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I  am tired of reporters and others distorting my statements regarding to Open Source. As I look at the posts and blogs out there that have come since my statements at the Churchill Club event on Wednesday , I get the impression that there are zealots so committed to the Open Source movement, they will pick a fight with software companies, just for the sake of the fight.

So, I decided to set the record straight and blog my point of view with regards to Open Source, the foundation beliefs for the movement, and the cultural effects the movement will have on our industry at large.

First, let me start by telling you that Tom Sanders, who wrote about my remarks at the Churchill Club on VNUnet.com got the story wrong and took my quotes completely out of context. And his story, with its sensational headline, didn’t properly characterize my point of view and has led to hundreds of angry and misplaced comments in the blogosphere about my views. Dan Farber of ZDNet recorded the event and you can listen to it directly at this link http://i.i.com.com/cnwk.1d/i/z/e/200511/110905_CHC_EVENT.mp3 http://i.i.com.com/cnwk.1d/i/z/e/200511/110905_CHC_EVENT.mp3and you can draw your own conclusions (the Open Source comments are at minute 35:30, but hopefully you will find the complete program of interest):

Later that same day, I had a chance to speak about the Open Source topic at an investors conference held at SAP’s North American headquarters in Pennsylvania. I was asked about the impact of the Open Source movement on SAP, and my answer can be seen at the following link:

http://www.sap.com/company/media/agassi_blog_250.asx

Because it was an investor conference, my answer was fairly short. I’d like to use this blog to expand on the topic.

Everyone is entitled to their own point of view; here is mine:

You might ask me: Shai, what is Open Source? I strongly believe that Open Source is a combination of many beliefs, and everyone who says they are for, against or participate in Open Source, refer to a different mix of these beliefs. My goal in this blog is to differentiate these beliefs and my personal reaction to each of them.

Openness of Source Code

The need for a consumer of software to receive transparency into the source code versus the “black box” approach of delivering systems without transparency is a key issue in the Open Source debate, and an issue that SAP has followed closely for as many years as we are in business. During those 30+ years, SAP shipped its application code, probably one of the largest software products in the world, with the source code available to every customer. The result was that almost every customer modified our code to suit their needs, either on their own, or through one of our many implementation partners.

Some of our customers found that process essential to make the system fit their needs. Some customers found that the ability to modify the code made it possible for programmers to veer too far away from the original application they received, and, in future implementations, they reduced the amount of such modifications. When we get to foundation software, such as operating systems or databases, customers mostly want the code in order to debug systems they build on top of those OSS components. Usually they do not modify the code that much, yet the ability to simply walk through the execution of calls into engines is somewhat the best way to learn how the code should be fixed to perform to a customer’s unique needs.

So, as you can see, I am not just a proponent of openness of source, at SAP we actually live by that rule on a daily basis. We are now taking this approach to our next generation of solutions, in which we not only expose the code of applications, we go the distance in exposing models of our composite applications in ways that allow non-programmers (business analysts) to modify the delivered apps to suit their business needs. This “Open Models” approach is not theory, it is executed and delivered with our latest generation of packaged composite apps, and we have more than 100 applications modeled and delivered to customers with in our recent delivery of SAP Analytics.

Creative Commons

I am a true believer that a swarm of innovators who are passionate about a topic will create a lot more inventions than a group of paid engineers who are managing solutions. True innovation does not happen when we control creativity but when we challenge, create shared vision, and passionately pursue excellence. As such, we at SAP open up our complete process backbone, through a set of web services-based APIs to all innovative companies to build new, innovative, cutting edge processes. When we do that, programmers can leverage SAP’s process backbone (without having to reinvest in the “basics,” and can leverage SAP’s large customer base to build their businesses.

To a certain degree we are leveling the playing field between external innovators and our own application developers, letting all innovate on an equal footing without blocking innovation from coming into our customer base. No customs, no tariffs, no secret back doors. With that approach we are hoping to ignite a creative commons development effort around a common enterprise process backbone, in a market that until now did not have any commonality base to trigger such a community of innovation.

In the process of doing so, we are not only providing APIs as many so-called technology Gorillas have done, we have created a community process to receive requirements, recommendations and examples of APIs that are needed for the creative masses as they are building these new innovative processes. So, not only SAP enabled the creation of a thriving eco-system around us , we actually are letting that eco-system guide us and prioritize the efforts we put around the creation of this common platform. I brought in a number of executives from great platform innovators who can drive such a community, to bring more “Silicon Valley savvy” into the effort, and elevated SAP one level higher in our partner centricity. Most people tend to ignore the fact that SAP created a market where our partners have earned more than 10 times SAP’s revenue as a result of our innovation. This “sharing of wealth” has not happened by accident, rather by strategic planning by SAP’s founders and current leaders. Very few other companies enable so much creativity around them with such a large share of the wealth going to other parties.

