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Western Cape businesses embrace open source

By   |  December 7, 2005

Small and medium IT companies in the Western Cape have been quick to take advantage of open source software according to a recent survey of Western Cape open source companies. The audit of open source companies, jointly conducted by the Cape IT initiative (CITI), the Western Cape Provincial Government, the City of Cape Town and Tectonic, found the majority of companies offering open source services in the region are SMMEs that have been operating for less than five years. Awareness and lack of skills remain the most significant hurdles facing the OSS industry, however.

The audit of OSS companies, conducted over the past two months, was intended as a phase-one project to determine the what open source skills are available in the region and if and where there is a need for skills development.

The audit was conducted online among companies offering OSS sales and support in the Western Cape region.

More than 75 companies operating in the Western Cape OSS sector responded to the survey.

Announcing the results in Cape Town yesterday, Tectonic editor Alastair Otter said the number of responses to the survey \”is very encouraging and suggests there is indeed a growing and thriving open source development and support community in South Africa and in the Western Cape region specifically. The number of companies offering services in this sector also suggests that open source services and support is increasingly being perceived as a viable business option.\”

Otter said the majority (57%) of the companies that responded to the survey had been operating for five years or less and 17% had been operational for 12 to 18 months.

\”One of the advantages of open source software,\” says Otter, \”is that it opens the way for new companies to enter the IT sector. With open source software barriers to entry are relatively low and it is encouraging to see so many smaller companies in the Western Cape taking advantage of these opportunities.\”

The survey results also found that almost half (49%) of the companies had five or fewer employees. 21% of them had between 6 and 20 staff members, 11% had between 20 and 100 employees and only four companies had more than 100 employees. The remaining companies did not complete this question.

On the empowerment front 13% of companies that responded were 100% black owned and 19% met current BEE compliancy guidelines. A large number of the remaining companies indicated that they were currently actively pursuing empowerment initiatives and many expected to meet the criteria in the next 24 months.

Learnerships, however, are relatively low among the companies that responded with only 12% of companies having an operational learnership programme. At the same time the long-standing perceived lack of skills in the open source sector was cited by most respondents as a key challenge the industry needs to overcome.

\”The lack of learnerships in the sector is largely understandable given the size and nature of many of the companies that responded to the survey,\” said Otter. \”Encouraging wider learnership and mentoring programmes, however, would be an important element in the drive to grow an open source IT sector in the region as well as across the country.\”

The audit showed and overwhelming passion for FOSS and responses ranged from all out OSS support to a few more hesitant \”only when it makes good business sense\” responses.

The main theme running through the responses was that OSS is here to stay and any company ignoring it would get left behind.

Challenges
Most of the companies cited lack of awareness and market acceptance as a persistent challenge to their development. Also a perceived lack of government policy was also highlighted.

\”The perception that government does not have policy in this area is of concern.\” said Otter. \”In reality government, particularly at national level, has a very strong strategy and policy on open source software usage. This unfortunately appears not to have been communicated effectively to all sectors of society.

\”While it in encouraging to see the passion of open source companies in the region — even to the point of rhetoric — an area that perhaps needs attention for many open source services companies is the development of business skills. For too long the OSS sector has been dogged by the impression that free and open source software is for enthusiasts and advocates only,\” said Otter.

\”More measured responses and a mature business perspective on the possibilities open source offers would do more to improve the image of open source software in the eyes of prospective clients. Business skills development assistance for companies operating in the OSS sector would be of significant value to the growth of this sector.\”

Also, said Otter, companies operating in the open source sector face particular problems, most noticeably the fact that they are operating in a space where many of the traditional revenue generation opportunities do not exist (product sales, licencing costs etc). \”Income is derived almost entirely from services and support. Many of these business models are still evolving which can be a significant challenge to many newer businesses.\”

Other speakers at the announcement of the results, including the City of Cape Town\’s Nirvesh Sooful, stressed the importance of open source companies \”articulating the business value of open source software\”. Sooful said the driver for greater usage of open source software in the region was business value and not just a \”philosophical\” argument.

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