Sage Enterprise CEO says there are too many holes for open source to offer much in the accountancy software market, reports Alexander Sword.
To your average individual user there seem to be few downsides to choosing open source for personal applications.
Services such as Apache OpenOffice can provide much of the functionality of Microsoft Office without the cost, while Mozilla Firefox is currently the world’s third most-used browser. Both are completely free and customisable.
There remains a debate over whether to use open source or closed source software for business functions, however.
For Jayne Archbold, CEO at Sage Enterprise Market Europe, a seller of closed source software will always be able to provide benefits that would be unavailable from open source.
One of these is in a more stringent guarantee of compliance with complex tax codes and payroll regulations, says Archbold.
"What Sage do is in the ERP or accountancy space and payroll/HR. It is business-to-business software where there is a real need to ensure that you are compliant. In businesses today we take that concern away from users so that they don’t have to worry about it."
Compliance in finance is not to be taken lightly in a country such as the UK, which has a considerable amount of regulation to adhere to. At 17,000 pages long, Britain has the longest tax code in the world and it has more than trebled in size since 1997.
So is open source a viable approach for accounting software applications? Is it really worth the potential hassle? Perhaps when choosing accounting software, as Archbold suggests, it’s better to be safe than sorry. She argues that free software doesn’t provide the same iron-tight guarantee of compliance offered by an established developer such as Sage.
"Certainly from customers I talk to, when asked why they don’t use something that’s free, they respond, ‘is that really going to make sure I’m compliant for HMRC?’"
"Despite this being a global business, we have local people in local countries that understand the legislative environment, which is particularly important around areas such as tax, VAT and payroll."
"(This provides) the benefit of global software development but with really local experts on the ground who understand the legislative environment and can connect with the customers."
What about the customisation and the sharing of ideas among a large community that comes from the ability to both edit and redistribute material at will?
Archbold says that a larger developer such as Sage, with access to a global community of contacts, can provide some of the benefits of a larger group of developers without making the code available to all.
"We have lots of third-party developers, in particular in the mid-market space, which are developing add-ons that would connect with our software – giving the customer, whether it would be free or chargeable, an opportunity to connect into our platform.
"So I think that is the best of both worlds. We’ve just launched a new developer programme globally, which is giving people access to the platform and the ability to develop their own apps based on it."
Christopher Catterfeld, director of strategy & communication at Sage Enterprise Market Europe, suggests that open source still struggles to compete with closed source in a business context because of the profit incentive. If an innovation can be monetised, it usually is.
"I don’t think there are a lot of open source business software vendors who are successful in the market," he says. "I think open source is successful and powerful when you get a large community contributing to a piece of software. Now, in business-to-business, and especially in a mid-sized business, you usually have someone coming from a developer ecosystem who adds functionality but wants to sell functionality. But you don’t have people who are developing things just to get ‘ego-dollars’.
"This is why you don’t really have an open source ecosystem. If someone adds a piece of functionality who can sell it they will sell it instead of just delivering it."