Alfresco Continues Open Source Partner Momentum
Alfresco Software, which specializes in open source enterprise content management, says it more than doubled its partner network in 2009. But here’s the really interesting part: Alfresco partners are earning $10 to $15 worth of services for every dollar of Alfresco Enterprise subscriptions sold. Here are the details.
Alfresco spent much of 2009 building a North American network of systems integrators and solutions providers. Roughly 80 companies are now part of that network, generating roughly $250 million worth of Alfresco-related services per year, Alfresco says,
Alfresco’s services revenue mirrors similar statements from Red Hat, which has openly stated that JBoss middleware integrators typically earn more than $10 in services fees for every dollar in JBoss-related sales they generate. No surprise, both Alfresco and Red Hat had prominent positions in The VAR Guy’s 2009 Open Source 50 report — which tracks the open source industry’s most popular partner programs. (The 2010 survey is ongoing now.)
Still, The VAR Guy needs to provide a reality check: For the most part, open source partner programs remain a work in progress. , Initiatives like the Open Source Channel Alliance (led by Synnex and Red Hat) and Tech Data‘s Open Tech strive to educate resellers about open source partner opportunities — but many traditional resellers lack application-level expertise and haven’t taken the open source plunge just yet.
Even so, Alfreco’s partner program shows particular promise. The company says additional milestones include:
- The expansion of the Alfresco partner program for original equipment manufacturers (OEM), with the addition of more than 20 OEM partners in 2009;
- Launch of Alfresco’s Partner Solution Showcase, an online content application resource that enables partners to promote solutions built with Alfresco; and,
- The expansion of its North and South American partner program for system integrators (SI).
- A relationship with RightScale, which could help partners to more easily deploy Alfresco in the cloud.
True believers include Acquity Group, which has won several Fortune 500 engagements involving Alfresco’s softeware; Micro Strategies Inc., which develops Alfresco-to-Oracle software integrations; and Clazics, a training partner that helped Alfresco to lift its North American training revenue 71 percent in 2009 vs. 2008.
Will more partners jump on the Alfresco bandwagon? Let’s be careful of the hype. When it comes to open source, many VARs have yet to push beyond Linux…
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The true first year cost of Alfresco is 10 to 15X the software subscription price?
IT Buyer: The VAR Guy thinks you may have slightly twisted the stats…. A few thoughts…
1. An integrator could be involved with an Alfresco customer engagement ongoing. So is the integration fee all rolled into a single year? That likely depends from one customer to the next.
2. The VAR Guy pays pennies on the dollar for his open source platforms. But our resident blogger pays a healthy premium to developers who customize the code into a true solution. So, in the open source world, it’s hardly surprising that the bulk of the cost involves customization rather than acquiring software.
Still, you raise an interesting point. The VAR Guy should take some time to put some actual dollar cost estimates to the Alfresco integration fees. Thanks for posting the comment. Our resident blogger appreciates you raising the question.
-TVG
Point taken. The scope and timeline of integration varies by customer and the integration investment might span more than a year. Waiting for more than a year for a packaged ECM to go live, even with customization, may not be a good thing from a buyer’s perspective, however.
My understanding of the rule of thumb for commercial OSS solutions is that they offer up to 90% savings on year one (subscription vs. proprietary license) and up to 40-50% savings in the subsequent years (subscription vs. maintenance). The average savings for all years might be in the neighborhood of 30%.
The following figures are illustrative and not meant to reflect accurate ECM pricing:
– Say the total license/maintenance price tag (all years) of a proprietary ECM system is $1,000,000 and the total subscription price tag (all years) of the OSS alternative is $300,000. (customer realizes the 30% savings referenced above)
– Now let’s say that the services price tag is the same. (I suppose the price of services would be influenced by the available supply of experienced integrators, but let’s assume services cost the same for proprietary and OSS offerings.)
– Using the 10-15X services:subscription ratio, the services price would be somewhere in the neighborhood of $3,000,000.
– The overall price tag (services + subscription) of the OSS solution would be $3,300,000 and the overall price tag (services + license/maintenance) of the proprietary solution would be $4,000,000.
-In this scenario, the OSS solution would offer roughly 20% savings over the proprietary solution.
To be clear: 30% of the cost of proprietary offering – or 70% savings.
IT Buyer: Thanks for the math. The VAR Guy is double-checking your numbers but ultimately understands the logic… in theory, partners can generate more services dollars because customer budgets don’t get consumed (entirely…) by software.
Again, just an over-simplification from The VAR Guy. But that’s what bloggers (including anonymous ones…) tend to do.
-TVG
Thanks TVG. The point is that Alfresco should be careful about pushing those numbers.
If the numbers are accurate, then Alfresco is only marginally less expensive than proprietary offerings.