If there’s any indication that the local market is ripe for commercial software, it lies in the fact that even smaller companies are now investing on it. Even with available open-source software and customizing applications in-house as an alternative, proprietary software is not losing its appeal because of its inherent advantages.

Ease of migration is the oft-repeated caveat to open-source despite all its promise of doing away with expensive software licenses. Migrating applications from one OS to another is not as simple as it sounds, especially for companies, which have been running proprietary systems for a long time.

Migrating to non-proprietary software opens up a Pandora ‘s box of issues IT departments have to contend with such as the absence of vendor support and availability of skills from within the company.

Tried And Tested

“For open-source applications, it is typically something that you must learn from scratch. This means a long implementation cycle,” said Johnny Sy, vice president for IT at media conglomerate ABS-CBN Broadcasting Corp., said in an interview with Computerworld Philippines via email.

Because vendor support is not as readily available, IT executives are driven to seek other companies that have adopted or at least tried similar solutions, not only Linux but applications that are freely available like, for example, MySQL, an open-source database program, and Web server software like Apache. In most cases, IT executives have to rely on mailing lists and ask for help from the local community of open-source users.

“Some products have a wider adoption, you’d be lucky to get a wealth of support info but, again, you’d have to rely on mailing lists or websites to get the right info in place,” Sy added.

On the other hand, the obvious advantages of proprietary software lie in available support from the local subsidiary or system integrators and resellers certified by the vendor to provide support and post-implementation services. But far more important for the user is the belief that it is using a tried-and-tested product adopted by the likes of Fortune 500 global companies, for example.

ABS-CBN uses more sophisticated solutions like business intelligence and data warehousing software because it allows it to manage information better and thus, allow it to compete better as an industry player. “The major advantage of using proprietary software solutions is the wealth of functionality that comes from a broad base of customers and the adoption of best practices in the product,” Sy noted.

Out Of The Box

Open-source is not the only alternative to commercial software. Some companies opt to develop their applications internally rather than purchase a licensed product because there is product in the market that matches exactly what they need. A company either employs its own team of programmers or hires the services of a software development company to make the application.

But again, the problem with internally developed software is long-term support. The lack of support is encouraging even relatively smaller users like the University of Santo Tomas (UST) to invest in commercial software. The Manila-based university initially planned on developing its own software programs until it eventually invested in packaged software two years ago from Great Plains. UST invested in an enterprise and resource planning (ERP) package that consists of modules like accounting and distribution.

Great Plains is one of four major ERP product lines – the others being Navision, Axapta and Microsoft CRM – offered by Microsoft Business Solutions (MBS), a unit established by Microsoft targeting the growing market of small and mid-tier companies looking for software to automate basic business requirements.

UST is one of three customers present during a recent briefing held by Microsoft. The software company said it grew its MBS customer base in the Philippines to 400 customers by the end of last year, mostly from industry segments like manufacturing, retail and distribution and services companies.

Jaime Dolera, who is in-charge of software development and data processing at UST, believes packaged software works better for companies that have small IT departments. UST employs a department of less than five people, including Dolera, that handles the school’s IT requirements.

“If you are using internally-developed software, it takes a lot of resources, including the amount of time you spend on perfecting the software and finding the right people with the right skills to do that,” Dolera said. “In the case of packaged software, you just open it from the box, install it and almost everything that you need is there,” he added.

Microsoft faces stiff competition from traditional ERP vendors like Oracle Corp. and SAP, which are also actively pursuing the same SME market perceived to be lucrative because of the sheer number of companies that belong to this sector.

According to the Department of Trade and Industry, SMEs make up more than 90% of existing businesses in the country. SAP recently launched a package called SAP Business One and has announced local users in agribusiness firm San Andres Fishing, manufacturing firm Splash Corp. and General Santos Hospital.

Oracle, on the other hand, has been selling its Oracle E-Business Suite since last year and has announced a number of users including fastfood chain HenLin (M&H Food Corp), Odyssey Records and Mindanao-based Davao Light and Power Company. Oracle also offers a version of its core database software for smaller users.

Bernard Morgan, president of Global Implementation Services, a local MBS partner, noted that smaller companies have the same requirements like those of much-larger software users. Morgan’s company is currently implementing a Microsoft point-of-sale (POS) solution for Petron and is targeting to install the software in at least 50 gasoline stations by the end of June.

GIS is also Microsoft’s implementation partner for UST. “Small companies have the same needs to automate their business operations. The goal is not really to cut down on manpower but simplifying access to the vast amount of information for key people in the company,” Morgan said.

Back-end niche

If there’s an area where commercial software is facing competition, it is in the back-end IT systems of companies. Linux, an open-source operating system that competes directly with Microsoft’s Windows, has gained a lot of interest from local users in the last two years in part due to the significant amount of support thrown in by major tech firms like IBM and Oracle. Hardware vendors often bundle Linux with their product offerings – be it servers, desktops and even notebooks.

The adoption of Linux, however, is still largely confined at the back-end, manned by “server guys” more knowledgeable and inclined to tinker with the software. Juan Chua, president of Nexxus Technologies, sees very little “invasion” of open-source software on the desktop side. Nexxus is a local reseller of Microsoft, database software by IBM and other commercial front-end applications.

But on the back-end, Chua noted that a lot of companies now run “heterogeneous” server environments. He acknowledged that companies are becoming more interested in Linux not only because it does away with licensing costs, but also (without exactly pointing at Windows) because of the security risks attached to proprietary systems.

“There are companies running proxy servers or email servers and even for small dabatases on open-source,” Chua pointed out. “But for mission critical applications, including large databases, I don’t see users yet adopting Linux.”

Jake Ligones, program manager for commercial software at Microsoft Philippines, likewise noted that Linux is finding its way in Web servers, email servers and firewall appliances because of the perception that it is less susceptible to attacks. “That’s where we see a bigger percentage of open-source users. But on the applications side, that’s where we see a lot more users running on the Microsoft platform,” Ligones said.