Who really makes money on open source products? How to use open source model not only as distribution channel but for achieving tangible financial results! Open Source business models.

1. Fight between carnival and lent
… and how to become rich on free software
Piotr Karwatka, CoCEO Divante

2. Divante
• eBusiness Software House operating since
2008
• Over 180 people at our office in Wroclaw,
Poland
• Offices in Rotterdam, London, Stockholm
• Clients from Europe, Asia, Africa and US
• Case studies: divante.co/portfolio
Key to success?
• Pragmmatic over egocentric
• Business goals first
• Best tools available

3. Marketing
User
Experience
Technology
• 360 view of Customer
• BigData - Actionable Data
• Omnichannel Customer Experience
• Omnichannel Loyalty
• B2B Omnichannel
• CRM Live Integration
• Customer Database
• Enterprise Serial Bus
• Multichannel Management
• Product Information Management
• Digital Products
• Omnichannel Order Management
We’ve built Divante services with Open Source at it’s core
Marketing
Automation
Customer
Experience
Personali
zation

4. What’s Enterprise Open Source?
- Open Source software is inevitable
- Enterprise Open Source = projects backed by proffesional companies: Magento, Wordpress,
RHEL, MySQL, Android …
- Often along with commercial licences, support and services
- Long ago stopped to be scored as “enthusiast based”, non-professional projects.
- Open Source is great for being used by Enterprises
- fosters standarization / distribution - no vendor lock-in,
- quality - are weable to write better code than contributors like Google, Microsoft …?
- community and support,
- security,
- commercial services, SLA,
- it’s so pragmmatic, developers love it, no marketing fluff,
- Hell has frozen over!
- Even Microsoft open sourced .NET,
ported SQL Server to Linux and
integrated Ubuntu to Windows
The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future by Kevin Kelly)

5. Open Source Business Models
- Dual Licensing - Open Core (ex: Magento)
- what you pay for: some extra features to be in
commercial version,
- notes: how to make Core version good enough?
- Partners (ex: Magento)
- what you pay for: Partners pay for certification
- notes: why to become a partner?
- Consulting services (ex: Red Hat Linux)
- what you pay for: customization, adding new
features, trainings,
- notes: not very scalable,
- SaaS / Enterprise Cloud (ex: Mautic, Heroku,
SugarCRM)
- what you pay for: hosting, SLA, provisioning,
- notes: it’s no longer so open as it should be
- Mixed (ex: Magento)

6. Fight between carnivale and fest
Open Source products rarely are commercial
successes comparing to proprietary equivalents

7. Why Open Source fails?
More: why Open Source fails. CIO Magazine
"If we look at Red Hat's market, 50 percent of potential customers may use Fedora (the free Linux
distribution,) and 50 percent use Red Hat Enterprise Linux (the version which is supported and
maintained by Red Hat on a subscription basis.) So a large part of the potential market is carved off –
why should people pay the 'Red Hat tax'?" Peter Levine, a partner at Andreessen Horowitz.
- Revenue Limits - ex. Magento vs. Demandware
- Uneven playing field - ex. KVM vs. VMware
Why should customer pay for commercial version / features / services?
Partners can canibalize software vendor businnes when original value
offer is too low.

8. Example - Magento
Magento valuation when sold to Permira - along with GSI Commerce unit - was 925M$ (with 1.5% market share)
Demandware valueation when sold to Salesforce was … 2.8B$ (with 25% market share)
- strong Community, very active partner eco-system,
mixed revenue streams
- … but most of revenue are probably NOT from licenses,
- 1.x offers too low value offer Community vs. Enterprise
- only around 25 EE licences sold in 2015
Magento: By Developers for Developers.
Demandware: More Business focused.
Everything depends on how do you define success!

9. VARs (Value Added Resellers) and Agencies!
Who benefits the most in Open Source world?
It’s great to built your service or added value business on top
of Open Source:
- you use standarized / commonly recognized base,
- starting point is low - not have to built product at first,
- you can focus on business value, extending,
- you can achieve better results than software vendor
because your value is more appreciable by business
customers who realy pay
- you can use all Open Source Business model as well.
So why anybody build open source projects?
It always depends on how you define success!
Use your strengths and focus on business value!

10. How to survive as product vendor in Open Source?
At the time they sold MySQL AB to Sun in 2008, 70 percent of the company’s income came from
licenses. “That was the reason that MySQL had a huge valuation,” Widenius said. “We were a product
company and people had to pay for it in certain situations.”
BSL (Business Source License), FAIR.IO, OSE (Open
Source Eventually)
- Idea initialy wasn’t mean for aiming commercial success
but for founding MariaDB foundation
- But it’s really interesting for enterprise products!
- Mixed approach:
- Always Open Source or Open Source from
some point (OSE approach)
- Free to some point (CPUs, accounts …?)
- VBP - Value Based Pricing - ”success share”
- No questions about “Why to pay” with all other benefits
of open software
- Still great for Agencies - there is license fee to share!
More: MySQL founder tries a new software licensing model. Techcrunch.

11. - Open Loyalty is Open Source loyalty program
ready to use out of the box,
- CDB - Central Database and 360deg
view of customer (offline / online)
- POS - application,
- End-customer application,
- If you’re Agency you can use it to implement
omnichannel experience for your
retail/eCommerce customers,
- Licensed using BSL-like license
- always open source
- with Value Based Pricing.
Open Loyalty
We decided to build Enterprise Open Source product to be used by eCommerce / marketing agencies
based on our experienced for large companies like SMYK.COM, ING, ENERGA, PZU, JTT
First case studies underway! Alpha tests for partners are open!

12. „Can you give me your
phone number to get
bonus (..)”
Buying off-line
Mobile App / SMS
Client Sales clerk
How it works?
receipt
order
info
Customer-order matching
phone
number
bonus points alerts recommendations
Customers Database
Promotions Rules
ERP / POS Integration

13. Earning point rules
13

14. Reward campaigns
14

15. Dasboard
15

16. Customer profile
16

17. Levels
17

18. POS Cockpit
18

19. ESB
Open Loyalty is Omnichannel Enabler - Open Sourced, easy and fast to deploy
B2B
B2C
SelfService
Mobile
POS
Amazon
eBay
Rakuten
Allegro
ShopinShop
..
..
..
..
..
Magento 2.0 PimCore
EDI
API
XML
Open Loyalty based on Symfony 3.0
Rapid B2B Rapid B2C Marketplace Multichannel Loyalty Program
CRM
(OroCRM)
BI
(Pentaho)
PIM CMS
OMS POS Mobile
Marketing
Automation
(Mauutic)

20. Win using Open Source with Divante
Discuss how you can win with Open Loyalty
Just grab us your e-mail: pkarwatka@divante.pl

21. Divante UK
286C Chase Road
London, N14 6HF
United Kingdom
(+44) 20 30115154
mblum@divante.co
Divante Sweden
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Divante NL
Divante UK
Divante HQ
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Poland
(+48) 733 355 596
sales@divante.pl
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141-181, 2909 LC
Capelle aan den
IJssel
The Netherlands
(+31) 657 625 006
mpolak@divante.co
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115 20 Stockholm
Sweden
kpodeszwa@divante.co