A presentation at Pre-FOSDEM in in Brussels, Belgium by Stefane Fermigier
Open Source: a dynamic market fueled by digital transformation and innovation Study conducted by teknowlogy Group for the National Free Software Council (CNLL), Syntec Numérique and Systematic Adapted and presented by Stefane Fermigier, CNLL – Bruxelles, 31 Jan. 2020 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Agenda 1. Sizing the European Open Source market 2. Open Source is strategic for the future of organizations in France (117 organizations surveyed) ➡️ Background and methodology ➡️ How do companies use Open Source? ➡️ Which partners do companies use? ➡️ What is the impact of digital transformation on the use of Open Source? 3. Europe: What are the local specificities? 2 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Segmentation & definitions Software & IT Services market SOFTWARE IT SERVICES Infrastructure Software & Platforms Application Software Products SaaS Operating Systems Office, Content & Collaboration N3SM & Middleware Horizontal Business Applications (incl. BI) Applications (incl. BI) Network, System, Storage and Security Management (N3SM) Vertical Business Applications Middleware Technical Applications InfrastructureRelated Services ApplicationRelated Services Infrastructure Support Services 1 Application-related Project Services 2 Infrastructure-related Project Services 2 Application Management Infrastructure Outsourcing Services 3 Business Process Outsourcing 1 Hardware Maintenance; Field Serv ices and Serv ices Desk Consulting; Sy stems Integration; Training 3 End-user Dev ices Outsourcing; Serv er Outsourcing & Hosting 2 Open Source Software & IT Services market SOFTWARE Subscriptions, support, maintenance 4 IT SERVICES Consulting, system integration, outsourcing Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Open Source strong growth across Europe Open Source Software & IT Services market ➡️ The French Open Source market is the largest in terms of Volume 2020 / Growth 19/20 (in Million EUR) volume when compared to the other major European countries. +9,6% This is due to a strong culture in specific development and integration of heterogeneous systems, as well as a historically large +8,6% investment by public authorities. +8,2% +7,6% 5 684 5 123 5 357 France France Open Germany Germany Open UK Source UK Open Rest of of Europe Europe* Rest Source Market Source Market Market Open Source Market ➡️ Germany’s market has been limited in Open Source Source: teknowlogy Group, 2019 9 206
Open Source market by country 2019 2020 2021 2022 2023 19/20 20/21 21/22 22/23 CAGR 19/23 France - Open Source Software and IT Services Market 5 233 5 684 6 187 6 741 7 336 8,6% 8,8% 8,9% 8,8% 8,8% Germany - Open Source Software and IT Services Market 4 735 5 123 5 553 5 983 6 376 8,2% 8,4% 7,7% 6,6% 7,7% UK - Open Source Software and IT Services Market 4 979 5 357 5 799 6 280 6 783 7,6% 8,2% 8,3% 8,0% 8,0% Rest of Europe* - Open Source Software and IT Services Market 8 398 9 206 10 048 10 890 11 705 9,6% 9,1% 8,4% 7,5% 8,7% Worldwide - Open Source Software and IT Services Market 91 672 100 713 110 411 120 399 130 435 9,9% 9,6% 9,0% 8,3% 9,2% Source: teknowlogy Group, 2019 in million EUR
Whole Europe (for some definition of « Europe ») Open Source - Software and IT services (in MEUR) 35 000 30 000 25 000 20 000 15 000 5 000 0 2017 2018 2019 2020 France Germany UK 2021 2022 Rest of Europe 2023 Source: teknowlogy Group, 2019 10 000
Open Source related employment by country In Full-Time Equivalents (FTE) 2020 2021 2022 2023 19/20 20/21 21/22 22/23 CAGR 19/23 France - Open Source FTEs 52 400 56 700 61 500 66 800 72 400 8,2% 8,5% 8,6% 8,4% 8,4% Germany - Open Source FTEs 47 500 51 200 55 300 59 300 63 000 7,8% 8,0% 7,2% 6,2% 7,3% UK - Open Source FTEs 49 800 53 400 57 600 62 200 67 000 7,2% 7,9% 8,0% 7,7% 7,7% Rest of Europe* - Open Source FTEs 84 100 91 900 100 000 108 000 115 600 9,3% 8,8% 8,0% 7,0% 8,3% Whole Europe- Open Source FTEs 233 800 253 200 274 400 296 300 318 000 8,3% 8,4% 8,0% 7,3% 8,0% 1 090 000 1 190 000 1 300 000 1 420 000 1 530 000 9,2% 9,2% 9,2% 7,7% 8,8% Worldwide - Open Source FTEs Source: teknowlogy Group, 2019 2019
