based Service-Oriented Architectures where applications can be assembled from Object Oriented components from different manufacturers.
  • Machine readable systems where applications will support domain industry standards, XML/Web services as a matter of course rather than explicit interfaces on monolithic architecture (what we call Monolithic Integration Architecture).
  • Deployment options for centralized, de-centralized, shared services, and hosted without compromising functional completeness or system flexibility.


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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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