Open Source Software Business Model: An Analysis of Open Source SaaS Model

Open Source Software Business Model: An Analysis of Open Source SaaS Model JingWen Cheng, Weiping Huang & JingXuan Sun Abstract 1. Introduction 2.1 General View of Open Source Business Model 2.2 SaaS Business Model in General and Open Source Industry 3. Case Review: SaaS Business Model Using in Open Source 3.1 Customer Relationship Management (CRM) 3.2 Web Content Management (WCM) 3.3 Enterprise Collaboration Server 4. Discussion and Recommendation 4.1 Open Source SaaS Model Summary 4.2 Benefits of Open Source SaaS 4.3 Business Model Discussion and Recommendation 5. Conclusion References Abstract With the increasing competitive pressure in the current software business environment, open source becomes one of the fine option in terms of improving competitive strength, increasing product value, reducing cost, as well as better satisfying customer. The license based model and the hosted service are seen as two main areas in the open source business model. During the past several years, Software as a Service (SaaS) model received great attentions from researchers and practitioners, and becomes a new type of service business model in the open source industry. The purpose of this paper is through literature review of the cases and empirical studies to analysis SaaS business model using in open source. In this paper, the general view of open source business model, along with the view of SaaS model in open source industry are reviewed. The study is done through real company cases analysis from three main SaaS business applications, including customer relationship management (CRM), web content management (WCM), and enterprise collaboration server. Open source SaaS is a win win solution for both providers and customers, with the benefits of open

source advantages using in SaaS, security, and innovation. Based on the literature review of open source SaaS model, as well as the findings from cases analysis, few recommendations of business model creation are provided of what should be considered when setting up an open source business, for example, the license choosing, customer targeting, partnership building, and so on. Even the open source SaaS have keep its rapid increasing in the market, currently, there are not so much research and study related to this business model analysis. Due to the limited time schedule, and the lack of the internal information, most of the analyses are done through internet study. There could be deeper studies more focus on one company and the open source software product itself. However, this paper presents a general view of the open source SaaS business model, which could be serve as a starting point of the further research. 1. Introduction In nowadays, all of the software companies exited have to face the increasing strong competitive pressure in current market environment. For improving competitive strength, every software company has to figure out the new ways to better satisfy the new needs of their customers, create product value, generate profits and reduce their costs. Open source is one of the fine options, and it is often selected. (Krishnamurthy 2005). Open source allows its source code to be modified and distributed. For instance, Linux uses GPL license and allows anyone to run freely, copy and modify its source code. The modified code or derivative code must also be free, open and uses GPL license. That is the main reason why open source developers have become more numerous. They come from all over the world and eager to participant in open source development work for better product. The worldwide hardware and software vendors also put lots of interests on taking part in open source business. Linux is a typical and successful example. Linux has developers from all over the world on making a better product, and it also gets the adoptions from companies like IBM, Red Hat, Oracle during its contribution. (Koenig, 2004). The characteristics of open source software (OSS) are not only able to absorb a large numbers of developers from around the world and vendors, but they also created a new approach in companies cooperation. For instance, Microsoft has used the source code from a leading open source operating system [Berkeley System Distribution or BSD] in its Windows 2000 and XP for reducing the development cost. It is getting more common for companies to forge strategic and other cooperation under the open source community. (Krishnamurthy 2005). Considering a large number of the open source advantages, open source become more popular and is widely used in individuals and enterprise for satisfying their computing and needs.(koenig, 2004). People may question about how free software for generating any revenue. OSS is different with other general free software considering of the licenses issues, where free software could be available as OSS, but OSS does not always mean free software. (Feller,Finnegan and Hayes, 2006). The main revenue OSS generates is from providing services for enterprise customers. Selling licenses is also great choice to get profits. (Krishnamurthy 2005). Based on the various purposes and process of adopting Open Source Software Development (OSSD), the different business models could be taken into considerations along with the companies circumstances, business goals and strategies. There are two main areas in open source business model. The license based and the hosted service. The figure below presents the different business models in open source market environment in these two areas.

