Why Do Companies Pay Big Money to Develop Open Source Software?

It’s not because they don’t believe in Capitalism. It is because it is a good business strategy.

Substitutes and Compliments

Before I can answer that main question, I need to introduce the economic principle of substitutes and compliments. All products have substitutes and compliments. Substitutes are goods that can easily replace one another while compliments are goods that go together well. Chicken is a substitute for beef. If beef prices go up, beef sales will decrease and chicken sales will increase. Gas is a compliment of automobiles. If gas prices go up, car sales and gas sales will both go down. Substitutes and Compliments are linked with their counterparts economically. The success and failure of one will affect the other. Computer hardware and software are compliments. The failure or success of one will have a big impact on the other.

OK, knowing this much we can ask the big question again. Why do companies pay big money to develop open source software? The economic principles of compliments explains it. Smart companies try to commoditize their compliments. By reducing the price of software, thus making the demand increase, the complimentary hardware will increase in demand too.

Headline News, Myth vs. Reality

Headline: IBM Spends Millions on Open Source Software
Myth: Lou Gerstner gave up on capitalism and decided to give back to the community.
Reality: IBM is becoming a consulting company. They consult on solutions that require software. By reducing the price of the complimentary software, they increase the demand for their consulting business. The payoff was big for IBM. It was a very smart business decision to sponsor Open Source software.

Headline: Transmeta Corporation Hires Linus Torvalds to Work on Linux Full Time.
Myth: They did it to get publicity.
Reality: They are a CPU company (hardware). They wanted the Operating System that ran on their CPUs to be a commodity. The Linux Operating System is the largest Open Source software project in the world and Linus Torvalds is the original developer. Today, 75% of the developers that work on Linux are paid by corporations. All of these companies businesses benefit from having a high demand, low cost operating system.

But How Does This Relate to the Church?

The church’s business is communicating the gospel and changing lives. A church has it’s substitutes and compliments. But what are the complimentary goods of a church?

— Buildings (places to gather) 
— People (staff) 
— Systems (lighting, sound, audio, video, web, and a Church Management System)

BVCMS is a substitute for other well-established Church Management Systems (ChMS) in the market. But such systems are complimentary goods of the business of a church. Smart churches are trying to commoditize their compliments. They are looking for ways to reduce the costs of their compliments while increasing the demand for their product. This just makes good business sense.

How does a church increase its return on investment? Through growth in numbers and spiritual health, church plants, and discipleship. Multiplication is the common factor among all of these. A good Church Management System is also a common and valuable tool to help increase and manage a churches growth, communication, startups, and discipleship programs. But in the same way a compliment’s negatives can affect a big company’s products or even entire industries, high-priced and unsatisfying church management systems can have a detrimental impact on the business of the church.

Why would a church become a big sponsor of an Open Source Church Management System?

1) The high-price of proprietary software
2) The high-price of dissatisfaction

These factors will prevent a church from being able to reproduce itself in small church plants and start-ups. These small churches need to draw on the experience and expertise of their mother church, but with proprietary software, they can’t afford to do so.

There is an astonishing level of dissatisfaction in the Church Management System market. Such frustration will hinder and close the windows of opportunity when they arrive. The software will stumble along and never become a vibrant and exciting enabler of new ideas and opportunities. This is not a formula a good business wants to deal with. Read an article about the general frustration in Church Management Systems. Be sure to view the results of the straw poll.

Open Source can solve both these problems. Low cost, and highly satisfying software is a hard combination to beat. The most satisfaction in software comes when you have control over competent developers working to implement your great ideas.

A proprietary solution will solve neither of these problems unless it happens to already be low-cost and highly refined and satisfying. That’s a hard combination to find in a for-profit software vendor.

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