Linux discovers corporate wins hard to repeat in SME sector

While operating system Linux continues to storm the enterprise market, a similar sweep into the small to medium business sector seems to be proving a tougher point of entry.

Much of Linux's quick rise from geekdom to the corporate market has come from its exposure in the enterprise sector, where it is growing at a phenomenal 28.2 per cent annually, according to analyst IDC, to become a market worth more than $9 billion in four years, according to analyst Gartner.

That kind of growth has been driven by support from some of the biggest names in the information and communication technology (ICT) sector. After initial interest from Intel and IBM in the late 1990s, other big ICT suppliers started to develop Linux market strategies for the enterprise market these days, big names like HP, Dell, Oracle, CA and Novell all push Linux offerings.

And many tech departments, which tend to be small independent fiefdoms within very large organizations, were unofficially running Linux out of sight of their tech-indifferent senior management long before it gained its current profile.

But that's the corporate sector. Small and medium enterprises (SMEs) are a harder market to crack. About 25 per cent of SMEs are running Linux in Ireland, according to a survey last year by IT magazine Computerscope, and that chimes with UK figures among SMEs (26 per cent, according to a UK survey last December).

The market is growing, with about 15 per cent of UK SMEs saying they plan to adopt Linux. But not growing very fast - some 59 per cent said they had no plans to use the open source OS at all.

Similarly, a recent report from analyst Forrester Research noted that although ICT spending is growing at a much faster pace among SMEs than enterprises - 6.6 per cent of SMEs said they planned to increase ICT spending this year, as opposed to a measly 1.7 per cent of enterprises - some 70 per cent of SMEs said they would not be buying Linux.

Speakers at LinuxWorld, a subsection of last week's ICT Expo in the RDS in Dublin, acknowledged that getting a foot in the door of SMEs can be tough.

Interest from Galway area SMEs in Linux and other open source software (OSS) - software developed with source code that is freely available - is "not as high as I thought it would be", says Mr Chris Kearns, of SyberNet OSS Services.

"It's taking a bit of time, because people have invested in Microsoft, and also, there's resistance to change. The fears are common: where do I get support, where do I get training, what if your company folds and isn't there in the morning," he says.

Yet, as several speakers point out, there are actually literally thousands of members of support teams behind OSS solutions because much of the time, a query can simply be put to a discussion group online and an answer - and often a software fix - typically comes back very quickly.

Which is fine if you have technically-capable people handling the IT in a company, but analysts point to an obvious SME problem - very small companies have small IT teams or none at all. When there is an IT person or team, there's often no one with any familiarity with either Linux or other OSS solutions.

Any switch of ICT strategy in a small company tends to be an all or nothing decision, too, so a Linux and OSS solution cannot be trialed as easily. So SMEs for now seem to stick with high-profile, commercial offerings.

That's an attitude that companies like SyberNet, which develops software and offers OSS services, and OpenApp, a Dublin OSS software and services company, hope to change.

At LinuxWorld, OpenApp's Mr Ciaran McCabe explained that the OSS model of "social computing" is becoming increasingly relevant to companies who want to be able "to define their own technical agenda".

OSS offers cost savings because it doesn't operate under the licensing and necessary upgrade regimes that many large commercial vendors use, he said.

But he feels OSS is more responsive to the individual needs of companies, because elements can be added as needed rather than as one bog (and often pricy) package.

This is especially beneficial to SMEs, he says, who often don't need many of the features they pay for within the big licensed packages.

He also says OSS must be more geared towards the needs of users, because its survival is dependent on their enthusiasm and support. "If you can't get anyone to use it and adopt it, it's essentially an academic exercise." The difficulty for companies like OpenApp and SyberNet, however, can be getting that initial foot in the door of either the SME or larger organisations where they'd like to see Linux and OSS solutions compete for government and enterprise contracts - not exactly easy when their small if highly energetic and committed companies have to compete with IBM and Oracle.

That's where OpenIreland comes in, a professional association of users, developers and vendors of OSS set up toward the end of last year.

The group's goal is to make OSS a more visible alternative solution and to accelerate its adoption in both the business and public sector in Ireland.

Nonetheless the challenge seems tough. Post-downturn, more and more of the big ICT companies that formerly targeted the enterprise market alone are moving down the food chain into the SME sector - which may represent smaller contracts, but potentially a lucrative volume of them.

For example, European Linux distributor SUSE was recently acquired by Novell. Novell and SUSE said last week in London that they would be pushing a Linux strategy into the SME market, where Novell already has a profile.

Likewise, Dell and Oracle announced a partnership this week whereby Dell would bundle Oracle's product targeted at SMEs, its Standard Edition One database, with Dell PowerEdge servers running Linux, which are popular in the SME market.

According to one Dell Ireland source, the company is already shipping about 12 per cent of its servers from its Irish plant with Linux installed.

But OSS advocates feel such a growing overall profile for Linux and OSS is beneficial, and will only help them get the open source products and services they can provide into Irish companies.

"There are 6,000 to 7,000 open source applications," Mr Paul O'Malley from the Irish Linux Users Group (ILUG) told a business user audience at ICT Expo. "There are no buts - you can make that move."