Figure1: The different business models in open source market environment.(koenig, 2004). The purpose of this paper is through literature review of the cases and empirical studies to analysis SaaS business model using in open source. Chapter 2 shows a general view of open source business model, along with the view of SaaS model in open source industry. In the following chapter, real company cases from three main SaaS business applications are discussed, including customer relationship management (CRM), web content management (WCM), and enterprise collaboration server. After analyzing these related SaaS business application cases, Chapter 4 furthermore discusses the benefit of open sources SaaS, as well as gives recommendation of what should be considered when starting a open source SaaS business. In the final chapter of conclusion, the contribution, limitation and future research area of this paper are presented. 2. Business Model in Open Source 2.1 General View of Open Source Business Model Open source provides a big potential competitive advantage to software and hardware suppliers, for example as Linux succeed, it has significantly contributed to the open source software. Many big software companies have invested to Linux, it makes the Linux for enterprise application including data center operations became legitimize. (Koenig, 2004). There are too many choices to the software users no matter individual or enterprise to satisfy their computing and networking needs. Open source software is the one of most popular because open source software can support broader choices to the users. Based on earlier studies, researchers have list many different business models used in the OSS industry, which can be donations, advertisements, sponsoring, dual licensing and buy out by investors (Mardjan, 2010). Two main areas could be from selling Services and licensing. Supporting service is not the only way to help the company to make money, the company also can get money from licensing (Blanco, 2006). In

license based aspect, the general models are Optimization, Dual and Support licensing. For the hosted service, Transaction, SaaS and Advertising are the most important licensing (Koenig, 2004). In this chapter, SaaS business model in Open source will be explained. 2.2 SaaS Business Model in General and Open Source Industry Software as a service (SaaS) is totally what it sounds, which is a new software category. Users don t need to buy the software, but to use or rent the software when they need it. People usually use SaaS software through an Internet Brower (KTG, 2009). For example Gmail service. Users don t need to purchase and run the software if they want to check email. What the users do? They only need to go to the Gmail website and log in, and then users can check the emails. Gmail is software as a service. SaaS is a software delivery model which related to other two models: Application service provider (ASP) model and on demand computing model (Rouse, 2010). Researchers from company of IDC identify two different delivery models for SaaS, which refer to the hosted application management model and software demand model. There are some benefits of the SaaS model. Firstly, the management of SaaS is rather easier. Secondly, it is able for SaaS to update and manage the patch automatically. Thirdly, due to the compatibility of SaaS, all the users can use the same version of the software. The easier collaboration is seen as the fourth benefit. And last but not least, SaaS doesn't have geographic boundaries, which means it can be used in global(rouse, 2010). SaaS is becoming a new type of service business model in open source industry during the past several years (Duan, Zhang, Sun, Li & Hu, 2011). Researchers and practitioners have put great attentions to SaaS business model. SaaS suppliers provide on demand information processing services to customers (Dan, 2007). Software system and user s data will store and run in a central location, which are provided by the suppliers. The suppliers also provide IT infrastructure, software applications and services to users by network. If users have any question or problem with the software, they have the option to pay an extra fee to suppliers for the customized technical support. In other words, the open source company can offer their solution of the software problems and bug tracking for the customers if the service fee is paid. By this way, the open source companies are able to earn revenues from the service (Ekaterina. 2010). SaaS is becoming more and more popular and important in business. The development of open source software has greatly promoted the trend in a recent period. Open source had radically changed the software business in enterprise because of the lower entry cost. In other words, open source makes software cheaper, and it reduces the barriers to entry, create a more competitive market. (OpenTube, 2009). Open source software and SaaS can be work together in various ways to provide a successful solution to company. No matter the company want to avoid vendor lock in, reduce cost, use higher quality software, or using a significant innovation in open source software. Using SaaS with open source software can solve most of the problems. (Ressler, 2012). Many SaaS companies built a friendly cooperative relationship with Open Source Software company. The high quality of the Open Source Software solutions provided the key building blocks to many SaaS companies, and SaaS companies would like to accept, modify and enhance the Open Source Software to better support their technical and business requirements (Prowse, 2010). Eric Larkin who is the Arena Company s founder and CTO said, The Open source is a more cost effective way to build and scale a SaaS business (Gasperson, 2007). The traditional Open Source Software model only needs to modify the related source codes that connect with the software distribution. If the SaaS software company want to use Open Source Software as part of

