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Steinbeis University Student investigates open source business model

Gemfony scientific – a spin-off just about to be launched by the Karlsuhe Institute of Technology (KIT) – will base its business plans on open source. As part of his master’s degree at the Steinbeis Business Academy, part of the Steinbeis University in Berlin, MBA graduate Dr. Rüdiger Berlich examined a range of different business models. Expertise and business application have always made good partners, and soon the SteinbeisMBA program will have made a direct contribution to the success of Gemfony scientific.

Open source development has had a strong and lasting impact on IT in recent years. The term “open source“ is generally used to refer to free access to the source code of software and an almost unlimited right to distribute and modify it. As part of his master’s degree project, Rüdiger Berlich studied the pros and cons of open source business models and the current level of technology.

In general, open source business models tend to be based on a large number of users to keep the software freely available and free of charge. One way to compensate for low or even non-existent license revenues is to offer alternatives based on the number of users – so even with “free” software, it is still possible to generate license revenues. Many open source programs are now released under “viral” licenses, one example being the GNU General Public License (GPL) – which, under certain circumstances, can even cover “derivative works”. Sometimes, a client application based on GPL software has to be made freely accessible under the same license terms. Under these circumstances, developers opt for dual licensing, making it possible to earn money through commercial licenses on the same code.

Providers of open source can gain high numbers of users, albeit at a price: added complexity. With the traditional approach, all that needs to be taken care of is the relationship between the software developer and the customer. When firms have to launch the sort of user groups – or “communities” – required by open source solutions (to discuss the solution), they immediately become involved in two more communication channels: developer/community and indirectly customer/community. Setting up these communication platforms results in additional cost. Another point worth considering is who owns the rights to code snippets developed by the community.

While researching suitable business models for Gemfony scientific, Rüdiger Berlich also had to take technical specifications into account, such as technical improvements and distributed computation. He addressed these aspects with an optimization environment called Geneva, which stands for gridenabled evolutionary algorithms (to find out more, visit Geneva is freely available as open-source software under certain conditions. Geneva can find solutions of highly complex optimization problems in parallel on devices ranging from multi-core machines to clusters and Grids, thus significantly accelerating the computation.

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