Open Source Go-To-Market Success: Liferay CEO Bryan Cheung (Part 4)

Sramana: The sales cycle you just described illustrates the beauty of the open source go-to-market strategy. I like how that model allows entrepreneurs to bootstrap the early company with services. I also really like a model that allows customers to find the company.

Bryan Cheung: Exactly. Another nice thing is that a lot of times when you are doing sales you don’t want to force somebody to buy something they do not need. Open source creates something that is easy to buy. You don’t have to shove it down their throat.

Sramana: Inbound leads are so much easier to close! Let’s talk about the transformation into an open source commercial company. How did you price your offering?

Bryan Cheung: We went through a lot of different models. In the very beginning we just sold enterprise support. We quickly realized that was not the best way for us to gain revenue to the point where we could truly support enterprise customers. We founders were fairly young, and we did not have years of enterprise software experience. Then we spent time playing around with per-CPU pricing. We considered per-user pricing. Today we have come to the happy medium pricing of per-server pricing. Most enterprises run on two redundant servers.

Sramana: What does it cost to buy Liferay for one server today?

Bryan Cheung: If you just want the updates it is about $4,000 per server per year. If you want the enterprise support, that pricing starts at around $17,000 per server per year.

Sramana: How many customers do you have?

Bryan Cheung: We have over a thousand customers.

Sramana: Have you noticed some sort of segmentation from customers today?

Bryan Cheung: Lately, we have seen tremendous traction in financial services. At last count, we had more than 20 banks using Liferay. Financial services are very innovative and shrewd when it comes to technology. They are often at the front of the curve because they know technology can give them an edge over their competitors. They are deploying everything from customer-facing portals to traditional intranet and collaborative environments.

We have also done very well with higher education. They are always looking to optimize resources. We have a lot of different universities, such as Penn State Medical Center, as well as a lot of online universities. They use it for student portals. We are also being used in OEM cases by various companies. They use Liferay as a platform to build value added services.

Sramana: If you would synthesize the use cases, have you noticed any trends?

Bryan Cheung: There are a couple of different trends going on in the infrastructure space. Infrastructure is being commoditized. If you look at everything from the app server layer below, operating system, database, Web server, you will see a lot of commodity items. People are just throwing things on a JBoss box or putting things in MySQL. That has led to virtualization and letting software ride on hosted environments.

Companies are OK with reliable uptime, and they accept that their data is getting backed up. The next layer of infrastructure is the enterprise portal. A portal is the layer in between and it is where the user meets IT. It is where end users want their view of an ERP package or CRM. The system has to know what that user works on, what they have access to, and who they need to talk to in order to get their work done.

Meanwhile, you have adjacent categories such as content management and collaboration suites as well as specialized applications that are starting to converge. The trend now is to bring people and applications together to allow them to get their work done.

This segment is part 4 in the series : Open Source Go-To-Market Success: Liferay CEO Bryan Cheung
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