Europe – Share of Open Source in Total market 1/2 in million EUR 2017 in million EUR 2017 Germany – Total Software and IT 62 511 Services Market Germany – Open Source Software and 3 990 IT Services Market Share of Open Source in Total 6,4% 9 2019 2020 2021 2022 2023 17/18 18/19 19/20 20/21 21/22 22/23 CAGR 19/23 48 378 50 799 53 321 56 006 58 788 61 555 5,1% 5,0% 5,0% 5,0% 5,0% 4,7% 4,9% 4 833 5 233 5 684 6 187 6 741 7 336 8,3% 8,3% 8,6% 8,8% 8,9% 8,8% 8,8% 10,0% 10,3% 10,7% 11,0% 11,5% 11,9% 2018 2019 2020 2021 2022 2023 17/18 18/19 19/20 20/21 21/22 22/23 CAGR 19/23 65 541 68 055 70 638 74 096 77 901 81 694 4,8% 3,8% 3,8% 4,9% 5,1% 4,9% 4,7% 4 375 4 735 5 123 5 553 5 983 6 376 9,6% 8,2% 8,2% 8,4% 7,7% 6,6% 7,7% 6,7% 7,0% 7,3% 7,5% 7,7% 7,8% Open Source: a dynamic market fueled by digital transformation and innovation Source: teknowlogy Group, 2019 France – Total Software and IT 46 020 Services Market France – Open Source Software and 4 462 IT Services Market Share of Open Source in Total 9,7% 2018 © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Europe – Share of Open Source in Total market 2/2 in million EUR 2017 in million EUR 2017 Rest of Europe – Total Software and IT 116 151 Services Market Rest of Europe – Open Source 6 900 Software and IT Services Market Share of Open Source in Total 5,9% 2019 2020 2021 2022 2023 17/18 18/19 19/20 20/21 21/22 22/23 CAGR 19/23 65 149 67 668 70 512 73 858 77 322 80 661 4,1% 3,9% 4,2% 4,7% 4,7% 4,3% 4,5% 4 598 4 979 5 357 5 799 6 280 6 783 9,7% 8,3% 7,6% 8,2% 8,3% 8,0% 8,0% 7,1% 7,4% 7,6% 7,9% 8,1% 8,4% 2018 2019 2020 2021 2022 2023 17/18 18/19 19/20 20/21 21/22 22/23 CAGR 19/23 122 451 128 353 134 808 141 736 148 799 155 770 5,4% 4,8% 5,0% 5,1% 5,0% 4,7% 5,0% 7 661 8 398 9 206 10 048 10 890 11 705 11,0% 9,6% 9,6% 9,1% 8,4% 7,5% 8,7% 6,3% 6,5% 6,8% 7,1% 7,3% 7,5% Source: teknowlogy Group, 2019 UK – Total Software and IT Services 62 554 Market UK – Open Source Software and IT 4 190 Services Market Share of Open Source in Total 6,7% 2018
In France Open Source is growing faster than the IT market France Open Source Software & IT Services market ➡️ By its nature, the Open Source market includes a high level of IT services. This is because Open Volume / Growth (in Million EUR) Source solutions are often considered more Share in Total Software & IT Services market tailorable than traditional software and therefore require more IT services. ➡️ Open Source is a frequent choice for specific developments, which require extra services for +8,8% +8,9% development and integration as opposed to the +8,8% +8,6% installation of packaged software. Source: teknowlogy Group, 2019 11 ➡️ Open Source is notably present in innovative technology (Cloud, AI, etc.), which requires more integration than more mature technology. Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
France – Open Source market 2020 2021 2022 2023 19/20 20/21 21/22 22/23 CAGR 19/23 Total Software and IT Services Market France 50,799 53,321 56,006 58,788 61,555 5.0% 5.0% 5.0% 4.7% 4.9% Open Source Software and IT Services Market France 5,233 5,684 6,187 6,741 7,336 8.6% 8.8% 8.9% 8.8% 8.8% Open Source Software 355 403 456 513 573 13.5% 13.1% 12.5% 11.8% 12.7% Open Source related IT Services 4,878 5,281 5,731 6,228 6,762 8.3% 8.5% 8.7% 8.6% 8.5% Source: teknowlogy Group, 2019 2019 in million EUR ➡️ In terms of volumes, the market is mainly generated by the Open Source offerings of IT service providers, and in particular the offerings for Open Source integration services. ➡️ In 2023, IT services will represent the largest share of the market in terms of revenue. ➡️ The market growth is driven by software over the 2019/2023 period, notably by SaaS revenues with an average annual growth rate (CAGR19/23) of more than 25%. 12 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
