Introduction
Auctionwire conducts online auctions on behalf of some of the world’s largest corporations, foundations and non-profit organisations. The company aims to create successful auctions to raise money, brand awareness and publicity for its clients. Common transactions for Auctionwire include selling off excess inventory and stock for large businesses and running fundraisers online for charitable organisations. The online auctions are performed on eBay tapping into the famous online auction sites 233 million users. Auctionwire manages the complete auction process for their clients, from listing the item to collecting payment, charging them a commission ranging from 5 to 20 percent on successful auctions. [1]
Auctionwire’s Business Plan
The basis for Auctionwire’s business model was to maximise the sale of each item by leveraging three core strengths: the reach of eBay, Auctionwire’s efficient auction management process and Auctionwire’s experience in conducting successful online auctions. I think this is profitable idea, if the team at Auctionwire could learn to conduct efficient auctions by listing their goods effectively and spotting trends in the eBay user base they could maximise the price for each item. This maximising of the sale price would increase the amount of commission Auctionwire received upon successful auction. In addition, becoming a power seller would encourage companies to approach them realising they could make more profit if Auctionwire handled the bidding process. This would increase the number of items Auctionwire would be selling as well as the commission received on each item. [2]
I think the potential market for Auctionwire is huge as companies are now beginning to see the benefits of selling unwanted inventory on eBay (e.g. IBM is one of the biggest eBay sellers in the world). The company’s main focus was on corporate businesses that had excess inventory items and out of date equipment and online charity auctions in the fundraising sector. Companies that had excess stock would in a lot of cases just have to scrap or hold the extra stock resulting in additional costs. I feel companies would be more than happy to pay for Auctionwire to perform their online auctions on behalf of themselves, as it would involve little input from them but would generate extra profit that they would in most cases never see. In my opinion charities would benefit from using the services of Auctionwire as they may not have the expertise or level of staff to perform large scale auctions. Additionally they would want to use the experience of Auctionwire to maximise the amount of money they would raise in the auction. Auctionwire at present has no direct competition, which should allow them to hold a strong position in the market.
Auctionwire’s Software Requirements
For Auctionwire to conduct efficient profit maximising auctions they must choose the right software to perform their auctions. This software package must have certain requirements for it to run effectively.
I felt the most important requirement for Auctionwire’s software was that it could manage multiple listing for different clients. As the company looked to represent multiple companies simultaneously it was essential the software could cope with this. When listing the sale items the software should be able to maximise the number of views each item gets by staggering identical items over time and researching eBay user trends. The software should also be able to help when trying to set the price of new sale listings. Software that could do both these processes would capitalize on the eBay market generating the most profit for Auctionwire.
I think the software chosen should be user friendly and help reduce costs and employee hours. It is important the system installed should automate a lot of the auction processes. Payment and shipping for example are common processes that if automated would significantly reduce operating costs. It would also be useful if the software could help improve customer service. The people at Auctionwire predicted receiving large amounts of emails from clients regarding their items. Many of these queries will be similar so software that could provide standard responses would be beneficial. If the right software is installed many aspects of the business would run itself and operating costs would greatly be reduced.
Which software package to choose?
To achieve the best results I feel Auctionwire should buy an already developed software package. Building their own package would increase the suitability of the system as it would be customised to Auctionwire’s individual needs but the effort and money needed to do this successfully would be too high. eBay is constantly changing so the software designed by Auctionwire would also need to evolve, this would mean a constant expense resulting from paying software designers to modify the system. In addition there is no guarantee that the newly designed software would be successfully and in the end an “off the shelf “ product would need to be purchased anyway. The risk and expense would therefore be too great so I think the best option would be to buy already available software.
All of the online auction software on the market had their individual flaws and problems but most would allow Auctionwire to operate somewhat effectively. I think the best option for Auctionwire would be to choose Canauction Inc. Unlike the competition Canauction already has in place all the requirements that Auctionwire needs. Canauction allows multiple client listings, is operable cross borders and has very little downtime due to the online and offline systems. The other companies have still to develop some of these essential requirements or modification of the existing system would be needed. Hence it is unclear if companies like SuperAuction could handle these essential requirements. Therefore for a small start up fee of $5000 Auctionwire could be up and running with all their software needs. The operating cost of the Canauction is also low at just $250 per month.
As the Canauction software is newly designed the software is still having some early problems that need ironed out but the Canauction designers are a team of former power sellers so they understand what their clients are looking for. Once these teething problems are fixed I believe Canauction will be by far the best system on offer to the market.
Conclusion
I believe Auctionwire has an opportunity to really make an impact on the online auction market. A lot of companies now realise the benefits resulting from selling unwanted stock online but just don’t have the resources available to do it theirself. The potential market is therefore huge for Auctionwire to break into. Picking Canauction Inc as its software supplier will satisfy all Auctionwire’s software needs. I think using Canauction would allow for effective selling online and for Auctionwire to make a substantial profit.
References
[1] http://auctionwire.com/
[2] Ivey: Creating Auctionwire (2006) by Ken Mark and Michael B. Comisarow
Saturday 22 December 2007
Saturday 15 December 2007
Mars Incorporated Case – The advantages and disadvantages of online procurement.
Introduction
Mars Inc is one of the world’s largest privately owned businesses producing confectionary, pet food and state-of-the-art electronic payment systems. [1] In 2006 alone Mars had annual sales of $21 billion dollars. Globally Mars Inc employs 40,000 people and operates in over 100 countries. [2] Mars is still owned by the Mars family and continues to trade using five key family held values (Quality, Responsibility, Mutuality, Efficiency and Freedom). With such a large amount of different products, including the eponymous Mars and Snickers bars, Mars Inc purchases more than $4 billion direct materials annually. This has lead Mars to introduce online procurement of materials in the hope of driving down prices. Other major firms that have switched to online marketplace auctions have recorded savings of around 5%, if Mars Inc developed similar reductions they could save in excess of $200 million per year.
The Internet is now a cost effective and reliable medium for performing business transactions. Consequently companies are starting to use the Internet to procure their goods. Businesses using online procurement can offer contracts to multiple qualified suppliers simultaneously resulting in a “reverse” auction (when the lowest bid wins the auction). With suppliers competing against each other the price of the contract is driven down resulting in the purchasing firm making a saving. Mars is looking to lower the price its paying for large contracts by making its suppliers compete on the online marketplace.
Advantages and disadvantages of online procurement
The main reason for a company to switch to online procurement is to drive down the cost of contracts from suppliers. By allowing pre-qualified suppliers to compete for contracts Mars will encourage suppliers to quote their best price. This means Mars will be receiving the same quality of materials but will be purchasing them at their lowest price. Online procurement can also be used to aid Mars when they are not sure how to value a contract. By letting suppliers bid for a contract the market will essentially value the contract for them, this will result in Mars always purchasing at a fair rate and stop them getting over charged. Comparisons between suppliers can also be made easier as all bidders can be stored on a single database. This allows Mars to evaluate many different suppliers quickly to ensure the best company is chosen.
