A Simple Marketing Model for Enterprise Open Source

Part One

A year ago I wrote "Howells Ten Rules for Open Source Marketing." At Alfresco we believed that open source was different and needed a different marketing model. Geoffrey Moore was at the root of our thinking when he wrote about "Darwin and the Demon" and markets being ripe for disruption in the form of marketing and business model disruption. We saw that there was no "cookie cutter," standard approach and tried to blend our experience in growing large successful enterprise software companies with some best principles from marketing visionaries such as Geoffrey Moore, who had a massive influence on all of us from Documentum.

Since I wrote that article Alfresco has been downloaded 600,000 times, is actively used at over 12,000 sites and supports over 300 paying customers predominantly from the Global 2000 and Government. Alfresco in just over a year has become the clear leader in Open Source Enterprise Content Management, one of the champions of the open source market and one of the fastest growing open source companies ever. This article is an attempt to review what we got right, what we got wrong and the new things we have learned along the way.

These findings have been broken into a two-part series. In this first part, I will be sharing the marketing strategies for open source. In part two, I will illustrate the implementation of these strategies.

I have previously worked for companies focused on crossing the chasm in the early days and later being leaders. I have also worked for companies that were number 2 to a dominant player. The marketing models we used and the understanding of them was critical as it drove a coherent approach to all that we did.

  • Ingres - Number 2 competitor to Oracle before they started dominating the market
  • Documentum - Leader in Document Management
  • SeeBeyond - Number 2 competitor to Tibco in Europe and number 3 in US
Often you focus on your position in the market - a follower or a leader - the Avis vs. Hertz model or a gorilla, a chimp or a monkey model. The open source marketing model tries to break away from that mindset. We have used some of our own thoughts combined with the best ideas from marketing visionaries such as Geoffrey Moore, Zagula and Tong with their "Marketing Playbook", Trout and Ries with their "Marketing Warfare" and Kim and Mauborgne with their "Blue Oceans". That is why such concepts as "Chasms, Tornados, Main Streets" "Gorillas", "Drag Races, Best-of-Both", "Blue Oceans, the Model T, Apple, Nickelodean and Megaplexes" have so much to do with the success of Alfresco!

A Marketing Strategy for Open Source
Strategy Rule 1 - Make markets not war

A simplistic view of open source strategy is to target a big, greedy, lazy incumbent enterprise software vendor and offer a lower-priced alternative. This means the market is a zero-sum game and you are dependent on swapping out the large incumbent vendor. If that was the case, low-priced enterprise vendors, that the Moore system categorizes as "monkeys" vs. "Chimps" and "Gorillas," would have been successful decades ago.

To be successful you need to focus on what Kim and Maubrogne call a "Blue Ocean" or "Non-Customer." These are the users that have either tried and rejected the software in question or have never been able to afford it. That is where Alfresco has focused.

Strategy Rule 2 - It's about value innovation not price alone
Alfresco is typically a tenth of the cost of traditional ECM vendors. However, the real reason ECM has not been rolled out is because it is too:

  • Expensive

    And too hard to:

  • Install
  • Use
  • Rollout
  • Scale-out to large numbers of users
  • Develop Content Centric Applications
  • Ties you in to a proprietary Architecture
What Alfresco has done is address the cost issue and innovate on each of the other issues. Value innovation is about reducing cost by eliminating factors the industry competes on that customers don't value and innovating on elements the industry has not offered. A good historical example is Compaq vs. DEC, HP and Sequent. Customers predominantly wanted a machine for file sharing and shared printing. DEC, HP and Sequent had high-priced, machines that were too complex to administer for most departments. Compaq was not only a third of the cost, it was twice as powerful at file sharing and shared printing.

Alfresco, as well as being a tenth of the cost, is as simple as a shared drive with no client install. This innovation in ease-of-use has commoditized key parts of the traditional complex sales process and enterprise sales force.

Strategy Rule 3 - Don't micro-market Maximize the blue ocean of open source
When there is a pure technical innovation/discontinuity customers often don't understand the technology. So it needs to be explained in industry terms. It's not a "virtual document" it is a "drug submission." In "Main Street" everyone knows what the technology does. Therefore there is no need to micro-market to a specific vertical, user and application and pray you will cross the chasm to the riches of the tornado. What is needed is to maximize your "Blue Ocean".

Alfresco targeted, the "Blue Ocean" of non-ECM users who were "Knowledge Workers" who used a shared drive. The S:/drive population. This is the majority of desktop users and much larger than the traditional ECM market. These users want to collaborate and publish to websites easily using their standard tools.

Strategy Rule 4 - Enterprise software companies don't "own" their customers
One school of thought is that open source is low cost and for SMB's because that is where the large enterprise software companies aren't present. Software companies don't "own" their customers. So any company, in the case of Alfresco, may already have Documentum, FileNet, Interwoven or Vignette. The reality is that there is only a 5% to 10% penetration of this software - either on a desktop or on the shelf. What is critical is to focus on people and users in com-panies and not companies as software fiefdoms.

Alfresco has been very successful in the Global 2000 (particularly financial services, media and professional services) and Government by targeting the non-users of existing ECM systems in these companies. Rather than competitively trying to replace existing installations Alfresco has targeted the knowledge workers who use shared drives. Existing ECM vendors become the boutique, the Gucci and Prada of ECM. The masses are using Alfresco.

Strategy Rule 5 - Differentiation • Make it simple, intuitive and indisputable • The best of both worlds
Enterprise software vendors have a lot going for them. They have a big base, a large sophisticated salesforce, and big budgets to create a lot of noise in the market. You can't "out-base", "out-salesforce" or "out-noise" them. Your differentiation must be simple, intuitive and indisputable. You can't rely on a sales-person having a long conversation to argue your differentiation or a long evaluation to prove your differentiation. What you have is a classic open source best-of-both world's strategy where a customer has to choose between the:

  • High-End - High priced
  • Low-End - Low Priced but doesn't meet requirements

More Stories By Ian Howells

Dr. Ian Howells is chief marketing officer of Alfresco and has more than 20 years of enterprise software marketing experience in the fields of content management, service-oriented architectures, and relational database systems. Ian earned a PhD in distributed databases from University College Cardiff. He has long been on the forefront of technology and marketing, holding early positions at Ingres, Documentum and SeeBeyond. You can read Howell's thoughts on open source marketing at

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