Wednesday, March 15, 2006

CIOs to become the new venture capitalists?

IT departments are swarming to mainstream open-source packages. But while horizontal offerings -- operating systems, web servers, databases, application-servers, etc. -- are increasingly popular, there's a relative dearth of vertical products that exist higher up on the value chain. CIO India Magazine remarks:

Some CIOs are skeptical that open-source communities will ever emerge for some of the software they really need. “There are things I need, but people in the community think it’s too boring to work on them,” says Barry Strasnick, CIO, CitiStreet, a benefits management company.

CIOs could become the venture capitalists. It would work this way: CIOs hire consultants to write code for patchy areas but the software isn’t part of their core competence and is broadly applicable enough for other companies to benefit from it. They have the consultants release the software as open source. The consultants are happy because they get to sell services to other companies. CIOs potentially benefit because other customers may pay consultants to write useful additions to the software that the original CIO gets to use for free. Maintenance and support are handled by the consultants and perhaps a community of users that emerges around the new product. If the community and the consultants disappear, CIOs simply take the code base to another outfit for support.

CIO India: CIOs to become the new venture capitalists?

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