However by changing to e-purchasing Mars could very well affect the values they hold so dear. Making the supply firms reduce the price of their contracts is going to have a large affect on their profit margins. Eventually Mars may grind down the supply firms so much that they could be in danger of not making a satisfactory profit in order to secure contracts. Obviously this would affect the relationship Mars has with its suppliers, the mutual benefits Mars wants to experience with its suppliers would no longer be going two ways. If the companies Mars are purchasing from feel they are not getting paid adequately the standard of service Mars receives will drop. In addition, the time pressure for bidding companies to submit a bid lower than the one on screen could lead to errors of judgement. [5] The subsequently awarded contracts are therefore more likely to have disputes and bad faith during the life of the contract. This again would affect the family values held at Mars.
Online procurement is much faster than traditional purchasing methods. Traditional procurement methods involve a lot of man hours i.e. faxes, phone calls and paperwork to suppliers. [4] With Mars being such a large company with many divisions that all have their own purchasing situations, traditional methods of procurement were slow and costly. Switching to online procurement dramatically reduced purchasing time at Mars. Contracts with a deadline date are sent to suppliers and they have to get their bid in by this time if they want to secure the contract. Therefore, it is now easier for Mars to push contracts through the system, which will increase the efficiency of the firm.
Negotiating contracts faster may have a negative side for Mars. Online procurement only decides the price the supplier receives for the contract. Using traditional methods buyers at Mars typically spent a long time working with the suppliers to agree on the issues for a contract. For example delivery conditions, quality specifications and payment terms were all discussed. This allows for the contract to be drawn up with both parties satisfied. However these extra conditions are not discussed using online procurement. The perception of online bidding is based upon ‘lowest price’ rather than the ‘best value’ consequently Mars may not be entering into the most suitable contracts using online procurement, this could lead to problems during the life of the contract. [5]
Prior to online procurement employees at Mars buying division would have to go looking for new suppliers their selves. Using online purchasing, suppliers effectively come to them. Mars can advertise contracts on online procurement websites allowing possible new buyers to get involved. This again helps to reduce costs as Mars can evaluate contracts with a lot more companies than they could with traditional procurement thus making sure they get the best deal. Faster transaction times and reduced supplier searching times will result in employees having more time for maintaining relationships with high value suppliers. This would help Mars reinforce their family values culture.
Conclusion
Switching to online procurement will benefit Mars, as it will lower its purchasing costs due to the extra competition between suppliers. The procurement process at Mars will also become more efficient allowing for easier supplier comparisons and reducing transaction times and employee hours. There could also be some drawbacks from introducing online bidding. Mars’s family values could be affected, as Mars would be encouraging its suppliers to lower their profit margins. Client relationships could then become strained and a poorer supplier service received. Faster contract negotiating could also reduce the suitability of the contracts entered into by Mars.
References
[1] Ivey. Mars Incorporated: Online Procurement
[2] Mars Incorporated article on Wikipedia http://en.wikipedia.org/wiki/Mars,_Incorporated
[3] Mars Inc website http://www.mars.com/
[4] Online Purchasing Gains (2001)
http://www.internetnews.com/bus-news/article.php/726831
[5] Contruction Industry Council: Online Bidding
http://www.construct-it.org.uk/pages/sources/CIC_online_bidding_briefing_note.pdf
Mars Inc is one of the world’s largest privately owned businesses producing confectionary, pet food and state-of-the-art electronic payment systems. [1] In 2006 alone Mars had annual sales of $21 billion dollars. Globally Mars Inc employs 40,000 people and operates in over 100 countries. [2] Mars is still owned by the Mars family and continues to trade using five key family held values (Quality, Responsibility, Mutuality, Efficiency and Freedom). With such a large amount of different products, including the eponymous Mars and Snickers bars, Mars Inc purchases more than $4 billion direct materials annually. This has lead Mars to introduce online procurement of materials in the hope of driving down prices. Other major firms that have switched to online marketplace auctions have recorded savings of around 5%, if Mars Inc developed similar reductions they could save in excess of $200 million per year.
The Internet is now a cost effective and reliable medium for performing business transactions. Consequently companies are starting to use the Internet to procure their goods. Businesses using online procurement can offer contracts to multiple qualified suppliers simultaneously resulting in a “reverse” auction (when the lowest bid wins the auction). With suppliers competing against each other the price of the contract is driven down resulting in the purchasing firm making a saving. Mars is looking to lower the price its paying for large contracts by making its suppliers compete on the online marketplace.
Advantages and disadvantages of online procurement
The main reason for a company to switch to online procurement is to drive down the cost of contracts from suppliers. By allowing pre-qualified suppliers to compete for contracts Mars will encourage suppliers to quote their best price. This means Mars will be receiving the same quality of materials but will be purchasing them at their lowest price. Online procurement can also be used to aid Mars when they are not sure how to value a contract. By letting suppliers bid for a contract the market will essentially value the contract for them, this will result in Mars always purchasing at a fair rate and stop them getting over charged. Comparisons between suppliers can also be made easier as all bidders can be stored on a single database. This allows Mars to evaluate many different suppliers quickly to ensure the best company is chosen.
However by changing to e-purchasing Mars could very well affect the values they hold so dear. Making the supply firms reduce the price of their contracts is going to have a large affect on their profit margins. Eventually Mars may grind down the supply firms so much that they could be in danger of not making a satisfactory profit in order to secure contracts. Obviously this would affect the relationship Mars has with its suppliers, the mutual benefits Mars wants to experience with its suppliers would no longer be going two ways. If the companies Mars are purchasing from feel they are not getting paid adequately the standard of service Mars receives will drop. In addition, the time pressure for bidding companies to submit a bid lower than the one on screen could lead to errors of judgement. [5] The subsequently awarded contracts are therefore more likely to have disputes and bad faith during the life of the contract. This again would affect the family values held at Mars.
Online procurement is much faster than traditional purchasing methods. Traditional procurement methods involve a lot of man hours i.e. faxes, phone calls and paperwork to suppliers. [4] With Mars being such a large company with many divisions that all have their own purchasing situations, traditional methods of procurement were slow and costly. Switching to online procurement dramatically reduced purchasing time at Mars. Contracts with a deadline date are sent to suppliers and they have to get their bid in by this time if they want to secure the contract. Therefore, it is now easier for Mars to push contracts through the system, which will increase the efficiency of the firm.
Negotiating contracts faster may have a negative side for Mars. Online procurement only decides the price the supplier receives for the contract. Using traditional methods buyers at Mars typically spent a long time working with the suppliers to agree on the issues for a contract. For example delivery conditions, quality specifications and payment terms were all discussed. This allows for the contract to be drawn up with both parties satisfied. However these extra conditions are not discussed using online procurement. The perception of online bidding is based upon ‘lowest price’ rather than the ‘best value’ consequently Mars may not be entering into the most suitable contracts using online procurement, this could lead to problems during the life of the contract. [5]
Prior to online procurement employees at Mars buying division would have to go looking for new suppliers their selves. Using online purchasing, suppliers effectively come to them. Mars can advertise contracts on online procurement websites allowing possible new buyers to get involved. This again helps to reduce costs as Mars can evaluate contracts with a lot more companies than they could with traditional procurement thus making sure they get the best deal. Faster transaction times and reduced supplier searching times will result in employees having more time for maintaining relationships with high value suppliers. This would help Mars reinforce their family values culture.