While projects driven by creative commons gain tremendously from the passion and power of the community, sometimes there are missed opportunities from other forms of innovation. In recent years, we have seen the likes of Apple, through the guidance of common vision, and addition by subtraction, elude a more democratized approached of community development. I believe that in cases where a strong individual like Linus is playing for Linux, the shared vision is created and galvanizes the masses of tiny investments along vectors of innovations; yet not every Open Source project enjoys such strong visionary leadership by default.

Ownership of IP by its creators

I work for an IP company, and we believe in the importance of inventors owning the IP they create. At SAP, we believe that without the ability to protect IP, most companies will no longer invest so much of their current revenues in future product innovation. Even with that point of view, SAP still assists the Open Source community, by providing and donating IP that is not core to our business, and where sharing IP will result in faster innovation in areas that will assist our customers better in the long run. One such example is our work with the good folks at mySQL, where we have shared significant code base, IP, and knowledge in helping them build a scalable transactional database over the last few years. Every company has taken a different approach with regards to this issue, and even pure play Open Source companies differ on their approach to this IP ownership issue.

The one thing we do not believe in is the attempt to kidnap the whole Open Source topic by the “socialize IP ownership” movement. We have seen in the past that extreme socialism does not lead to extreme goodness in any area of our lives, and IP ownership is no different. As a matter of fact, any form of extremism is not helpful, and, as such, I think there is room to respect the approach that the IP owner should decide the fate of the IP, not a social pressure group. SAP invests more than 1 billion euros a year in product innovation, and we look forward to many years of continuous investment into improvements of our software. These market leading investments result in continuous additions of functionality and features, including some breakthrough innovations, all of which come from the smart re-investment of our profits into R&D on behalf of our customers.

Commoditized bits

As the emerging stack of IT starts to get commoditized from below (LAMP stack being the first set, but there many more to come), customers have asked us questions about “supporting Open Source stacks.” We continue to monitor customer usage and demand of the emerging stack components, instead of wholesale adoption of every element as it shows up. In that sense, we are different than most companies who center around servicing individual customer by customer landscapes through expensive services.

SAP drives mass volume adoption of customer solutions. When we ship software, it usually runs the most mission critical parts of our customers’ businesses and requires predictability of performance. In a sense, we do not have a 24 X 7 agreement, we have a 24 X 7 x 100,000 agreement with the market, with the 100K representing the number of SAP installations around the world. Each and every one of these installations can be remotely monitored, debugged and supported at any point in time. Such needs require that we have certain mission critical capabilities in our stack (hence the uniqueness of NetWeaver as a mission critical enterprise platform), and limit the number of permutations of components at any implementation site. We adopt platform elements as they become common and in high-enough demand, hence our early adoption of Linux ( we were the first to ship our enterprise apps on Linux ), our partnership with mySQL (to try to bring them up to enterprise readiness), and our investment in Zend (the P in LAMP).

The end result of this stack developing from the bottom of our solution map is no doubt a commoditized set of “compute and store” elements, which requires all players to elevate the value proposition one level up. This is a common phenomenon in our industry every 5-10 years, and no one should be surprised (maybe other than those who believe we are at the end of our maturing industry….)

In summary, I personally believe, support and exercise many of the traits and actions shared by the Open Source community, and the company I work for stands for the same beliefs. We are not fanatics about the movement (we’re only fanatical about making our customers successful), but believe it generates value for customers at its core. SAP contributes and support many Open Source projects, and I personally help the community and its visionary leaders on many occasions. I don’t think you have to be an Open Source fanatic to be accepted by the community at large, and I would hope our point of view would be recognized by the Open Source community, and that our actions speak loudly and positively for myself and for SAP.

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  1. Daniel McWeeney
    Shai-

    From the start I’d like to say, I’m glad to see you haven’t mysteriously jumped ship on the Open Source Community.  Additionally, I’m glad to see you choose SDN as your mouth-piece just like us “regular folks.”

