Creative Destruction in the Software Industry

Posted by: Steve Hamm on September 21, 2006

It’s fascinating to witness the phenomenon of people who created sizable chunks of the software industry coming back with open source or on-demand companies aimed at disrupting the very market segments they helped build. The latest example I have come across is Alfresco, an open source enterprise content management software company based in the U.K. Its co-founders are John Powell, the CEO, who was formerly COO of Business Objects, and John Newton, the CTO, who was the founder of Documentum, the document-management pioneer. Alfresco’s goal is to offer corporations and governments an open-source alternative to the big, complex, and expensive document and content management systems that are now sold by the likes of IBM and EMC.

Alfreso has built up some momentum. Since posting its application on the SourceForge open source site a year ago, 350,000 people have downloaded it and the 30-person company has 200 paying customers, including the US branch of Japan’s Daiwa bank and Virgin Money. Newton’s technical vision is to provide simplicity and low cost through a content repository and a handful of applications, including document management. Plus, he’s engineering some innovative new features. They include one that enables corporations to get a view of how re-designed Web sites will look and work before they go live, and another that allows them to dial back in history to see what was on their site at a given time on a given day. The business strategy, according to Powell, is to offer a simple best-of-breed alternative to the big system vendors, and pick off business from 200-or-so proprietary content management software companies that are limping along in obscurity. Like with dozens of other open source outfits, we’ll have to see if this one gains traction. I’m betting the pedigree of its two founders will at least get the company’s feet in a lot of doors.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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