France – Open Source Software market by segment 2019 2020 2021 2022 2023 19/20 20/21 21/22 22/23 CAGR 19/23 Open Source Software 355 403 456 513 573 13.5% 13.1% 12.5% 11.8% 12.7% Infrastructure Software & Platforms 199 229 262 299 341 14,8% 14,6% 14,3% 14,0% 14,4% Application Software Products 129 138 147 156 166 7,0% 6,6% 6,3% 5,9% 6,5% SaaS 27 36 47 57 67 34,7% 28,9% 22,3% 16,1% 25,3% Source: teknowlogy Group, 2019 in million EUR ➡️ The Open Source software market is more oriented towards infrastructure software than applications. ➡️ As Open Source matures, more legacy Open Source solutions will need to be maintained, improved and, in some cases, even abandoned while new, more advanced solutions can be implemented. ➡️ Regarding licenses, the market is increasingly oriented towards permissive licenses. 13 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
France – Open Source related IT Services market by segment 2019 2020 2021 2022 2023 19/20 20/21 21/22 22/23 CAGR 19/23 Open Source related IT Services 4,878 5,281 5,731 6,228 6,762 8.3% 8.5% 8.7% 8.6% 8.5% 660 701 745 794 847 6,2% 6,4% 6,5% 6,7% 6,4% Infrastructure-related 280 298 318 340 363 6,4% 6,7% 6,8% 7,0% 6,7% Application-related 380 403 428 455 484 6,0% 6,2% 6,3% 6,4% 6,2% 3 156 3 355 3 573 3 814 4 077 6,3% 6,5% 6,7% 6,9% 6,6% Infrastructure-related 1 668 1 784 1 913 2 054 2 212 7,0% 7,2% 7,3% 7,7% 7,3% Application-related 1 489 1 570 1 659 1 760 1 866 5,5% 5,7% 6,0% 6,0% 5,8% 1 062 1 226 1 413 1 620 1 838 15,4% 15,3% 14,6% 13,5% 14,7% Infrastructure-related 845 992 1 161 1 347 1 541 17,4% 17,0% 16,0% 14,4% 16,2% Application-related 217 234 252 273 296 7,7% 7,8% 8,3% 8,6% 8,1% IT Consulting System Integration Outsourcing Source: teknowlogy Group, 2019 in million EUR ➡️ Due to the nature of Open Source, the share of IT services in the Open Source market remains high. In particular, because many Open Source solutions are considered “less finished” than traditional software, and therefore require services around them. ➡️ Open Source is a smart choice for specific developments, which mechanically requires more development services and more integration services than when implementing packaged software. ➡️ Open Source is particularly present in innovative technologies, which also requires more integration than mature technologies. 14 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Background and methodology Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Companies surveyed Number of employees n=117 Sector n=117 ➡️ 117 French companies and public organisations with more than 100 employees surveyed in November 2019. 17 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Respondents interviewed Role in the use of Open Source / Free Software in the company n=117 Function n=117 ➡️ 1 in 2 respondents is a decision-maker or prescriber on strategy that may include Open Source. Open Source drives transformation strategies. ➡️ 1 out of 3 respondents does not belong to the IT department (CEO, marketing, digital, etc.). 18 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
How do companies use Open Source? Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Business management is more and more committed to Open Source Who is the main internal sponsor of the use of Open Source in your company? (n=117) ☞ 2019 vs 2018* One year ago, CIO/IT was the internal sponsor for 72% ➡️ For 1 in 3 companies, the use of Open Source is sponsored by the CEO or a business department. ➡️ The use of Open Source is promoted by the IT department, but not only. CEOs and business lines are increasingly involved in the subject because Open Source has become strategic for transformational topics.