Conclusion
Switching to online procurement will benefit Mars, as it will lower its purchasing costs due to the extra competition between suppliers. The procurement process at Mars will also become more efficient allowing for easier supplier comparisons and reducing transaction times and employee hours. There could also be some drawbacks from introducing online bidding. Mars’s family values could be affected, as Mars would be encouraging its suppliers to lower their profit margins. Client relationships could then become strained and a poorer supplier service received. Faster contract negotiating could also reduce the suitability of the contracts entered into by Mars.
References
[1] Ivey. Mars Incorporated: Online Procurement
[2] Mars Incorporated article on Wikipedia http://en.wikipedia.org/wiki/Mars,_Incorporated
[3] Mars Inc website http://www.mars.com/
[4] Online Purchasing Gains (2001)
http://www.internetnews.com/bus-news/article.php/726831
[5] Contruction Industry Council: Online Bidding
http://www.construct-it.org.uk/pages/sources/CIC_online_bidding_briefing_note.pdf
Case Study 2: Lotus Notes introduction at Compound UK
1 – Introduction
Compound UK is a multinational pharmaceutical company based in the United Kingdom. Compound concentrates primarily on selling its products to hospitals and general medical practices in the UK. It also looks to develop new drugs by participating in clinical trials with trusted doctors. In the late 1980s the NHS underwent a huge reform with the introduction of an internal market place. As Compound mainly operates in the UK health sector this had a significant effect on how the company operated. The new internal market place and budgetary responsibilities for hospitals resulted in the sales situations for Compound becoming more complex.
Compound’s response was to split the company up into eight regions with the aim of giving each of them greater autonomy in planning and responding in its own area. In addition to this Compound introduced a system to encourage knowledge sharing between departments and employees. The system they used was Lotus Notes. Compound had four main uses for Lotus Notes.
1. E-mail – to enable one-to-one communication;
2. Strategic Selling – to enable employees from different functions to share information on selling techniques;
3. Discussion Databases – to enable employees to talk about the topical issues within the company; and
4. Contact recording – to enable employees to record customer specific information.
The initiation of Lotus Notes did improve knowledge sharing within Compound but a different implementation and usage strategy could have made the introduction more successful.
2 – Benefits arising from the use of Lotus Notes
Prior to the introduction of Lotus Notes only a few groups within the company (such as area managers) worked across boundaries. After the introduction groups (such as the medical staff) who had previously not worked with those in other functions were able to communicate through the system. Whilst this may not have been to the liking of some of the medical staff (as they now were expected to work on complex sales situations and the development of new products) there were those in the company, James Black being one, who saw the potential benefits. Lotus Notes allowed him to liaise more with the representatives themselves, detail what it was he did and what he expected of them and it also afforded him the opportunity to visit doctors with the representatives occasionally.
The actions of people like James Black and others within the company (in no small part due to Lotus notes) made the representatives more comfortable in what was expected of them as part of their job description and encouraged them to contact the medical staff if ever they needed assistance. The system also had benefits for the medical staff themselves in that they themselves were able to see what it was like to be a representative – something they would not have done prior to the introduction of Lotus Notes.
3 – Areas that Compound could have improved
One area that could have been improved was how the directors used Lotus Notes, mainly contact recording, to monitor representative productivity. By launching a performance league table for the representatives in each region an increased amount of pressure was placed on each member of the sales force. This resulted in representatives recording false contacts and selling sheets, which they believed would improve their position in the league tables. Inaccuracies would then be present when directors evaluated potential sales. In addition, if representatives feel they are only being monitored by head office on one part of their job this is the only area they will focus on. The affect of this is that other areas of the company could suffer resulting in an overall lose in efficiency.
Using this kind of performance measurement has proven to be an inefficient means of recording the true performance of sales representatives and could prove harmful to the company in the long term. Therefore the directors should consider alternative means of measuring the performance of its representatives. Essentially whilst recording details of their meetings with doctors and such like may be of some benefit to the company it is not the best way of recording the actual performance of sales representatives. The directors at the company should investigate creating a system that would take into account the sales revenue (and cost of goods sold particularly if the sales price is negotiable) as at the end of the day revenue is what keeps the company alive and not the number of sales meetings or contacts that a representative has.
Directors at Compound could have found more success if they used contact recording to evaluate representative performance but in a more hidden manner. By not informing representatives of their surveillance they would continue to work normally and this would enable their true performance to be monitored. Also without the league tables the representatives would be more likely to record only relevant sales, which is the purpose of contact recording. As it stands contact recording at Compound is just a means for ambitious representatives to make a name for themselves and the figures and numbers present cannot be relied upon.
4 – Conclusion
The introduction of Lotus Notes had its advantages and disadvantages for the company. It was advantageous in that it opened up communications across different job functions – the medical staff could liaise with the representatives and vice versa. This enabled prominent members of staff, such as James Black, the opportunity to be in touch more often with the representatives and identify what he expected of them. However, when it came to recording the performance of the representatives the system was highly flawed. Representatives feeling under pressure by a performance table had a tendency to create false contacts and selling sheets and this resulted in potential sales becoming inaccurate and ultimately a loss of efficiency within the company. To combat this, directors should consider using alternative means of performance measurement (such as actual sales) and perhaps a more hidden approach to monitoring the performance of representatives (rather than something like a performance table).
5 – References
Title: Sharing Knowledge through Lotus Notes in a Pharmaceuticals Company
Author(s): Professor Geoff Walsham and Doctor Niall Hayes
Year: 2000
This project was a collaboration between Rory Linwood and Stuart Nibloe
Compound UK is a multinational pharmaceutical company based in the United Kingdom. Compound concentrates primarily on selling its products to hospitals and general medical practices in the UK. It also looks to develop new drugs by participating in clinical trials with trusted doctors. In the late 1980s the NHS underwent a huge reform with the introduction of an internal market place. As Compound mainly operates in the UK health sector this had a significant effect on how the company operated. The new internal market place and budgetary responsibilities for hospitals resulted in the sales situations for Compound becoming more complex.
Compound’s response was to split the company up into eight regions with the aim of giving each of them greater autonomy in planning and responding in its own area. In addition to this Compound introduced a system to encourage knowledge sharing between departments and employees. The system they used was Lotus Notes. Compound had four main uses for Lotus Notes.
1. E-mail – to enable one-to-one communication;
2. Strategic Selling – to enable employees from different functions to share information on selling techniques;
3. Discussion Databases – to enable employees to talk about the topical issues within the company; and
4. Contact recording – to enable employees to record customer specific information.
The initiation of Lotus Notes did improve knowledge sharing within Compound but a different implementation and usage strategy could have made the introduction more successful.
