Paul Holmes-Higgin is the Chief Product Officer at Flowable.
This article is adapted from his talk given at Product-Led World, London 2019.
"We position ourselves in the market as Intelligent Automation. This is a label that lots of companies are now using in the Business Process Management space.
We create enterprise software. But, we don't sell it to the people who are going to use it. We sell it to people that are going to take it and then configure it for the people that are going to use it.
It means that our customers are usually very large companies with very deep pockets who have very high expectations. Because of the types of use cases we have, it's all about high performance and scale.
Importantly, the business is based around open source and is centred around open standards.
Open source at Flowable
A lot of people are using open source, yet it's quite shocking the number of people using it who don't really understand how it functions. Let's get to grips with the nature of Flowable's business model.
Flowable is Apache licensed
That means that anyone can take it and do pretty much anything they want with it. They could take the company, rebrand it as their own and sell it. We could do nothing about it.
Importantly, you can do what you want with it for free.
We have active public forums where we get involved. People will be asking questions, 'How do I do this?' 'I've got a problem.' 'How do I fix this?' Again, these forums are completely free to use.
All code is managed by flowable staff
Any code that comes into our project, it's our staff that put that into the code base.
You can be using flowable and you don't need to pay a penny. But, those previous companies I talked about are paying us a penny.
The dance you have to do as a Product Manager is figuring out how to make money when you're giving stuff away for free.
The evolution of open source
There's a history to commercial open source. It's not always been as free moving as it is now:
Documentation and support
When I started commercial open source about 15 plus years ago, the way you made money was by selling these.
In the early days, if you used our software in your own product, you had to put a flag or a logo up of our brand. Even the end customer would see this logo somewhere along the stream.
Juicy features were not in open source
Everything that was really juicy was outside the open source. You think that’s going to get you more money, but it actually introduces other barriers.
Legally untested licensing models
There was (and still is) the wide-spread use of open source licenses like LGPL. I bet there's a bunch of you out there using LGPL software thinking 'that's fine.' You can do whatever you want with it. But, it's legally untested and untried.
If your exit strategy is to get bought by a big company, their lawyers will say LGPL is not going to cross the threshold. The choice of the license is important.
All of these have been barriers to open source businesses.
This is now the way commercial open source functions.
Open core entails:
Liberally licensed raw capabilities
Like I said, Apache for us just means you can do what you want with it. This is the core of the model.
In the old days, we'd be doing 95% open source and then maybe 5% which is the closed proprietary (the extra special source that people want to pay for.)
A lot of the value is still in the open core, but currently, this proportion has shifted. You're now talking about 30-40% of functionality still in the commercial piece.
Product Managing for free
When you're in Product Management you're competing against two very different classes of product.
Other open source vendors
Open source is quite a mature space now. So, anything that you come up with, there's a good chance that there's someone else already doing it. If you're unlucky, it may be someone like Facebook or Google.
These are very different communities to target with widely different audiences. When you're doing your product releases, you’ll need to keep these in mind:
Open source audience
You are targeting developers. This is bottom up marketing. You're not going to spend marketing dollars trying to push a product down someone's throat, but you're going to get the developers to pick it up instead.
Get out there, get it propagated, get people using it, and then at some point, somebody may decide to give you some money. That is a very slow way of making revenue.
To put it simply, you're targeting the CTO and the CIO.
Combatting sales hatred of 'free'
This is how a lot of these guys will look when you explain the way that Flowable works.
‘Wait, so you give the software away? For free?'
Particularly in enterprise, you've often got very expensive salespeople with very high expectations of how to grow.
The typical conversion rate for enterprise open source is about 1%. And so the sales guy is saying,
'Well, if we could just make that 2%, that's doubling our revenue!'
In reality, it's brutally hard to change that conversion rate, but the sales guys, unless they've been living and breathing it, just don't understand this.
The other one that you might hear is 'we're letting the competition find out about our weaknesses.'
And that's true. Our competitor may tell our customer that there's some flaws in our product that they need to think about. There is no privacy.
How to address this?
Be honest with the advantages
You can't be defensive forever. Somehow, you've got to achieve change.
As a general business practice, the more open you can be, the better your cultural advantage.
'I'm not hiding anything. I'm so confident about what we're doing that I know we're going to continue innovating. So, if you jump in with us, we're going to take you forward in an exciting way.'
One of the other real advantages when you do something where you make it widely available, is you get a very large community of skilled people that know about your product.
If you need to close the gap between the overall generic solution and a particular customer solution, you need people to customize and tweak and fill the gaps for you.
If you're closed proprietary, then those tend to be very expensive and rare resources.
If you're open source, you've made it very free and possible for people to learn and play with your software.
Product Managing for Developers
With developers, PMing works from the bottom up.
Operate with the latest technologies
One of the things that has changed is that Developers now are not nearly as willing to dive in and spend time learning stuff as they used to be.
Expect easy examples
They expect to be fed stuff. We've got to give them easy examples to play with.
Offshore development regions indicates market awareness
With open source, we don't know who's doing what with our software. It's not actually tracked. At Flowable, about 18 months ago, we had a sudden kickoff of people on the forums from India. Then just early this year, we had a huge kickoff issue and thousands of people from China suddenly joined the forums and started asking questions. That's an indicator that awareness is spreading.
Neutralise the other open source competition
You're not trying to compete against them in terms of beating them in a particular market space. You're trying to neutralize them as much as possible.
Pull a “commercial” feature into open source to differentiate
One of the really nice things about having open source is that you can make it available as a feature without having to do anything apart from maybe turning a switch.
That can be really useful to respond to the market or to an open source competitor to differentiate yourself in some way.
Enable and encourage developer-driven features
Product managers tend to act like an insulation layer between the Developers and the people that are actually using this software.
With open source, you can close that gap. Some of the people that are on the forums are end users, and they're talking to the Developers. From the Developers, you can get some really interesting and significant product features. Product Managers aren't always the best people to say what should be in product.
Product Management for businesses
Time to production: pay for quicker and safer solutions
One of the challenges with open source is that people say, 'Well, I know I've got the open source, I can get anything for free. I can make my product and I don't need to pay you anything.'
In product management, you're looking at how to get people to pay to get to that place quicker and more securely. How do you get to their solution faster?
Ensuring that this is done more securely in enterprise securities is critical. Who can see what? Who can do what? To get that right is really hard.
It's finding these things that make it hard for the end customer to just build it themselves. How do I make those cogs work really smoothly? How do I add additional cogs that allow the business to run more effectively and get going quicker?
Don't forget the value of free
Open source allows you to experiment
Validate ideas, architectures and platforms. And, if something is a failed experiment, you can still leave it out there. People can still use it, you're not taking away from them and you can return to it whenever.
It’s easy to make a feature free
Quick response to market or demands means we can also roll off commercial product into open source so we can keep people interested and keep the open source community moving with us as well.
Don’t stop improving
Because it's free, you might say it's not worth anything. You have to really think hard about why you made something free in the first place.
What is the value to the customer? Continue to make it, because that is one of the catches that allows you to hook someone, maybe not today, but when they come on board later.
If they don’t pay today, they may in the future. There's a lot you can do from pitching to the CIO or CTO. But, the real stickiness and the real value takes time to come through.
Just because it's free, just because it's open, doesn't mean it's valueless. The value of open source, the value of free is actually thinking hard about what the value is to the end customer. The results will come with that."