Open Source meets the need for customization and technological independence ☞ 2019 vs 2017* What are your motivations for using Open Source in your company? (n=117) Two years ago, cost reduction was the primary motivation ➡️ Open Source facilitates customization and specific development which organizations need to improve their customers’ experience. Independence remains a key criterion. ➡️ In the 2017 study, cost reduction was the first driver for using Open Source. In 2019, the main drivers are customization and technological independence. ➡️ We are currently seeing an increase in the reliability and security offered by Open Source.
Open Source is now infused in all layers of information systems Do you use Open Source for the following applications or systems? n=117 ➡️ Companies make regular or even systematic use of it at many levels of the IS, including in enterprise applications. ➡️ The majority of applications and systems have at least one Open Source component. 22 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
It is strongly used for Cloud/DevOps and Security, catalysts of digital transformation Do you use or plan to use Open Source components in the following areas? n=117 ➡️ More than 1 in 2 companies use Open Source components for their cloud, DevOps and infrastructure projects. ➡️ Security becomes a key to the adoption of Open Source. 23 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
The undisputed model for innovative technology such as AI For those areas where you use Open Source, what do you think of the use of Open Source? (n=80) ➡️ For 9 out of 10 companies, Open Source is essential or preferable when adopted for AI or Data Management & Blockchain. ➡️ The Open Source model is the new trusted norm when thinking of innovation. ➡️ These innovative technologies, alongside with Edge computing/IoT, are « born open ». 24 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Which partners do companies use in Open Source ? Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Most companies use external service providers, particularly for consulting services For your projects using Open Source, do you use external service providers? n=117 Do you use the following types of services for your services using Open Source ? n=117 ☞ 2019 vs 2018* One year ago, 64% used external providers (larger companies) ➡️ 6 out of 10 companies use external service providers for their projects using Open Source. ➡️ Companies need to be supported throughout the project cycle. The strategic aspect of Open Source in digital transformation favors the use of consulting by business leaders.
Companies strongly rely on Open Source specialists and software vendors What type of providers/partners do you or would you use first for your needs using Open Source? n=117 ➡️ Open Source is always perceived as a specialization. ➡️ Generalist software vendors have acquired a strong footprint in Open Source through acquisitions in recent years. ➡️ Cloud providers are increasingly seen as partners for services around open source. 27 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
The principle of pooling resources has not yet been adopted For your projects using Open Source, you use: n=117 ➡️ The contribution to communities remains low in companies despite a culture that continues to spread. ➡️ Open Source promotes specific development, which is coming back into its own with digital transformation strategies. 28 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Security, compliance and skills, key success factors of Open Source projects What are the important points for the management of your open source/Open Source software projects? n=117 ➡️ Security by design, compliance and available internal skills are the key factors for the success of Open Source projects. ➡️ Collaboration with a publisher specializing in Open Source is also essential in understanding the Open Source model (licenses, communities). 29 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
What is the impact of digital transformation on the use of Open Source ? Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Internal and external skills remain the keys to greater use To what extent would the following developments allow you to develop the use of Open Source in your company? n=117 ➡️ The lack of specific skills hinders the adoption of Open Source, whether it is internal company resources or service providers. ➡️ Open Source is still perceived as a highly technological subject. ➡️ Community initiatives (pooling requests, direct contribution to communities) make it possible to better disseminate the open source/software culture internally. 31 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Open Source will be key for security, AI and Cloud/DevOps For each of these key topics of digital transformation, do you think that Open Source will play an important role in your company? n=117 ➡️ Digital trust will be the next pillar in the adoption of Open Source. ➡️ Open Source will play a key role for AI and Cloud/DevOps because these cutting-edge innovation topics require an open and transparent creative process (methodological framework, code). 32 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Open Source is now a key differentiator for digital transformation and innovation For the digital transformation of your company, what role will Open Source play? (n=117) For digital innovation in your company, what role will Open Source play? (n=117) ➡️ More than 9 out of 10 companies believe that Open Source will play a fairly or very important role in transformation and digital innovation. ➡️ Open Source is seen as a tool for the implementation of digital transformation and the acceleration of digital innovation. These are key arguments for companies in the differentiation from their competitors and improvement of the customer experience. 33 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