2 – Benefits arising from the use of Lotus Notes
Prior to the introduction of Lotus Notes only a few groups within the company (such as area managers) worked across boundaries. After the introduction groups (such as the medical staff) who had previously not worked with those in other functions were able to communicate through the system. Whilst this may not have been to the liking of some of the medical staff (as they now were expected to work on complex sales situations and the development of new products) there were those in the company, James Black being one, who saw the potential benefits. Lotus Notes allowed him to liaise more with the representatives themselves, detail what it was he did and what he expected of them and it also afforded him the opportunity to visit doctors with the representatives occasionally.
The actions of people like James Black and others within the company (in no small part due to Lotus notes) made the representatives more comfortable in what was expected of them as part of their job description and encouraged them to contact the medical staff if ever they needed assistance. The system also had benefits for the medical staff themselves in that they themselves were able to see what it was like to be a representative – something they would not have done prior to the introduction of Lotus Notes.
3 – Areas that Compound could have improved
One area that could have been improved was how the directors used Lotus Notes, mainly contact recording, to monitor representative productivity. By launching a performance league table for the representatives in each region an increased amount of pressure was placed on each member of the sales force. This resulted in representatives recording false contacts and selling sheets, which they believed would improve their position in the league tables. Inaccuracies would then be present when directors evaluated potential sales. In addition, if representatives feel they are only being monitored by head office on one part of their job this is the only area they will focus on. The affect of this is that other areas of the company could suffer resulting in an overall lose in efficiency.
Using this kind of performance measurement has proven to be an inefficient means of recording the true performance of sales representatives and could prove harmful to the company in the long term. Therefore the directors should consider alternative means of measuring the performance of its representatives. Essentially whilst recording details of their meetings with doctors and such like may be of some benefit to the company it is not the best way of recording the actual performance of sales representatives. The directors at the company should investigate creating a system that would take into account the sales revenue (and cost of goods sold particularly if the sales price is negotiable) as at the end of the day revenue is what keeps the company alive and not the number of sales meetings or contacts that a representative has.
Directors at Compound could have found more success if they used contact recording to evaluate representative performance but in a more hidden manner. By not informing representatives of their surveillance they would continue to work normally and this would enable their true performance to be monitored. Also without the league tables the representatives would be more likely to record only relevant sales, which is the purpose of contact recording. As it stands contact recording at Compound is just a means for ambitious representatives to make a name for themselves and the figures and numbers present cannot be relied upon.
4 – Conclusion
The introduction of Lotus Notes had its advantages and disadvantages for the company. It was advantageous in that it opened up communications across different job functions – the medical staff could liaise with the representatives and vice versa. This enabled prominent members of staff, such as James Black, the opportunity to be in touch more often with the representatives and identify what he expected of them. However, when it came to recording the performance of the representatives the system was highly flawed. Representatives feeling under pressure by a performance table had a tendency to create false contacts and selling sheets and this resulted in potential sales becoming inaccurate and ultimately a loss of efficiency within the company. To combat this, directors should consider using alternative means of performance measurement (such as actual sales) and perhaps a more hidden approach to monitoring the performance of representatives (rather than something like a performance table).
5 – References
Title: Sharing Knowledge through Lotus Notes in a Pharmaceuticals Company
Author(s): Professor Geoff Walsham and Doctor Niall Hayes
Year: 2000
This project was a collaboration between Rory Linwood and Stuart Nibloe
Saturday 8 December 2007
MySQL Database Case – The Advantages and Disadvantages of Open Source Software.
Introduction
Open source software is a type of software that is open and free to use. Users of open source software are able to modify and customise the software to meet their individual needs. Companies that develop open source software look to create a large user base of their product by making it readily available to the market. This makes the software understandable, modifiable and accessible to its users, which is the aim of the open source format. [1]
MySQL AB is the world’s most popular open source database software provider with over 100 million copies of its software downloaded in its history. Its database MySQL is fast, reliable and easy to use quickly making it a real competitor to the traditional closed source systems of Microsoft, IBM and Oracle. MySQL looks to provide a high quality service and satisfy its customer’s needs while upholding its open source values. [2]
Advantages of the open source format
The main advantage of open sourcing MYSQL is the increased accessibility of the product. Breaking into the database market is extremely hard as huge multi-million dollar firms (Microsoft, IBM etc.) dominate the industry. On many occasions new and acclaimed software have not made an impact on the market, as customers are reluctant to buy products outside the tradition firms. By making MySQL free to download it encouraged users to try out the database without being locked into the product. This resulted in MySQL fast and reliable system getting installed on millions of computers worldwide. For a relatively small company MySQL AB had thousands of users that understood how to operate their system and could appreciate its benefits first hand. [3]
Open source software allows for constant modification and fine-tuning of the product as users are allowed access to the applications code, this in turn greatly extends the lifetime of the application. Closed source applications have a very short functional life, as they cannot change with time, as a result upgrades and new software constantly has to be bought. Having software available in source forms means the applications can change with varying conditions and be improved easily. This gives MySQL an advantage over its competitors as small low budget companies could potentially run MySQL for a decade with little addition cost. [4]
Being able to customise the database software also enables businesses to modify the application to their individual needs. Each business using MySQL could tailor the system, using the open source code, making it more efficient in their own particular market. As a consequence for most small business’s MySQL can outperform the one-dimensional products offered by the large closed source firms. So not only are companies saving money by installing free open source software the system they are receiving a system that they can integrate better into their business. [7]
Another benefit to MyQSL is that open source software tends to have far less ‘bugs’ than closed source systems; this is an advantage that MySQL should be keen to highlight to potential customers. Most applications that are developed contain bugs and even with testing some make it to the final product.
"If builders built houses the way programmers built programs, the first woodpecker to come along would destroy civilization." -- Gerald Weinberg
With open source software, users can see the code enabling them to spot and correct problems their self before any damage occurs to the data. Bugs are therefore more visible and rapidly corrected this results in maintenance costs being lower for companies that install open source database software. With closed source products the only way to correct problems is to pay the original developer, as they are the only ones with access to the software code. These fees can be high and may encourage small businesses towards the open source route. [5][6]
Disadvantages of the open source format
The problem MySQL AB has is how can it generate substantial revenue if its product is essentially free to operate. In traditional closed source firm’s revenue is 60% software sales and 40% service support. For open source firms this dramatically switches to 0% sales and 100% support. Free software will attract more users, which should result in drastic increase in the amount of support fees. Companies like Digital Domain experienced a 100-fold increase in the amount of users of their applications when they open sourced their products. Consequently even if a small fraction of new users needed support they would expect a significant rise in revenue. The problem is most users don’t seem to need (or want to pay for) service support. [5]
The conversion funnel states that only 1% of people downloading an application will go on to be a paying customer. Executives at MySQL AB have figures calculating their percentage of paying customers from number of downloads to be drastically lower with just 0.0001%. Consequently MySQL AB needs a gigantic amount of installations to create substantial revenue. By having the software code available to all users means that the installer can solve most problems their self thus reducing the need for service support.