business, it is important to think the specific terms of any Open Source Software License to ensure they are suit for the SaaS agreement. 3. Case Review: SaaS Business Model Using in Open Source SaaS, as a cloud based delivery model, allows the applications to be accessed via Internet through a light client. SaaS is nowadays commonly used in many business applications including Content Management (CM), Customer Relationship Management (CRM), Enterprise resource planning (ERP), IT Services Management, and so on. (Software as a service, 2010) Closed sourced SaaS solutions, e.g. Salesforce, SussessFactors, are seen as high performance. (Holt, Weiss, Swanson, & Wood, 2011) However with the enormous growth of OSS in the past years, open source software has also become the top choice as the core application for SaaS business. (Ressler, 2013) The result of the Survey named 2013 The Future Of Open Source shows that the SaaS Revenue has been increase from No.5 in year 2011 to No.2 in 2013, only lower than Support Subscription, and already reaches No.1 among the SaaS vendors. (The 2013 Future of Open Source Survey Results, 2013) Considering of the SaaS using in open source software business, several typical cases from different business areas are reviewed in this session. 3.1 Customer Relationship Management (CRM) The term of CRM was first introduced to the business from earlier ninth (Buttle, 2009), arming to understanding the company s customers by combining the people, process and technology (Chen & Karen, 2003). Nowadays CRM is more often to be described as the software applications, which provide the business functions to automate the marketing, selling and services. Since 2008, amount the SaaS solutions, CRM had been highly supported and developed following the ERP system, and became the mainstream of the enterprise system instead of just a supplement of ERP. (Jia, 2008) The trance of adopting CRM strategy in business, along with the increasingly spending on CRM software, brings more and more CRM players into the market (Buttle, 2009). such as SalesForce, which been seen as the CRM market leader, as well as many other open source software alternatives, like SugarCRM, Vtiger, and so on. Salesforce (Salesforce.com) is seen as the market leader in the CRM business, but the license model is rather expensive, so for small companies to start up, an alternative open source solution of SaaS, e.g. SugarCRM, Vtiger, is much cost saving (from both licensing and services) and flexible. Below are the cases of open source solution of CRM. SugarCRM Software (http://www.sugarcrm.com/) SugarCRM, as one of the most flexible and cost effective CRM system in the market, is developed on an open source platform, and allows customers to customized the solution based on own needs. (SugarCRM Software, 2013) With the customers and partners globally, both SaaS solution and installed as an on premise solution are available, with the mobile devices supported. SugarCRM Community Edition, licensed under AGPL version 3, is free to download for developers who are interested in developing applications on SugarCRM. Besides, commercial products and solutions are also provided with the different pricing accordingly. As the alternatives for Salesforce CRM, SugarCRM is on the top recommended list as an open source cloud CRM solution in the CRM market for the companies which searching an extremely tailored solution. (Carlson, 2011) The free open CRM platform, allowed the companies to implement suitable solution for their own business. Addition to the charged services, there are also free support available from their

webpage, including documentations, community, blogs, and forums. SugarCRM Open + Partner Program have four different types of Channel Partner, Technology Partner, Referral Partner, and OEM Partner. Committed the success of their partners, the goal of this program is to support and deliver value, market differentiation and revenue opportunities to the partners. Vtiger CRM(https://www.vtiger.com) Mainly based on US and India, Vtiger Company is founded in 2004, with the partners globally from America, Europe, Asia and Africa, offering most open, easy to use, customizable and most accessible CRM software solution for small and medium enterprises. Their offers include online CRM, mobile CRM, and local CRM deployment solutions. Vtiger open source CRM was first launched as a branch of SugarCRM 1,0 back to year 2004. (Marson, 2004) The licenses Vtiger CRM followed comprise of Apache License, GPL, LGPL, BSD, as well as SugarCRM public License 1.1.2, where The Vtiger Public License 1.1 (VPL 1.1) is based on the Mozilla Public License (MPL 1.1). Source codes with different versions for different system are able to be downloaded from Vtiger homepage, with also the Wiki, Forums and Books. Besides the open source edition, a commercial version of Vtiger CRM On Demand charges 12$ per user every month with a storage of 5G pre organization, and 10,000 free email pre organization, plus plenty of related features. Vtiger claims that, with this small fee, up to date software, high end hoster, high secure and high quality support will be all contained. An extra fee is charged for migrating from other CRM solution to commercial Vtiger CRM, while it is free if the migration is from Vtiger CRM open source edition to Vtiger CRM on Demand. Similar as SugarCRM, arming to help partners build up business in the growing CRM market, Vtiger promises to offer their partner benefits including both commission, and additional services. X2CRM (http://www.x2engine.com/) X2Engine Inc. is a much newer company founded in 2011 with headquarter in California USA. The company founder is both an open source CRM developer and an entrepreneur. X2 CRM provides the features for marketing, sales and services, social internet, administrator, as well as same with other competitors, the mobile device supported. With X2 CRM business model, customers have the options of ordering a hosted solution with certain fee, or downloading and installing the software on own hardware. (Jack, 2013) The open source X2 CRM is available at the X2 Community web site, with the support information, document, Chat tool, Wiki page, and But Tracker. X2 CRM open source is licensed under AGPLv3, Affero General Public License, same as SugarCRM. The founder and co founder of X2CRM and SugarCRM chose AGPLv3 for both open source CRM with proud, since he saw the trend of this license with enterprise as the most open and fair license nowadays. (Jone, 2013) No partner information was founded in their homepage, but they are open for all the partnership possibilities. X2Engine allows the materials downloaded from their webpage, either information or software, only for personal and non commercial transitory viewing. Currently, comparing to the previous cases, X2 CRM is seen as less globalization, but more open source developing orientated than commercial. However, it cannot

