I read two articles yesterday that lead me to believe OpenLogic’s best days are ahead.

First, OpenLogic reported a 41% year to year increase in 3Q09 revenue with a 100% renewal rate.  These are strong results and the renewal rate suggests that clients value OpenLogic’s offerings.

Second, the US Department of Defense (DoD) CIO issued clarifying guidance regarding open source usage by the DoD.  The DoD memo deals with some misconceptions about using open source and goes on to explain that open source software should be considered when it can potentially meet the needs of a given mission.  Of note to open source vendors, the DoD paper states:

“The use of any software without appropriate maintenance and support presents an information assurance risk. Before approving the use of software (including OSS), system/program managers, and ultimately Designated Approving Authorities (DAAs), must ensure that the plan for software support (e.g., commercial or Government program office support) is adequate for mission need.”

The DoD would prefer open source usage to be aligned with “appropriate” maintenance and support.  OpenLogic touts its ability to support and maintain 500 plus open source software projects.  Seems like a perfect match.

While OpenLogic provides support for 500 plus open source projects, the top five projects that customers sought support for in 3Q09 were JBoss, Apache HTTP Server, Apache Tomcat, MySQL and PostgreSQL.  Interestingly, four of these five projects are controlled and driven by well known open source vendors that offer their own support subscriptions.  The fact that customers chose to acquire support from OpenLogic versus going directly to the vendor controlling the project suggests that some customers prefer to consolidate their support contracts and experience.  I suspect that the DoD and other government agencies would see the value of a streamlined support process across tens or hundreds of open source projects used by the DoD.  However, if the DoD wanted to modify and redistribute an open source project without being required to share their changes, a commercial license from the project’s copyright holder would still be required.

Government agencies do tend to purchase though a government-approved systems integrator (SI).  Some of these SIs are already endorsing open source.  I wonder if one of these firms will see competitive advantage in acquiring OpenLogic. Okay, well, maybe a strategic partnership would be a first step.

While the financial services sector is the largest driver of OpenLogic’s revenue, it’s important to note that government is amongst the fastest growing revenue contributors.  I wouldn’t be surprised at all to learn that government becomes OpenLogic’s top revenue contributing sector over the next two years.

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PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”