MySQL AB may also find new problems if they can manage to get a large amount of paying customers. Open source software can at times be more complicated than normal software. Due to high competition closed source products are designed for easy installation but some open source products need a certain level of expertise for installation. If a customer does not understand the code he may not be able to use the product easily and reap the potential benefits. This could lead to multiple complaints that could take up most of MySQL AB’s staff time. Less energy could then be put into developing the software as customer service takes a more central role. [8]
Conclusion
In general, MySQL AB has benefited from supplying open source products. Due to it being open source MySQL has been installed on millions of computers worldwide making it a household name. If there was a purchase fee on the software it would be unlikely that MySQL would have been able to break into the database market so successfully but instead they may have joined the long line of failed products. Small businesses now understand how open source products like MySQL can bring the customisation level they need at a low price. As long as MYSQL keeps developing and adding new features the amount of installations are only going to increase bringing with it a rise in revenue.
References
[1] Open- Source Software article on Wikipedia http://en.wikipedia.org/wiki/Open_source_software
[2] About MySQL http://www.mysql.com/company/
[3] MYSQL Open Source Database in 2006 (B)
[4] Advantages of Open Source Software (2000) by Jesus M. Gonzalez http://eu.conecta.it/paper/Advantages_open_source_soft.html
[5] The Economics of open Source Software (1999) by Philip E. Varner http://www.cs.virginia.edu/~pev5b/writing/econ_oss/advantages.html
[6] Benefits of Open Source Code (2007) by James A. J. Wilson
http://www.oss-watch.ac.uk/resources/whoneedssource.xml
[7] Benefits of Using Open Source Software
http://open-source.gbdirect.co.uk/migration/benefit.html
[8] Disadvantages of Open Source by Dmitri Rotow http://www.gismonitor.com/articles/comment/061903_Dmitri.php
Open source software is a type of software that is open and free to use. Users of open source software are able to modify and customise the software to meet their individual needs. Companies that develop open source software look to create a large user base of their product by making it readily available to the market. This makes the software understandable, modifiable and accessible to its users, which is the aim of the open source format. [1]
MySQL AB is the world’s most popular open source database software provider with over 100 million copies of its software downloaded in its history. Its database MySQL is fast, reliable and easy to use quickly making it a real competitor to the traditional closed source systems of Microsoft, IBM and Oracle. MySQL looks to provide a high quality service and satisfy its customer’s needs while upholding its open source values. [2]
Advantages of the open source format
The main advantage of open sourcing MYSQL is the increased accessibility of the product. Breaking into the database market is extremely hard as huge multi-million dollar firms (Microsoft, IBM etc.) dominate the industry. On many occasions new and acclaimed software have not made an impact on the market, as customers are reluctant to buy products outside the tradition firms. By making MySQL free to download it encouraged users to try out the database without being locked into the product. This resulted in MySQL fast and reliable system getting installed on millions of computers worldwide. For a relatively small company MySQL AB had thousands of users that understood how to operate their system and could appreciate its benefits first hand. [3]
Open source software allows for constant modification and fine-tuning of the product as users are allowed access to the applications code, this in turn greatly extends the lifetime of the application. Closed source applications have a very short functional life, as they cannot change with time, as a result upgrades and new software constantly has to be bought. Having software available in source forms means the applications can change with varying conditions and be improved easily. This gives MySQL an advantage over its competitors as small low budget companies could potentially run MySQL for a decade with little addition cost. [4]
Being able to customise the database software also enables businesses to modify the application to their individual needs. Each business using MySQL could tailor the system, using the open source code, making it more efficient in their own particular market. As a consequence for most small business’s MySQL can outperform the one-dimensional products offered by the large closed source firms. So not only are companies saving money by installing free open source software the system they are receiving a system that they can integrate better into their business. [7]
Another benefit to MyQSL is that open source software tends to have far less ‘bugs’ than closed source systems; this is an advantage that MySQL should be keen to highlight to potential customers. Most applications that are developed contain bugs and even with testing some make it to the final product.
"If builders built houses the way programmers built programs, the first woodpecker to come along would destroy civilization." -- Gerald Weinberg
With open source software, users can see the code enabling them to spot and correct problems their self before any damage occurs to the data. Bugs are therefore more visible and rapidly corrected this results in maintenance costs being lower for companies that install open source database software. With closed source products the only way to correct problems is to pay the original developer, as they are the only ones with access to the software code. These fees can be high and may encourage small businesses towards the open source route. [5][6]
Disadvantages of the open source format
The problem MySQL AB has is how can it generate substantial revenue if its product is essentially free to operate. In traditional closed source firm’s revenue is 60% software sales and 40% service support. For open source firms this dramatically switches to 0% sales and 100% support. Free software will attract more users, which should result in drastic increase in the amount of support fees. Companies like Digital Domain experienced a 100-fold increase in the amount of users of their applications when they open sourced their products. Consequently even if a small fraction of new users needed support they would expect a significant rise in revenue. The problem is most users don’t seem to need (or want to pay for) service support. [5]
The conversion funnel states that only 1% of people downloading an application will go on to be a paying customer. Executives at MySQL AB have figures calculating their percentage of paying customers from number of downloads to be drastically lower with just 0.0001%. Consequently MySQL AB needs a gigantic amount of installations to create substantial revenue. By having the software code available to all users means that the installer can solve most problems their self thus reducing the need for service support.
MySQL AB may also find new problems if they can manage to get a large amount of paying customers. Open source software can at times be more complicated than normal software. Due to high competition closed source products are designed for easy installation but some open source products need a certain level of expertise for installation. If a customer does not understand the code he may not be able to use the product easily and reap the potential benefits. This could lead to multiple complaints that could take up most of MySQL AB’s staff time. Less energy could then be put into developing the software as customer service takes a more central role. [8]
Conclusion
In general, MySQL AB has benefited from supplying open source products. Due to it being open source MySQL has been installed on millions of computers worldwide making it a household name. If there was a purchase fee on the software it would be unlikely that MySQL would have been able to break into the database market so successfully but instead they may have joined the long line of failed products. Small businesses now understand how open source products like MySQL can bring the customisation level they need at a low price. As long as MYSQL keeps developing and adding new features the amount of installations are only going to increase bringing with it a rise in revenue.
References
[1] Open- Source Software article on Wikipedia http://en.wikipedia.org/wiki/Open_source_software
[2] About MySQL http://www.mysql.com/company/
[3] MYSQL Open Source Database in 2006 (B)
[4] Advantages of Open Source Software (2000) by Jesus M. Gonzalez http://eu.conecta.it/paper/Advantages_open_source_soft.html
[5] The Economics of open Source Software (1999) by Philip E. Varner http://www.cs.virginia.edu/~pev5b/writing/econ_oss/advantages.html
[6] Benefits of Open Source Code (2007) by James A. J. Wilson
http://www.oss-watch.ac.uk/resources/whoneedssource.xml
[7] Benefits of Using Open Source Software
http://open-source.gbdirect.co.uk/migration/benefit.html
[8] Disadvantages of Open Source by Dmitri Rotow http://www.gismonitor.com/articles/comment/061903_Dmitri.php
Friday 7 December 2007
Long Essay - The Open Document Format
1 – An introduction to the OpenDocument format
The OpenDocument format (ODF) is an alternative document file format to the one predominantly used in Microsoft Office. Unlike Microsoft’s proprietary document file format ODF is open source. This effectively means that the source code used in the creation of the format is freely available to anyone under a General Public Licence (GPL) and they may do with it as they wish (i.e. modify it for their own needs or redistribute it). Microsoft’s proprietary document file format does not allow users the same freedoms (such as modifying the format) that ODF does.