The use of Open Source will therefore increase in the next 2 years Overall, regarding the use of Open Source in your company in the next 2 years, would you say that it will… n=117 ➡️ In nearly 80% of companies, the use of Open Source will increase slightly or strongly in the next 2 years. 34 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Europe has a unique opportunity to take the lead in Open Source development For Open Source skills, what do you think about Europe in relation to the rest of the world? (n=117) For the adoption of Open Source, what do you think about Europe in relation to the rest of the world? (n=117) ➡️ For approximatively 80% of companies, Europe leads the rest of the world in terms of Open Source skills available and its early adoption. ➡️ Europe has the opportunity to take the lead on this topic thanks to its skills and experience in adopting Open Source. 35 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
A look at European specificities 1/3 Germany Croatia Finland ➡️ The Open Source market is booming with ➡️ Open Source is a very high growth market ➡️ Open Source is on a positive trend among a transfer of legacy systems to open source. driven by a strong public policy which companies. ➡️ The Open Source community is dynamized supports open source software and ➡️ However, the country lacks a strong public by the strong commitment of Cloud providers, contributes. policy. private and ICT companies and startups. ➡️ However, how to work with Open Source ➡️ Web companies are driving the Open ➡️ A lack of regulation and procurement communities is still not understood by private Source market. policy as well as a strong corporate lobby act companies. in slowing down the development of Open ➡️ The market is strongly fragmented, with Source market. small vertical specialized service providers and big ICT players. 37 Open Source: a dynamic market fueled by digital transformation and innovation ➡️ Availability and stability are the key drivers for adoption. ➡️ Only generalist IT players promote Open Source. © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
A look at European specificities 2/3 United Kingdom Italy Spain ➡️ Structured by a strong commercial ➡️ Innovation drives a 15%+ annual growth for ➡️ The market is rather mature, more than ecosystem, the Open Source market is growing Open Source according to a local expert. 70% of businesses use Open Source, boosted steadily. The main driver is still cost reduction. ➡️ Though the public sector is the main user by innovation. ➡️ All sectors are engaged but contributions and contributor of Open Source, there is no ➡️ Open Source reaches the financial are marginal. policy regulating the market. The financial sector and telecoms. Yet, contributions are ➡️ Public policies favor open source but sector uses actively Open Source, but does still weak, apart from the public sector. practice does not yet. Improvements are not contribute, ➡️ All new projects in the public sector are expected in 2020. ➡️ With no large pure players, the Open released under an Open Source license. ➡️ Lack of experts who really understand the Source market has difficulty to address all ➡️.The country lacks experts, but Open mechanics of Open Source. business needs. Source popularity is high in universities. 38 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
A look at European specificities 3/3 Portugal ➡️ The Open Source dynamism is driven by all sectors. Open Source is evaluated for new projects by big or small companies. ➡️ Contributions start to emerge with companies promoting best practices. ➡️ Some public policies favor Open Source but the proprietary software industry lobby is still strong. ➡️ Lack of human resources and Open Source experts. 39 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
Thanks to our contributors Stéfane Fermigier – CNLL (France) Stefano Pampaloni – RIOS (Italy) Philippe Montargès – Systematic Paris-Region (France) Philippe Lardy – OpenExpo Europe (Spain) Boris Mathieux – Syntec Numerique (France) Timo Väliharju – COSS (Finland) Grégory Bécue – Paris Open Source Summit (France) Svebor Prstačić – HrOpen (Croatia) Pierre Baudracco – CNLL (France) Sílvia Costa – ESOP (Portugal) Catherine Nuel – CNLL (France) Nicolas Beyer – teknowlogy Group Jonathan Rivalan – Systematic Paris-Region (France) Cyrille Chausson – teknowlogy Group Diego Calvo de Nó – OSBA (Germany) Mathieu Poujol – teknowlogy Group Stuart J Mackintosh – OpenUK (UK) Charlotte Roland – teknowlogy Group 40 Open Source: a dynamic market fueled by digital transformation and innovation © CNLL, Syntec Numérique, Systematic, teknowlogy Group, 2019
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