    However, I still believe there is some short sightedness in the software marketplace concerning open source and IP.  As you know from reading “The World is Flat,” IBM is a great example of a company who creates software products and has done well by contributing to and taking from the open source community.  Their use of Apache allowed them to get a running start and reduce costs by relying on a “swarm” of unpaid, highly motivated “hackers” to worry about the day-to-day support of the code base.  Given SAP’s historical policy of shipping all source code with their applications, they are in SAP’s Open Source Possibilities

    You spoke about another software company being” pirates” and that SAP just hade to sail faster to stay ahead.  This analogy works when you are being chased by another corporation, but imagine a scenario when you are chased by a few thousand boats all full of pirates who are hackers and programmers working on their free time, and therefore removing profit from the equation.  This is the situation another large software company based somewhere in the US Northwest is in, today.  They disregarded the movement as just a trifle and now, I don’t even need their OS!  I can run nearly any program I want without even buying their underlying operating system.  Soon, I will be able to open and share documents without buying their productivity software.  Obviously, this battle is far from over and I think the big software company in the Northwest still has some fight left in it.

    It is just an interesting situation to be at the cross roads of.  You can take the community and embrace them, feeding off their “free” work, or attempt to try and out-run them and have your lead slowly chipped away by a “great babbling bazaar of differing agendas and approaches.”  I am interested to see what direction SAP is going to take in the next few years if they look to their community of the customers and SDN to help drive new ideas and new developments or they look internally hoping every day to run faster.

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    1. Blasius Lofi Dewanto

      IBM is a great example of a company…

      I agree, especially if you take a look at Apache Geronimo and IBM Websphere roadmap. They offer a community edition of Websphere which is completely based on Geronimo. And if you see the comments of many people at TSS.com they all are waiting for this application server 🙂

      Websphere and Geronimo:
      http://www-306.ibm.com/software/info/websphere/may2005announce/

      Also not to forget the Eclipse IDE with IBM Rational tools offer… So they know how to embrace Open Source products.

      In many cases the community is not interested in the “source code” but they are interested in using the products for free (also in production environments). Just take Java as an example. It’s not Open Source in the term of OSI but it’s free (they are surely moving slowly in Open Source way…), and so you can see that it has a huge community. Anyway, it’s a good move of SAP to have George Paolini who has successfully built Java community.

      IMO, SAP NetWeaver has a huge opportunity to be a solid foundation of enterprise applications (model-driven, etc.). I just hope that it won’t miss the train, just like ABAP. Actually ABAP is easy to use, platform independent (running on a virtual maschine), can be distributed over networks, etc. but in term of community, it’s not as successful as Java. It may also lie on the fact that ABAP is a DSL for business applications whereas Java is a general purpose language but IMO it’s also because ABAP environment is not “open” (free to download, test and use in production environment) as Java. Java will never ever reach its market penetration today if you have to pay license for using it (development and production).

      Opening SAP NetWeaver incl. all its personalities (ABAP and J2EE), so you can freely use them in development *and* production environments just like Java will help SAP to get a very huge community and… the amount of SAP NetWeaver-based applications (xApps, ABAP) will automatically grow just like what you have seen sofar with Java. Anyway, SAP strategy with ESA should be taken as an example. SAP NetWeaver is “just” the infrastructure, the real value lies on the “applications and services” above it.

      It is interesting to watch who will make this move faster SAP with its NetWeaver or Oracle with its Fusion Middleware. At least Oracle JDeveloper is already free to use (also for commecial apps) if I’m not wrong…

      Regards,
      Lofi Dewanto.

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  2. Jason Simmons

    I’m glad you have taken the opportunity to explain your thoughts more fully. I did think that the headlines running on some of the news sites such as “SAP dismisses Open Source innovation” were extreme. This is because I have been observing the activities of SAP within the Open Source Community with Mysql and Zend in particular. In fact I was surprised how SAP welcomed the article I had written on using Open Source web technology with SAP. Your explanation does show that sensationalism has been applied.

    However,I’m slightly perturbed about your comments about “Intellectual property socialism”. I’m not against the protection of intellectual property, I just think it needs to be applied when appropriate.

    Look at the foundations of the Internet. Would the Internet be as pervasive within our everyday lives if we had to pay
    Vint Cerf
    or Tim Berners Lee a license fee every time we used TCP/IP or HTML. These innovations were created in the spirit of “Intellectual property socialism”. Now most corporations are now looking at ways to commercially exploit these technologies.

    “Intellectual property socialism” DOES provide innovation and sometimes is a key survival tool in the flat lands.

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  3. Anand Shankar
    Shai-
    I personally believe that being open source is one way of adding more creative momemntum to the evolution of the product. SAP is clearly gaining ground by keeping itself open source and the number of creative solutions and ideas which add up every day at this very forum is phenomenal and a proof for itself.

    Since, all the creative ideas which are being pooled in are built on the very platform which is built by SAP, I believe there is no big “Intellectual Property” issue here for SAP. The core of the platform and low level implementation is still an “Intellectual Property” of SAP, Which is required to keep the business running.