ODF was originally developed by the Organisation for the Advancement of Structured Information Standards (OASIS). The organisation represents companies from around the globe that have a desire to develop and implement standards within the IT world. The format itself is XML (a computer language whose primary purpose is to make it easier to share data across different applications) based and as such is promoted as an independent file format. This means that users will be able to view and edit files (saved in ODF) across different applications and on different operating systems should they desire to do so.
The initial version of the file format – OpenDocument 1.0 (Second Edition) – was approved by the International Organisation for Standardisation (ISO) and the International Electrotechnical Commission (IEC) on 04/05/2006 (ISO/IEC 26300:2006 refers). As a result of this achievement and through the continued ownership of the file format by OASIS it truly can be said to be an open standard. This means that users are not restricted in any way by what they do with it (such as modifying it or redistributing it).
As it stands this is the only file format that is an open standard and as such it has been implemented through various vendors (mainly through OpenOffice) and is slowly, but surely, beginning to find its way onto the public domain. Governments (such as those of France and Germany) are either evaluating ODF or have already implemented it to some degree with more likely to follow. ODF is highly desirable for governments as it will ensure that data saved in present times will not be inaccessible in the future due to different technological specifications. Microsoft clearly sees ODF as a threat to its dominance of electronic office applications and as such is currently trying to push through its own apparent open sourced based document file format called Office Open XML (OOXML).
However, a key obstacle for ODF is that the vast majority know how to use and are comfortable with Microsoft Office and as such they will be unwilling to switch to a different office suite. Microsoft Office suites up until Office 12 (2007) do not include native support of ODF but plug-ins, with the permission of Microsoft, have been developed. One such plug-in has already been released by the OpenDocument Foundation.
2 – The standardisation process of ODF
Whilst ODF was submitted to the ISO in September 2005 and approved as a standard in May 2006 the whole process started out several years before in 1999. In that year StarDivision decided to begin the development of a XML default file format. This decision was primarily based on the limitations of the older file formats. StarDivision’s ambition was to create an interoperable file format that would not be limited to one application or operating system and as such be used by other software companies. After Sun acquired StarDivision the project was expanded to include the open source community (in October 2000) primarily through the website OpenOffice.org. The idea behind this was for the open source community to be involved in defining a specification for the open file format.
In 2002 the OASIS Open Office Technical Committee had its first conference on the open file format’s specification and that year also saw two office applications (OpenOffice.org 1.0 and StarOffice 6) using the open file format as the default file format for the first time. The period of 2003 to 2004 saw the open file format being adapted to reflect recent technical developments in XML and office applications. The result of these adaptations saw the open file format become more refined and consistent. By the end of 2004 the open file format was first called the OpenDocument Format (ODF).
2005 resulted in further refinements of ODF as well as a public review being carried out. In May 2005 ODF was finally approved as an OASIS standard, which would allow it to be submitted to the ISO to be approved as an international standard.
3 – Application support for ODF
Whilst there is no native support (as of yet) in any versions of Microsoft Office there are a number of applications out there that support ODF as the default file format and there are plug-ins available for Microsoft Office (available from sources like the OpenDocument Foundation or Sun) that enables it to support ODF. There are currently eight applications (such as OpenOffice.org and StarOffice) that include ODF as the default file format and further to this there are numerous applications that can convert to and from ODF as well as online office applications (like Google Docs) that include support for ODF.
Whilst many of these applications both work in a very similar manner to Microsoft Office (up to 2003 (version 11)) and are either free (such as OpenOffice.org) or relatively cheap to buy (such as StarOffice) a huge problem remains in that Microsoft Office in effect has a near monopoly over the office application market. If ODF is to truly take off then it will need to be supported in the Microsoft Office application. There are plug-ins (as mentioned previously) that will include support for ODF in Microsoft Office but this is the next best thing to Microsoft actually including ODF has one of the file formats in the program. As governments begin to see the advantages of ODF they will apply pressure on Microsoft to include support for the format in Microsoft Office. Microsoft reported in July 2006 that it would include support for open formats like ODF in its latest office suite (Office 2007 (version 12)) though as of December 2007, nearly a year after Office 2007's release, Microsoft has yet to include support for ODF in the application.
4 - Adoption of ODF
2007 has seen the start of many governments evaluating the adoption of ODF. As ODF guarantees long term access to data without technical or legal barriers many governments now view ODF as a public policy issue. ODF would allow governments to access any policies made in the present day in the future, without having to change the file format as technologies and restrictions evolve. This is because ODF standardises file formats giving users better control over their documents. This advantage over traditional proprietary formats has resulted in many governments including those of France, Belgium and Germany adopting ODF in some form.
The aforementioned governments are starting to exchange documents in their current file format to ODF and are recommending that any future documentation be created using open standards (i.e. ODF). With these leading governments realising the benefits of ODF it is only a matter of time before other governments follow suit. It is likely that in the near future ODF will be the main format in the public domain and with this position of power it could start to make an impact on the private sector.
Even now businesses are responding to the needs of governments and their customers by implementing ODF in their products. In the market today there are multiple applications (both open source and commercial) that support ODF. With the increasing use by governments the pressure on companies to implement ODF into their products is only going to increase.
5 – Benefits and criticisms of ODF
There are many key benefits that come from using ODF over closed source formats. The users of ODF have improved ownership and access to the data they save. Using closed source formats users may not actually own their documents making them dependent on the technology vendors they purchase the products from. This is not the case with open source, as you cannot get technologically locked out of ODF files. The open nature of ODF allows for long term access to files without the worry of changing technologies.
As ODF aims to separate the document (information) from the application that created it a greater choice is available to open source users. This is because the document can be used by other applications without restriction or interference from proprietary code. This interoperability of ODF is a big advantage over closed source rivals. Due to this standardised base for interoperable document formats, it openly encourages innovation. Any company can design and distribute new applications and services but access to the documents will remain after this innovation because of the standardised base.
Many open source enthusiasts would argue that criticisms of ODF are only arising because Microsoft is backing the people making the complaints. However, there are some legitimate criticisms of ODF.
One criticism is the implementation of MathML as the standard to represent mathematical formula in OpenDocument form. Most mathematicians do not use or like this standard and would much prefer the use of the older TeX format for typesetting complex mathematical formula. TeX is the de facto standard used by mathematicians and is thought to be far more accurate than MathML. It is therefore unclear why MathML has been chosen as the standard for mathematical code.
