Open Source Middleware: Reaching an Inflection Point Date:   Wednesday , February 27, 2013 Red Hat, Inc. (NYSE: RHT) is an American multinational software company that provides open-source software products to the enterprise community. Founded in 1993 and headquartered in Raleigh the company has a market cap of $10.42 billion. The last decade saw Linux and open source being synonymous with Red Hat but this is just one half of the story. Today open source has a much larger impact on the customer ecosystem and partner ecosystem than just Linux. There has been a sea of transition and the focus has today shifted away from cost. The transformation of the value transition has gone from just 'cost' to a number of different things. CIOs today are more adamant about open standards, than they were before. They are more demanding of vendors delivering open platforms in open standards. This move to open standards is very visible now. The value proposition that open source brings to the table resonates very closely with customer's view of open standards. Another area of dramatic change is that even though cost is essential, importance is also given to performance. The way software is consumed today is also transitioning and moving away from the traditional proprietary model towards licensing models of subscriptions. In a cloud perspective the move is from a capex model to opex model. In the Indian context people are yet to make the transition to cloud, however in the West the transition has already been made and they have moved out of the legacy. But there are several exceptions and there are some very forward looking Indian CIOs who have played bets and created nimble architectures today. The technology is already there. The question is have you reached that point of mass momentum that will help you drive the technology. Customers are usually stuck in legacy worlds and they need help in terms of growing. The start of the journey to the cloud is the start to the movement to commodity and open source space for the architecture. Open Source Middleware India has a bipolar view of application development where one school of thought believes in buying off the shelf while the other in building their own. In both these cases the industry has traditionally focused on proprietary middleware solutions which are very expensive. The past three years were focused on educating the customers about open source middleware and its potential. Open source middleware has now reached an inflection point where it has crossed the bar in terms of adoption. Customers are adopting it with confidence and we see middle ware as a major force in the upcoming years. Middleware is a notion and there are so many ways in which a middleware suite can be used, making it a major crust for customers in the next few years. The way an application was written some years back is not relevant anymore. Increasing number of customers and ISVs will write their solutions directly for the cloud as opposed to writing for on premise and looking to sell it as a license. This will be an interesting shift in the coming years because the ability to monetize these efforts will be more than the traditional licensing model. A Requisite to Battle Tomorrow's Demands Everybody wants to build successful businesses but numbers convey only one part of the story. Being a horizontal technology organization we build platforms where different applications are delivered irrespective of their vertical. In terms of Indian customer segments where there are pockets of very high awareness and very low awareness, we look at increasing our footprint and being a trusted advisor to our customers in their challenges. The premise for the CIO is to deliver to the next generation architecture that will be based on open standards and go to commodity architectures. Customers want to drive the best performance and have a value based relationship. It is important to have that conversation with the customer and deliver to the promise. The coverage of markets as big as India and China is the biggest challenge. The next wave of growth is slated to happen in the Tier I and Tier II cities and it's a requisite to cover all bases. We have embarked on a set of ecosystem initiatives to collaborate with ecosystem partners since they automatically multiply our sales coverage. Another gaping hole is awareness about the difference between an open source project and an enterprise product. India is surprisingly lagging months behind other Western markets and we make an effort to explain to a customer what open source is. We also focus on driving the point of differentiation between community driven approach to development and consuming a product which is enterprise ready. Like every other company our focus is to attain market share leadership in every part of the market that we operate in. At the end of the day it is the industry and customers who will define the future of the company. (As told to Rachita Sharma)