Free and Open Source Software (FOSS). Fueling growth in the local economy?

Ever since free software policies boomed at the beginning of the 21^st century, one of the familiar mantras spelled out by any representative, while listing the benefits of promoting FOSS is the expected ability to foster the local economy. The equation is supposed to work as follows: Public administrations, companies and society promote the use of FOSS which generates license savings that can be devoted to software integration tasks including the development of new features. Those new developments are carried out mostly by local companies empowered by their capacity to manipulate the code. As a result, a virtuous circle arises with new local companies emerging around, FOSS increases its use and a positive feedback in terms of savings and employment goes back to the community.

In the study “Economic impact of open source innovation and the competitiveness of the ICT sector in the EU” contracted by the European Commission in 2007, the authors reported a strong economic impact of FLOSS in the economy and the stated that “FLOSS provides opportunities in Europe for new businesses, a greater role in the wider information society and business model that suits European SMEs”.

Far from making a review of the report and even though FOSS is present in almost any computer, one can have the feeling that, in terms of the promotion of an SMEs based innovation ecosystem, most of the predicted benefits are yet to come.

Today, many local SMEs are able to provide full support on a wide variety of enterprise solutions based on FOSS. But honestly, this does not differ too much from the proprietary model in which a world class software company establish a partnership program for “locals”.

Besides of considering FOSS an opportunity for SMEs’ growth as subsidiaries, the focus might be appropriately set on the ability of extending the FOSS-way as a new business mechanism that definitely can be more successful. What if we strengthen our efforts on making FOSS development a formal business case that can be taught and replicated? Moreover, what if we focus on the product development instead of delivering third party services?

Basically there are at least two business processes in FOSS development that we should try to shape and copy. Firstly, the creation of a community around a product. It is clear there is no rule of the thumb to succeed, as in almost every single business process, let alone if we think of innovation. But still there are some common basics worth following. We also count on the invaluable expertise of those who didn’t succeed on launching a community.

Secondly, as Community development is the cornerstone of FOSS, so it is the ability of FOSS companies for internationalization, a skill that seems priceless today.

Two examples of success (so far) to illustrate the idea of fostering an innovation ecosystem powered by FOSS learnings:

Started in 2006 Zentyal is a FOSS company, based in Zaragoza, which offers an off-the-shell IT solution for small businesses. Zentyal has developed a worldwide community of partners and users and it is currently competing with Microsoft in the low-end server solutions segment. The second one correspond to a public initiative led by the region of Valencia, gvSIG, aimed at developing of Geospatial Information tools based on FOSS. As a result of the public efforts, a local ecosystem of companies with strong expertise on the subject flourished, followed by an international community of users and developers.

We end up reinforcing the idea that economic impact of FOSS should not be limited to license savings. Developing an Open Culture with the implication of public agencies and companies combined with the formalization of a business methodology that picks up from already-proven strengths, such as the ability of building world class communities, should determine the grassroots for a new growth model that really fits with the peculiarities and needs of SMEs throughout Europe.