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  4. Iyengar Karthik
    I believe that Open source is the way to go and is here to stay. Nobody can have a monopoly on creativity. SAP has to go the open source way.

    Kartik Iyengar~

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  5. Anonymous
    Congratulations on your timely spin control. But your defense of IP against the specter of IP socialism is a political stance. Even granting the philosophical point that property is not theft, the stance commits SAP to defending its IP in a global arena where not only OS zealots but also state authorities and others contest such property rights. Following the ‘Open Models’ approach will not help us to defend our IP against attacks unless we adopt tactics that risk incurring the sort of obloquy that dogs Microsoft. Perhaps what we need is the idea that the value in our IP cannot be measured in bytes. Copying code is not the same as copying everything that makes SAP a great company to do business with. As you say, ongoing commoditization requires all players to elevate their value proposition. Still we have a potential problem with patents. There is no efficient worldwide protection in place for patent disclosures, yet we are pushing to increase our patent portfolio. We argue that these are fungible assets for trading with the likes of IBM or Microsoft but this is an unconvincing defense for an ugly practice – if we push to sue small offenders we risk OS flak. We might do better to set up an internal market for such ideas and bypass the clumsy, slow, often dysfunctional public system. I have worked a lot on IP issues and would be happy to get involved in such an initiative.
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    1. Anand Gupta
      The tie-up with MySQL is a move to blunt Oracle, a competition. In a way, SAP would get free support from a dedicated programmers and fight the threat from Oracle.

      What customers may, in case they do trust putting SAP on MySQL, would find is that they end up paying SAP a little more.

      While controling spins of others, Shai adds one of his own -:)

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  6. r. tenbosch
    Mr. Agassi, thank you for describing the position of SAP and its partners, for which I am one, to this community. Indeed there is more than enough creativity invested by SAP and its partners, which has lead to bizfunctions “which make the world of our enterprise customers go round”. Realize with what functions MNC’s do TP for people, money and other assets. With SAP. The impressive object/component-based infrastructure has all in it to provide our customers with a SCA advantage for the next 10 years.. Also ABAP is a hugely succesful, democratic, robust and modern IDE. Not to be compared with Java or J2EE. Again look at the TP functions used by MNC’s.
    We should not mix the positioning of premium-ERP bizfunction applications with OSS. Has it ever produced even a GL which is in use by real customers on large scale? I don’t think so.
    We must also no forget that our customers are driving the market and paying our bill, not the OSS community.
    Summarized, I believe there is enough room for both SAP and OSS systems to integrate and mutualy improve. Take for example, SAP on Linux. To my findings it runs 20X vs. AS400 and 5x AIX with same configuration. For innovating customers this is a ball. But to my surprise, most MNC’s don’t even evaluate it. They just do business with the largest trusted party, like SAP for ERP and for platforms with the large US IT companies.
    Thanks for your effort,
    robert
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  7. Tom Jull
    I can’t help but find a parallel between the Open Source debate and today’s news that the business arm of the Grateful Dead has requested archive.org cease and desist free downloads of Dead “IP”.

    Perhaps it is just coincidence that my (ABAP’er) friends who preach to me about Open Source are also huge Dead fans that have whole hard drives full of free music from archive.org.

    Perhaps it turns out that the remaining legends of the Dead feel entitled to some benefit of their IP.

    I am confident that beyond the hard drive manufactures, there are a myriad of ancillary cottage businessmen who are making money off the Dead’s free IP and who are today threatening to “boycott” their lifeblood.

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  8. Niel Robertson
    Shai’s got it right! Packaged applications really were the first open source systems. And with 55,000 customers (across all major vendors) there is a whole lot of data to show us the benefits and challenges that will be encountered by the more “classic” open source community.

    I wrote about Shai’s post and a number of other experiences with the packaged application open source model for those that are interested in learning more.

    http://parallax.blogs.com/parallax_calculating_tech/2005/12/platos_software.html

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  9. Mohan Kumar K
    Hi Shai
    I am joined SAP LABS India very recently.
    Well the debate on Opensource by Shai was very convicing to me. The statement which he made OS, well thought in broader perspective is bit hard to digest but in customers pont of view, i really appreciate. I was one hundread percent conviced by this statement made by him as below.

    “I personally believe, We are not fanatics about the movement (we’re only fanatical about making our customers successful), but believe it generates value for customers at its core.I don’t think you have to be an Open Source fanatic to be accepted by the community at large,”

    Thanks and Regards
    Mohan Kumar K
    SAP LABS India

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