be ignored that X2Engine has much short history (about 2 years) than others. Salesforce CRM Mobile Service As mentioned above, Salesforce CRM, the current leader of CRM market, is not open sourced application with charges of a monthly per user fee. But Salesforce has disclosed in year 2003 that they also use open source Eclipse and Linux. (Koenig, 2004) Lately, with the growth and development of OSS, Salesforce launched new open source platform mobile services, including Salesforce Mobile SDK 2.0 and Developer Mobile Packs, to extend their cloud platform for mobile application development. James Governor, the founding analyst from RedMonk said that, Application development today is increasingly mobile first, built with open source frameworks. Salesforce.com is responding by packaging up popular mobile and web tooling to make it easier to extend its apps and rethink process interaction models. (Bridgwater, 2013) To start develop the mobile service with Salesforce open source SDKs, three platform of HTML 5, ios, and Android can be chose to start. In this paper, we will not analyze the open source SDKs in details, since it is just a small part of the whole Salesforce business. However, this case shows well the growth, importance and the increasing demands of OSS in SaaS CMS business.. 3.2 Web Content Management (WCM) The Web content management system includes the software tools that are used to support the WCM activities of easy creating and deploying the digital content to all Web based users. (McKeever, 2003) WordPress is seen as the top one notable open source based WCMS provider, followed by Drupal and many many other choices. Drupal (http://www.acquia.com) Drupal, provided by the commercial OSS Company named Acquia, is one of the numerous open source based frameworks for web site creation. Seen the benefits of combining SaaS with declarative configuration model in web site creating, the Drupal original creator started the project to make the web creation process much easier (Woods, 2010), as well as managed to implement the open source principles into SaaS model to provide better services. For the developers, there are two places to find Drupal open source. One is Drupal.org, which is mainly focus on the core and site functions/features development by developers and contributors. Another is from Acquia Drupal (Acquia.com), where more supports are available and more commercial oriented comparing with the former. Acquia offer free cloud with the development platform, supported tools, functions and documentations. Acquia Drupal is licensed under GPL version 2 or later, and the source code package can be downloaded from the homepage. In addition, Acquia Network subscriptions offer charged software and services package of high performance and security with different prices depends on customers needs. There are also different pricing options of the Acquia cloud related to hardware, storage, and supports. Acquia is global based with contacts of sales and supports in US, EU, and Asia. Acquia encourage co sell and co market partners to join their partner programs, becoming technology partners, digital marketing agencies, implementation & integration companies, and Education and Training centers. The innovation of Open source software, the collaboration of the Drupal global system, and the community with thousands of developers can bring win win solutions for both partners and customers.