The open source nature of ODF is the main benefit but it has also caused a few problems. ODF does not contain a defined formula language, which means some files are not compatible. OASIS is currently creating a standard for formula language (Open Formula) but until then some inaccuracies may occur. Applications using ODF as their standard document format do not use the same methods of providing scripting capabilities. A standard here would again be required to produce some level of consistency between different applications using ODF.
The functionality of ODF has also come under attack. ODF still has a few missing features like the ability to include tables in presentations. Microsoft also claims that ODF handles new extensions in a complex manner compared to their own open source format OOXML.
6 – Microsoft’s rival Office Open XML
Due to the threat posed by ODF to its proprietary office suite and the increased pressure from consumers to provide an open source product Microsoft has created its own open source rival to ODF called Office Open XML (OOXML).
Prior to the 2007 edition of Microsoft Office, its applications like Word and Excel used binary file formats for storing data. This restrictive manner of storing data has been under fire recently with the development of open source office equivalents like ODF. The benefits of open source file formats have attracted the interest of many governments and businesses and in response Microsoft began to develop OOXML.
So far OOXML has not managed to get approval for ISO standard. This is because there are concerns about the limitations to OOXML’s openness and the complexity of its standard document. The ISO does not want to create an incompatible rival to ODF that will allow the non-interoperable environment to continue. If OOXML and ODF were compatible then OOXML may find it easier to earn standard status. As it stands ODF meets all the definitions of open standard and is already in use worldwide, so the ISO see OOXML as unnecessary.
With the might of Microsoft behind it the adoption of OOXML could be quicker and more extensive than ODF. Many large companies have already backed OOXML and have started incorporating OOXML translators into their applications. However, OOXML is still an entirely new format so existing Microsoft Office files will have to be translated anyway so many companies may chose the ODF ISO standard.
7 – Conclusion
The use of ODF is only going to increase in the next couple of years, as organisations now understand the benefits of implementing open source applications. The better flexibility and choice that comes from using ODF will result in more governments and companies choosing ODF as their main file format. Competition from Microsoft’s OOXML will increase but if it continues to fail at getting ISO approval ODF will continue to compete with OOXML in the market.
8 – References
ODF Alliance – ODF Resources
http://www.odfalliance.org/resources.php
Wikipedia – The OpenDocument Format
http://en.wikipedia.org/wiki/OpenDocument
Free/Libre/Open Source Software: Policy Support
An Economic Basis for Open Standards
http://pascal.case.unibz.it/retrieve/3327/FLOSSPOLS-D04-openstandards-v6.pdf
Google’s Position on OOXML as a Proposed ISO Standard
http://www.odfalliance.org/resources/Google%20XML%20Q%20%20A%20(2).pdf
ISO welcomes Open Document Format
http://www.pcpro.co.uk/news/86931/iso-welcomes-open-document-format.html
History of OpenDocument
http://opendocument.xml.org/milestones
“Why ODF?” – The Importance of OpenDocument Format for Governments
http://www.odfalliance.org/resources/whyODF.pdf
ODF Alliance Hails Record Growth in Application Support for ODF
http://www.odfalliance.org/press/Release20071026.pdf
Application support for the OpenDocument format
http://opendocumentfellowship.com/applications
Microsoft Expands Document Interoperability
http://www.microsoft.com/presspass/press/2006/jul06/07-06OpenSourceProjectPR.mspx
Open or Closed? The ODF debate spills in LinuxWorld
http://searchenterpriselinux.techtarget.com/originalContent/0,289142,sid39_gci1179223,00.html
This project was a collaboration between Rory Linwood and Stuart Nibloe
The OpenDocument format (ODF) is an alternative document file format to the one predominantly used in Microsoft Office. Unlike Microsoft’s proprietary document file format ODF is open source. This effectively means that the source code used in the creation of the format is freely available to anyone under a General Public Licence (GPL) and they may do with it as they wish (i.e. modify it for their own needs or redistribute it). Microsoft’s proprietary document file format does not allow users the same freedoms (such as modifying the format) that ODF does.
ODF was originally developed by the Organisation for the Advancement of Structured Information Standards (OASIS). The organisation represents companies from around the globe that have a desire to develop and implement standards within the IT world. The format itself is XML (a computer language whose primary purpose is to make it easier to share data across different applications) based and as such is promoted as an independent file format. This means that users will be able to view and edit files (saved in ODF) across different applications and on different operating systems should they desire to do so.
The initial version of the file format – OpenDocument 1.0 (Second Edition) – was approved by the International Organisation for Standardisation (ISO) and the International Electrotechnical Commission (IEC) on 04/05/2006 (ISO/IEC 26300:2006 refers). As a result of this achievement and through the continued ownership of the file format by OASIS it truly can be said to be an open standard. This means that users are not restricted in any way by what they do with it (such as modifying it or redistributing it).
As it stands this is the only file format that is an open standard and as such it has been implemented through various vendors (mainly through OpenOffice) and is slowly, but surely, beginning to find its way onto the public domain. Governments (such as those of France and Germany) are either evaluating ODF or have already implemented it to some degree with more likely to follow. ODF is highly desirable for governments as it will ensure that data saved in present times will not be inaccessible in the future due to different technological specifications. Microsoft clearly sees ODF as a threat to its dominance of electronic office applications and as such is currently trying to push through its own apparent open sourced based document file format called Office Open XML (OOXML).
However, a key obstacle for ODF is that the vast majority know how to use and are comfortable with Microsoft Office and as such they will be unwilling to switch to a different office suite. Microsoft Office suites up until Office 12 (2007) do not include native support of ODF but plug-ins, with the permission of Microsoft, have been developed. One such plug-in has already been released by the OpenDocument Foundation.
2 – The standardisation process of ODF
Whilst ODF was submitted to the ISO in September 2005 and approved as a standard in May 2006 the whole process started out several years before in 1999. In that year StarDivision decided to begin the development of a XML default file format. This decision was primarily based on the limitations of the older file formats. StarDivision’s ambition was to create an interoperable file format that would not be limited to one application or operating system and as such be used by other software companies. After Sun acquired StarDivision the project was expanded to include the open source community (in October 2000) primarily through the website OpenOffice.org. The idea behind this was for the open source community to be involved in defining a specification for the open file format.
In 2002 the OASIS Open Office Technical Committee had its first conference on the open file format’s specification and that year also saw two office applications (OpenOffice.org 1.0 and StarOffice 6) using the open file format as the default file format for the first time. The period of 2003 to 2004 saw the open file format being adapted to reflect recent technical developments in XML and office applications. The result of these adaptations saw the open file format become more refined and consistent. By the end of 2004 the open file format was first called the OpenDocument Format (ODF).
2005 resulted in further refinements of ODF as well as a public review being carried out. In May 2005 ODF was finally approved as an OASIS standard, which would allow it to be submitted to the ISO to be approved as an international standard.
