The Definitive Guide for Choosing Business Management Software - CHAPTER 12

NaN-tic Jun 9, 2019



How is free software made? Who is responsible? If it is free how do companies that do this earn money? It is reliable? These are questions that come to us constantly and that in this final chapter we take advantage of to answer from our knowledge and experience.


  • Free software is more widespread than people imagine. Most websites or online stores use open platforms, without any problem.
  • Open source software is developed cooperatively. The improvements are used by all, which accelerates and enriches its evolution.
  • Companies like NaN-tic do not grow selling program licenses, but adapting free programs to the needs of companies.

SOME CONSIDERATIONS REGARDING OPEN SOURCE PROGRAMS that we don’t want to leave out of this guide. Because, to be frank, open source software creates a certain amount of distrust. Three recurring questions arise regarding our business area that need to be answered.

Are open source programs reliable? Several years ago the image of open source software was not at its best. It was seen to be something that IT engineers who worked for large software companies did in their free time. The products appeared to be alternatives that in no way amounted to competition for standard programs. We say ‘appeared’ because many programs revealed an initial robustness that many proprietary programs would have envied. However, one has to make a major act of faith in order to confide in programs of this type, in which barely a single euro has been spent on marketing.

Fortunately things have changed. And we can attest to this. Free software is no longer something weird and is now commonplace in our lives. Popular operating systems for mobile phones and tablets, such as Android or Firefox OS, browsers such as Chrome, Firefox or Safari or the Macintosh printing system are examples of solutions that have been either totally or largely developed using free software and which are used every day by millions of people around the world. To put it another way, it is actually difficult to find someone today who does not have a tool that has been developed using open source programs.

There are of course other, more renowned examples, such as OpenOffice or LibreOffice (office software suites that are highly compatible with Microsoft Office), GIMP (an image editor), Wordpress (the CMS on which most web pages are built), SugarCRM (a business opportunity manager) or the most important e-commerce shops. In some areas, free software is the only program format that has been installed. Good examples are Magento and Prestashop, which are tools for constructing online shops that have become the real winners in this sector, one in which few proprietary programs are used.

Apart from these widely-used tools, it is worthwhile mentioning that the computer infrastructure of companies such as Google, Facebook, Twitter and several banking organisations use free software a lot. It is therefore evident that open source is now no longer merely simple entertainment for IT buffs. It is a way of understanding software that is changing industry paradigms at all levels and we are therefore looking at products that are extraordinarily reliable.

One final note: according to the CENATIC Observatory (a Spanish public organisation), 91% of Spanish CIT companies use open source programs in one way or another.

Where does free programming come from? How is it made? Free programming is an open, transparent, accessible phenomenon. But who makes it, and how do the people who invest their time in it earn their livings?

There’s possible no other sentence that frightens potential open source users more than “There is no company that manufactures this program”. The immediate reaction is to place open source in the mental space for things that are of no interest and which may entail more problems that solutions. “Who do I turn to if there’s a problem? Who do I complain to?” are often the questions asked.

But think about it like this: imagine that you had an unknown illness and that you needed medical attention, what would you prefer? Having all your medical history on hand and being able to select the doctors of your choice, or going to the only clinic where they have your information on file? An IT engineer is like a doctor for computers, and when he has access to the source code he will always have resources with which to try and cure the patient. On the other hand, being a captive in the only-available clinic is a little more worrying.

But we’ll leave the medical metaphors out of this for a while and focus on the panic-inducing sentence. It’s true that behind many open source products there is no single manufacturer. There are usually many experts with many different viewpoints. Open source is made via cooperation and not competition. This means that the improvements requested by a client to his IT specialist or supplier can be used immediately in another location, and without any restrictions.

All of the above translates into the fact that everyone is interested in developing the program and improving it constantly – and even from different starting points. The result is usually a livelier form of software, which has been designed by IT engineers with radically different viewpoints and who have responded to hundreds of challenges put forward by users around the world. We could say that it would be highly difficult to find RDI computer labs that provide better results than those offered by open source software.

How do free software companies make a living? Investing your time in something you then give away doesn’t seem like the best business plan in the world. This is why many people ask us about the business model behind open source. They often ask us “How do you make money?” It’s a reasonable question. And more so when there are companies who use free programming as a commercial gambit rather than as a professional philosophy.

But the truth is that there are many possible business models to choose from in the realm of free software. We’ll take a look at the most important to understand the type of suppliers you might come across if you choose a tool of this type.

EXAMPLE 1: A company or professional that creates or improves a product You need a lot of time, knowledge and experience, but there are many examples of people and companies who make a living from having developed an open source program. Up to this point the business makes no profit, however later, these people offer services, normally in the development of the product, either because their clients want specific improvements or product development.

This normally includes freelancers or very small companies. Some examples are as follows: Emweb,; a small Belgian company. They are the creators of a highly interesting tool called Wt (, which is used for creating web applications in C++ and Java programming languages. Richard Stallman: apart from being one of the main proponents of free software on a worldwide level, also created a text editing program called Emacs, and he earned his living charging for the improvements requested by some users. The program is widely used and in proportionate terms he had few commissions.