WordPress (http://wordpress.org, WordPress.com) Started from year 2003, WordPress.org provides the web software for website and blog creation. Nowadays, WordPress has already grown as world top open source SaaS with the core software built by numerous of community volunteers. WordPress software is under the license of GPLv2 (or later) from the Free Software Foundation. Derivatives of WordPress code (e.g. plugins and themes) have the GPL license which is same as Drupal. GPL is highly recommended for the derivatives work, however BSD or Apache license are also possible alternatives. WordPress.org is a non profit open source project, which is more flexible to download and install by self but a web host is needed with a minimum requirements from WordPress. Meanwhile WordPress.com and WordPress.com VIP (http://vip.wordpress.com/) offers premium upgrades, and high level WordPress solutions for enterprises, including both the cloud hosting and supporting. Automattic, the company behind WordPress.com remains profitable, and was expected to have $45 million in revenue in year 2012, which mainly from premium subscription services, as well as the VIP enterprise solutions for publisher business. The further development of WordPress.com would be focus more on social networks and mobile devices supported. (Gannes, 2012) Even with this big revenue, and about half a million paying customers, Automattic is rather a thin and flat company with less than 200 employees. Clearly, the open source model with hundreds of developers be active in the community for the core software development, benefits the company in both resources and costs. 3.3 Enterprise Collaboration Server Zimbra Collaboration Suite (ZCS) (http://www.zimbra.com/) Zimbra Collaboration Suite is client server email and collaboration software. Founded in 2005 as a small startup company, Zimbra Inc., was acquired by Yahoo in year 2007 (MacManus, 2007), and then sold to VMware, a cloud and virtualization software and services company, in year 2010, with the purpose of helping VMware move from the full PaaS suite to SaaS applications (Team, 2011). The latest news from July 2013 shows that Telligent, an enterprise social software market leader, had acquired Zimbra from VMware, to form a company of offering the unified social collaboration solutions. (Henry, 2013) Zimbra products have both commercial software and service subscription of ZCS Network edition with different level of licenses and supports, and open source edition with free email and collaboration solution, targeting for individuals and small organizations without Zimbra support. Open source edition can be downloaded from the homepage after requesting a free license key. Zimbra open source SaaS is seen as flexible in terms of able to be hosted by various managed hosting providers. (Craig Wood, 2013) The community with forums, documentation, wiki, blog provides rich information and knowledge for the developers, contributors, and users who are interested in using and developing ZCS open source edition. ZCS source code is licensed under Zimbra Public License (ZPL), requires publishing all modifications to ZCS source code form, as well as keeping all copyright and attribution notices. Additionally, there are also 3rd party licenses available, and Zimbra for Android License. Customers of Zimbra are from various industries, including Education, Service providers, Government and non profit organizations, Finance and healthcare, Transportation and manufacturing, Technology, Advertising and Media, as well as Real estate and Retail. Zimbra has mainly three kinds of partners: 1) world wide ZCS

hosting services providers; 2) local solution providers; 3) training and professional services partners. 4. Discussion and Recommendation 4.1 Open Source SaaS Model Summary In chapter 3, open source SaaS cases are reviewed from different business areas. Table 1 below presents a summary view of all the cases, including the main business area, open source licensing and supporting, commercial products and services, customer segments, and partnership. The case companies are mainly from three business areas with the size of both large and small organizations. Some findings from the case companies study include: 1) All compaines have B2B business model, namely the target customers are primarily companies rather than individuals; 2) Almost all companies have provide their software products in both open source edition and commercial edition with either customized solutions or additional service and support; 3) AGPL version 3 is seen as most popular and recommended open source license been adopted; 4) Open source SaaS companies tend to have more international customer segments with different sizes. e.g. SugarCRM have customer with size from under 50 upto over 1000 employees, while X2CRM is more target to small business companies; 5) Most companies have or seek for international partners of technology, solutions and services providing. 6) Salesforce CRM Mobile Service is seen as a special case, since the main Salesforce CRM product is not open sourced, but only the mobile SDK.