3 – Application support for ODF
Whilst there is no native support (as of yet) in any versions of Microsoft Office there are a number of applications out there that support ODF as the default file format and there are plug-ins available for Microsoft Office (available from sources like the OpenDocument Foundation or Sun) that enables it to support ODF. There are currently eight applications (such as OpenOffice.org and StarOffice) that include ODF as the default file format and further to this there are numerous applications that can convert to and from ODF as well as online office applications (like Google Docs) that include support for ODF.
Whilst many of these applications both work in a very similar manner to Microsoft Office (up to 2003 (version 11)) and are either free (such as OpenOffice.org) or relatively cheap to buy (such as StarOffice) a huge problem remains in that Microsoft Office in effect has a near monopoly over the office application market. If ODF is to truly take off then it will need to be supported in the Microsoft Office application. There are plug-ins (as mentioned previously) that will include support for ODF in Microsoft Office but this is the next best thing to Microsoft actually including ODF has one of the file formats in the program. As governments begin to see the advantages of ODF they will apply pressure on Microsoft to include support for the format in Microsoft Office. Microsoft reported in July 2006 that it would include support for open formats like ODF in its latest office suite (Office 2007 (version 12)) though as of December 2007, nearly a year after Office 2007's release, Microsoft has yet to include support for ODF in the application.
4 - Adoption of ODF
2007 has seen the start of many governments evaluating the adoption of ODF. As ODF guarantees long term access to data without technical or legal barriers many governments now view ODF as a public policy issue. ODF would allow governments to access any policies made in the present day in the future, without having to change the file format as technologies and restrictions evolve. This is because ODF standardises file formats giving users better control over their documents. This advantage over traditional proprietary formats has resulted in many governments including those of France, Belgium and Germany adopting ODF in some form.
The aforementioned governments are starting to exchange documents in their current file format to ODF and are recommending that any future documentation be created using open standards (i.e. ODF). With these leading governments realising the benefits of ODF it is only a matter of time before other governments follow suit. It is likely that in the near future ODF will be the main format in the public domain and with this position of power it could start to make an impact on the private sector.
Even now businesses are responding to the needs of governments and their customers by implementing ODF in their products. In the market today there are multiple applications (both open source and commercial) that support ODF. With the increasing use by governments the pressure on companies to implement ODF into their products is only going to increase.
5 – Benefits and criticisms of ODF
There are many key benefits that come from using ODF over closed source formats. The users of ODF have improved ownership and access to the data they save. Using closed source formats users may not actually own their documents making them dependent on the technology vendors they purchase the products from. This is not the case with open source, as you cannot get technologically locked out of ODF files. The open nature of ODF allows for long term access to files without the worry of changing technologies.
As ODF aims to separate the document (information) from the application that created it a greater choice is available to open source users. This is because the document can be used by other applications without restriction or interference from proprietary code. This interoperability of ODF is a big advantage over closed source rivals. Due to this standardised base for interoperable document formats, it openly encourages innovation. Any company can design and distribute new applications and services but access to the documents will remain after this innovation because of the standardised base.
Many open source enthusiasts would argue that criticisms of ODF are only arising because Microsoft is backing the people making the complaints. However, there are some legitimate criticisms of ODF.
One criticism is the implementation of MathML as the standard to represent mathematical formula in OpenDocument form. Most mathematicians do not use or like this standard and would much prefer the use of the older TeX format for typesetting complex mathematical formula. TeX is the de facto standard used by mathematicians and is thought to be far more accurate than MathML. It is therefore unclear why MathML has been chosen as the standard for mathematical code.
The open source nature of ODF is the main benefit but it has also caused a few problems. ODF does not contain a defined formula language, which means some files are not compatible. OASIS is currently creating a standard for formula language (Open Formula) but until then some inaccuracies may occur. Applications using ODF as their standard document format do not use the same methods of providing scripting capabilities. A standard here would again be required to produce some level of consistency between different applications using ODF.
The functionality of ODF has also come under attack. ODF still has a few missing features like the ability to include tables in presentations. Microsoft also claims that ODF handles new extensions in a complex manner compared to their own open source format OOXML.
6 – Microsoft’s rival Office Open XML
Due to the threat posed by ODF to its proprietary office suite and the increased pressure from consumers to provide an open source product Microsoft has created its own open source rival to ODF called Office Open XML (OOXML).
Prior to the 2007 edition of Microsoft Office, its applications like Word and Excel used binary file formats for storing data. This restrictive manner of storing data has been under fire recently with the development of open source office equivalents like ODF. The benefits of open source file formats have attracted the interest of many governments and businesses and in response Microsoft began to develop OOXML.
So far OOXML has not managed to get approval for ISO standard. This is because there are concerns about the limitations to OOXML’s openness and the complexity of its standard document. The ISO does not want to create an incompatible rival to ODF that will allow the non-interoperable environment to continue. If OOXML and ODF were compatible then OOXML may find it easier to earn standard status. As it stands ODF meets all the definitions of open standard and is already in use worldwide, so the ISO see OOXML as unnecessary.
With the might of Microsoft behind it the adoption of OOXML could be quicker and more extensive than ODF. Many large companies have already backed OOXML and have started incorporating OOXML translators into their applications. However, OOXML is still an entirely new format so existing Microsoft Office files will have to be translated anyway so many companies may chose the ODF ISO standard.
7 – Conclusion
The use of ODF is only going to increase in the next couple of years, as organisations now understand the benefits of implementing open source applications. The better flexibility and choice that comes from using ODF will result in more governments and companies choosing ODF as their main file format. Competition from Microsoft’s OOXML will increase but if it continues to fail at getting ISO approval ODF will continue to compete with OOXML in the market.
8 – References
ODF Alliance – ODF Resources
http://www.odfalliance.org/resources.php
Wikipedia – The OpenDocument Format
http://en.wikipedia.org/wiki/OpenDocument
Free/Libre/Open Source Software: Policy Support
An Economic Basis for Open Standards
http://pascal.case.unibz.it/retrieve/3327/FLOSSPOLS-D04-openstandards-v6.pdf
Google’s Position on OOXML as a Proposed ISO Standard
http://www.odfalliance.org/resources/Google%20XML%20Q%20%20A%20(2).pdf
ISO welcomes Open Document Format
http://www.pcpro.co.uk/news/86931/iso-welcomes-open-document-format.html
History of OpenDocument
http://opendocument.xml.org/milestones
“Why ODF?” – The Importance of OpenDocument Format for Governments
http://www.odfalliance.org/resources/whyODF.pdf
ODF Alliance Hails Record Growth in Application Support for ODF
http://www.odfalliance.org/press/Release20071026.pdf
Application support for the OpenDocument format
http://opendocumentfellowship.com/applications
Microsoft Expands Document Interoperability
http://www.microsoft.com/presspass/press/2006/jul06/07-06OpenSourceProjectPR.mspx
Open or Closed? The ODF debate spills in LinuxWorld
http://searchenterpriselinux.techtarget.com/originalContent/0,289142,sid39_gci1179223,00.html
This project was a collaboration between Rory Linwood and Stuart Nibloe
Subscribe to:
Posts (Atom)