Building An Open Source ERP Company From Pamplona, Spain: OpenBravo CEO Paolo Juvara (Part 7)

Sramana: What levers are you going to push to accelerate growth?

Paolo Juvara: From my perspective, we need to take advantage of our open source background and leverage that from a commercial standpoint. We have a very real pull-and-push effect. Our partners push the product onto the market by finding customers. In that use case, the partner cares more about the open source nature of the software than their customers do.

The pull effect is illustrated by the 30,000 monthly downloads of our software. We have 40,000 installations a month. Companies take our product and put it into production. We do not monetize the total number of installations that are put into production to its full potential. I believe we need to monetize that area more than we do now to be successful in the long run.

One of the key aspects going forward will be certification. When certification comes into the picture, more users will find the product more valuable and will have more confidence in deploying the solution. OpenBravo should be easy to install and deploy for someone with the correct skill sets. It is not a trivial product. If we made a trivial product, we would be limited in scope and functionality to the point where we would not do anything more than QuickBooks does. The key for us is to maintain the philosophy of starting small and letting our software grow with the business.

Sramana: If I were you, I would keep your partnership business that allows your partners to build commercial solutions on top of your open source core. I do believe that you would grow a lot faster if you kept the consulting to yourself. If you are getting 30,000 downloads a month, there is definitely a market for consulting services.

Paolo Juvara: It would grow a lot faster. That is a debate that we have had many times within the company. I think that would limit the company in some ways.

Sramana: True, but the consulting would not be your sole purpose. You have other revenue streams. At least 40% of your business should be consulting, which would let you get a lot more leverage. You are not monetizing the your monthly downloads and installations nearly enough. I think you need to drill down there and get some monetization from that.

Paolo Juvara: Yes, we have certainly debated that. We could probably grow from 5 million to 20 million euros. That is not bad. However, if we reach that level we may end up destroying our partner channel.

Sramana: Are the majority of your partners developing commercial software solutions on top of your open source product, or are they doing consulting services based on your open source product?

Paolo Juvara: It is a combination of both. There are a lot of partners who provide services on top of the commercial services. If we start competing with them, we will destroy that channel. We will have to limit our consulting to our core product.

Sramana: I encourage you to do that. The open source business model has some scaling issues. You are discovering some of them. When it comes to your core software, you will still find there is a need for consulting work. If you give that core to channel partners, you will not have a business model.

Paolo Juvara: Perhaps. We will see. I appreciate the perspective you provide.

Sramana: I am just giving you my observations of the open source industry. I really enjoyed your story. Good luck!

This segment is part 7 in the series : Building An Open Source ERP Company From Pamplona, Spain: OpenBravo CEO Paolo Juvara
1 2 3 4 5 6 7