Table 1. Open source SaaS case summary 4.2 Benefits of Open Source SaaS In this chapter, we will analysis the benefits of open source SaaS from both CRM business and a more general point of view. In CRM business, a comparison of OS CRM with Salesforce.com shows the pro and con of both solutions. Salesforce.com is a more ready product with long history and high reputation in market, but the price is also high compare to other open source software. For the company with the limited budget, it could be more cost saving of choosing Open Source CRM as a starting point. The open source codes is public, so it is somehow easier to add new features and functions, which means the company who choose open source CRM might have more control over the development of the products. Both SugarCRM and Vtiger are good choices for the company with limited budget. However, if a company wants a high level integrated resolution, which can combine CRM with other application, and without restrictions on budget, it would be a better choice of considering Salesfore.com. (Compare Open Source CRM to Salesforce.com) From general point of view, it is a Win Win situation for no matter customers or providers of adopting Open source SaaS (Wolfgang, 2012). As we know, open source code has its benefits of more visible and rapid bug fixing, with the supported of the developers and contributors from OS community (Wilson. 2013). Open source software is more customizable in order to fit the specific user needs. Compare with use commercial software, using of open source can reduce the vendor collapse and product discontinuation, namely the user also could have somehow control over the OS products, especially if the user also becomes part of the community. Combining those open source benefits with SaaS model, for OS SaaS consumers, no client/server software installation and maintenance are needed and the deployment time is much shorter. Open source SaaS also makes the globalization possible. More important, open source SaaS model free the company's IT resources and cost from supporting and maintaining the client/server software. As providers, if they use open source SaaS, the benefits can be that they will need support only one preferred hardware or OS version, it means that it is easier to modify and control. Providers don t have to install and maintain the remote client or server software. Providers only need to use single local roll out instead of multiple remote rollouts and they are able to have permission to full access to hardware and software at any time. Besides the above benefits, Open Source also provides business opportunities to SaaS companies. According to the future of Open Source Survey 2013 result, Paul (2013) pointed out three Open Source Opportunities for SaaS businesses.

1). Open Source SaaS From the case study chapter, we can see that Aquia and SugarCRM are good examples of using Open Source Software as the core application in their SaaS business, and both of them succeed so far. Sometimes this kind of business type can called as Open Source SaaS. From the survey result, it shows that there are many companies started to use this model. This model is the second used business model in Open Source Software Company, and the most used one is provide support. It is a good great opportunity to start a SaaS company, product line or product (Ressler, 2013). 2). Security Security is important for software companies, no matter its open source or close source. The security of OSS project and make the project to match company s own security needs is important area to research. The business opportunity is that company have a greater chance to find the OSS project which meet their functional and security needs if company focus on the aspect of security. 3). Innovation Innovation also is an opportunity for business. The area of API growth and the increased acceptance of open APIs can be the innovation areas with open source software. API stands for Application Programming Interface. An open API is a public free tool, which can be used by anyone. Open APIs made a lot of sense on the web. 4.3 Business Model Discussion and Recommendation Both providers and customers are benefit by open source SaaS. However, in order to well benefit from SaaS business model, whether the service providers or customers have to make some necessary preparations and take lots of challenge and risk considerations. Before start up a SaaS business, a company need to consider the business model and how to general profits. The SaaS business is similar as the house renting business. The landlord invests his money in a house, and charges the room rent from his guests. The SaaS Company makes investment in software development and hardware equipment, and rents their services. The core of SaaS business model is services. The services fees could be software licensing costs, hardware usage fees or charged customize solution. And the ways of services charging is like installation. The clients have many of options to choose pay annually, by every month or even over than a few years. A good SaaS company usually makes a few plans in determining the pace of full or partial cost recovery and how long it can be profitable. In determining own suitable business model, how to improve the core competitiveness has become next issue to consider. As a SaaS company, the core competency is how to improve the quality and security of the provided products and service, as well as to expand the customer segment. The companies cases above showed successful points, like OS innovation in API areas, built up open community with lots of developers and contributors, product forums and wiki documentations for providing related help and even technical supports, easy management and in time bug fixing. (Ressler, 2013) To start a SaaS business, choosing open source is seen as an easier starting point, especially when the application is based on an existing OS SaaS like case Vtiger CRM. The rich support from open community always can reduce the cost and resources for a start up and make the company keep flat and more flexible. (Ressler, 2013)