EXAMPLE 2: Cooperation between various service companies This is a development of the previous case. Due to the nature of the product, instead of having a single person or a small company that profits from the ecosystem created by a program, several people or companies do so instead. In one way or another they cooperate in the project, they share the costs of maintaining it among each other and they earn a living by offering product-related services to other companies.

Tryton is a good example of this model. Tryton is an ERP, a business management program that is mainly promoted by the Belgian company B2CK, although companies also actively take part in making it grow, thanks to the demands made by their clients.

Just to be clear on this point, this is how we make our living.

EXAMPLE 3: Foundations that manage resources This section focuses on larger projects. Here the interests of large companies play a part, and which, unlike the previous cases, these businesses do not earn money directly from the program or the services provided with respect to the program in open source. A well-known example is the Firefox OS operating system for tablets and mobile phones. This free software has been developed by the Mozilla Foundation, which receives money from companies that are far from dedicated to charity, such as Movistar.

More examples are the Apache Foundation, which as in the case above, maintains numerous applications, or the Document Foundation (which is behind the office software package LibreOffice), in addition to the Eclipse Foundation, the Python Foundation and many more. Needless to say, not only are there often large companies that finance foundations, there are also individuals who donate, and participate in their work, as satisfied users.

EXAMPLE 4: Creating a free version and a private version so that users can decide.

Up until now we have talked about free software without limitations, but when companies want to focus on developing open source programs and experience significant growth, they are faced with the incompatibility of combining both. How can growth be attained if what you produce is sold freely on the Internet?

The solution is not altogether original, but some companies have opted to make use of open source software as an advertising gambit, while offering a ‘better’ option that is not free. The usual case involves creating a ‘Community’ version of the program, which is free. Forums are then normally enabled so that developers can make contributions, however, in reality, it is difficult to include changes made by people external to the manufacturing company.

Apart from the Community version, they also offer the Enterprise version (or any other name like this), which includes more features, so that those users who want these improvements need to pay for them, and normally the licence is not free. It must be said that in many successful projects, the Community version is widely used and only very large companies opt for the Enterprise version. There are many successful companies with this model.

Here are some examples: JasperSoft: an editor of various integrated Business Intelligence solutions with a well-established track record.

Pentaho: as above, they also offer a complete and integrated Business Intelligence solution and have been on the market for many years now.

OpenBravo: this is a company with Catalan capital that has created an ERP (a business management tool). They offer a free Community version, although it is relatively limited, so that some areas, such as production, are payment-based, with a proprietary licence. Users may use the code, but cannot redistribute it, nor therefore improve or reduce long-term expenses. Is this free software? Put it this way; is a vegetarian who eats a barbecue every weekend really a vegetarian?

Magento: is one of the most-utilised e-commerce solutions at a global level. The basic version is free, open and anything you want, but if you want certain extras you need to pay.

EXAMPLE 5: Selling software that is almost free There is also the case of companies that have decided not to use these two versions and have opted to increase client loyalty with certain methods that are not altogether clearly defined.

This is the case of OpenERP, which offers the program free of charge, but when you want to move on to the next version of the program, there is no process available that allows this, which means that either you develop it yourself (which is practically impossible and not at all practical) or you pay OpenERP to do the work for you.

In this case the company takes advantage of one of the main errors committed by companies when selecting a management tool: not taking product development into account, i.e. not calculating expenses for software maintenance and evolution over the years.

EXAMPLE 6: Dual licencing The last example of a free software business model is that of the dual licence, and it may be the most difficult one to explain, as it is usually adopted by companies that offer their solution to other IT-based companies.

In this scenario, the company develops a totally free-to-use product, however it retains intellectual property rights over it. This means that it can offer the program with a free licence while also offering it with a purchase-based licence. Some types of free licences oblige those users who make program changes to redistribute the program with these changes if and when they redistribute it. This means that those companies that wish to focus on making proprietary programs cannot use the free program as a starting point.

Dual licencing means that manufacturers can offer programs that are both totally open and free to anyone who uses them, with the rules of free licencing, while those who wish to use them, modify them and charge their own licence fees to clients must pay the manufacturer. This allows consumers to choose which rules of the game they wish to follow; free or proprietary.

It is complicated, but some people have managed to earn a living from this model.


CHAPTER 11: Glossary

CHAPTER 10: 10 Questions you have to do

CHAPTER 9: The General Manager opinion

CHAPTER 8: The Financial Manager opinion

CHAPTER 7: CTO opinion is a must

CHAPTER 6: Who should participate in the selection? Involve responsibles for the key departments in the organization

CHAPTER 5: Is open source the best option? Not necessarily, but you should always count on it

CHAPTER 4: Incorporate products developed in open source software into the search. They will broaden your perspective and offer you advantages that perhaps interest you.

CHAPTER 3: How should you start looking for an ERP? The main mistake is to limit the initial search too much.

CHAPTER 2: We find out when is the right time to select an ERP and how long it will take to choose it and start it up.

CHAPTER 1: Selecting a business management program is always a headache. This guide is aspirin that will help you face it.


The Definitive Guide for Choosing Business Management Software