From the case study, it shows the partnership is also one important factor in OS SaaS business. Most SaaS companies have or seeking for global partners in terms of cloud providing, technical & solution supporting, training and so on. With open source software, build up good partnerships could help the SaaS Company expand the customer segment to larger region instead of limited by the hosting locations. In addition, when customers choose the open sources edition SaaS, besides using own web host or the cloud service provided by the SaaS company (free with limitation or a charged package), they can also have a choice of a customer located cloud service from the SaaS company s partners, which helps both SaaS company and customer reduce the cost. Lots of customer companies store their business critical data on the external servers by using SaaS application, how to protect these data become a biggest obstacle between SaaS and their customers. The SaaS Company is not only to guarantee the data transmission security on the internet, but also to make sure the customers are able to recall their needed data at any time from the server. The order information, recipes information and client information is the basis for customer company survival and development. Any information leak out may cause huge lost in the customer company. Open source SaaS make it possible and more flexible for customer companies to customize the SaaS to meet their own security needs. (Ressler, 2012). In an apartment or house renting market, a community contains with diverse apartments usually gets higher occupancy rate. The diverse apartments are able to meet the different needs of the tenant. Someone needs a large house, and some students only need a separated room. As a SaaS company should be more flexible to provide software applications to meet the needs of the customer company with different sizes even in different industries. The fine solution for SaaS Company to take a module design, the customer companies can choose the appropriate module according to their own needs. It is a good way to append your customer base. The case analysis from previous chapter, from a certain point of view, reflects that SaaS is mostly B2B business to provide products and solutions for customers that mean the target customers are mainly enterprises and organizations. However, using open source SaaS, make it also possible for personal usage and developers who are interested in developing SaaS without any extra paid supports needed. When adopting open source SaaS, licensing is one key factor to be considered. Affero General Public License (AGPL) is basis on GPL. The complete source code is made available to any network user. Meanwhile all modifications are also to be provided to the user under the AGPL. In cases above, SugarCRM, X2CRM, Drupal are using AGPL on building up their own new OSS or building it based on the other existed OS platform. For instance, in CRM business, Vtiger was first launched as a branch of SugarCRM and X2CRM open source is also licensed under AGPL, it is same as SugarCRM. Almost of the cases show the AGPL is a new trend, especially in OS SaaS business. In the future, the traditional software installation mode will not disappear. Although SaaS applications are properly used to solve lots of problems and it makes benefits for both providers and consumers, but the traditional software also widely used in many areas. We believe the SaaS model still has the space to grow, and will be more popular in the near future. Plus the fast development of open source industry, there will be more investors to join and involved more innovations in technical side and business side. 5. Conclusion SaaS, as a growing service business model, has received more and more attentions from researchers and practitioners. With the rapid development of open source software, it becomes one top choice as the core

application for SaaS business. However, the related study and research on open source SaaS are rather limited. This paper provides a general sight of open source SaaS business model through real company case studies, and what should be considered when starting a open source SaaS business. One the other hand, due to lack of the related published literature, the results of this paper is mainly based on the study from latest Internet blogs and case company homepages. Business model is always a sensitive topic for a company. The limited available information might affect the objectiveness of the results, and furthermore bring bias in the recommendation. Based on the structure from this paper, the possible future study could be deep down to one case company, especially a start up company, with more detail business environment and company status analysis to generate the specific open SaaS model framework. References Compare Open Source CRM to Salesforce.com. (ei pvm). Retrieved October 24, 2013 from Servicepush : http://service push.com/compare open source crm to salesforce com Software as a service. (2010). Retrieved October 21, 2013, from Cloud Taxonomy: http://cloudtaxonomy.opencrowd.com/taxonomy/software as a service/ SugarCRM Software. (2013). Retrieved October 23, 2013, from Software Advice: http://www.softwareadvice.com/crm/ticomix sugarcrm profile/?layout=var_h The 2013 Future of Open Source Survey Results. (2013, April 17). Retrieved October 23, 2013, from Slidshare: http://www.slideshare.net/blackducksoftware/the 2013 future of open source survey results KTG. (2009). Software as a Service and Open Source: A Good Choice for Small Businesses. Retrieved October 26,2013, from http://www.ktgdenver.com/sites/default/files/about%20open%20source%20and%20saas.pdf OpenTube (2009). Open source and SaaS are a great combination why open source SaaS will be the future?. Retrieved October 23, 2013 from http://open tube.com/open source and saas are a great combination/ Bridgwater, A. (2013, April 15). Salesforce Widens Mobile Development Offerings. Retrieved October 24, 2013, from Dr. Dobb's: http://www.drdobbs.com/mobile/salesforce widensmobile development off/240152927 Buttle, F. (2009). Customer Relationship Management: Concepts and Technologies. Carlson, L. (2011, May 24). Top 5 Alternatives to Salesforce CRM. Retrieved October 24, 2013, from socialmediatoday: http://socialmediatoday.com/laurensoftwareadvice/558212/top 5 alternatives salesforce crm Chen, I. J., & Karen, P. (2003). Understanding customer relationship management (CRM): People, process and technology. Business Process Management Journal, 672 688.

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