Why Open Source Thrives in Down Markets

It’s historically true that economic slowdowns boost the adoption of both open source and cloud technologies. There are a few reasons why I think the same pattern could repeat in 2020-2021. 

Open source technologies during COVID-19

While the economic outlook for the future is highly uncertain, we know it’s going to be rough. With more than 30 million Americans filing for unemployment since the beginning of widespread shelter in place orders, we are already well into a recession, and economists are predicting anywhere from six to twelve months of a down market.

This is difficult news to process overall, and I’m certainly not one to try and call anything a “silver lining” in this kind of calamity. However, it’s also historically true that economic slowdowns boost the adoption of both open source and cloud technologies. Comparatively, economic disruption has not been kind to either proprietary software or the managed/on-prem enterprise delivery mode. 

The 2001-2003 dot com bust gave birth to both WordPress and Drupal, and the 2008 financial crisis coincided with a pronounced rise in the adoption of both. As the Drupal project’s own metrics show, activity and downloads grew quickly through the financial crisis of 2008, peaking along with the recovery in 2012. WordPress, which enjoys a much wider addressable market, has continued to expand its market share. 

Here are my hypotheses as to why this pattern could repeat in 2020-2021:

CMOs Facing Financial Discipline

The first and most obvious driver for open source in a down market is vigorous fiscal discipline. Every business is taking a closer look at their budgets. Open source technology isn’t free of cost (as we’ll get into later) but it does come unencumbered by software licensing fees, which makes it an attractive option when all spend is under scrutiny.

The quickest items to get chopped in these circumstances are under-used technologies. That doesn’t apply to the web for most organizations (you’re not going to fire your website), but after the first pass of “trimming the fat” and cancelling things you really don’t need, the more complex and strategic questions start to emerge: “are we really getting our money’s worth for this thing?”

When it comes to digital marketing, many businesses are paying a pretty penny for many technologies where the answer to that question isn’t clear. Studies show that “website” is the single largest category of spend for CMOs, and it’s impossible to believe that everyone is getting their money’s worth. 

In a down market, this status quo is unacceptable. All web projects will be under the microscope to see if they are really delivering a return on their investment. That close scrutiny should by in large benefit the adoption of open source.

'Build vs Buy' Dynamics Changing for IT

For most businesses, a down market changes the economics around 'build vs buy' as they evaluate the consequences of cutting headcount, compared to vendor spend. Where internal employees require a high upfront investment for long-term value, vendor spend is easily ramped up or down according to market trends. With high-cost vendors under the microscope, and web technology more essential now than ever, the proven value of open source will absolutely be considered. 

Even when they invest in internal resources, companies don't want to spend time writing software from scratch when their focus should be strategic differentiation and driving results that will impact the bottom line. You don’t want to build a CMS from the ground up; you want to quickly leverage it to your specific goals. Open source serves as an affordable, external third party in this case—a resource companies can tap as they cut vendors, tighten budgets, and push to meet deadlines.

In addition, a downturn often creates a preference for widely adopted commodity tools, as opposed to niche software that requires specialization. The reason for this is risk mitigation; if your website comes from a proprietary platform or system, and they go out of business or have to cut resources, you’re stuck without either talent or functionality. 

Which Open Source Projects Will Thrive?

Historically, both WordPress and Drupal jumped in popularity during fiscal uncertainty, but we shouldn’t necessarily assume the same will happen here. WordPress holds a much greater market share than it did in 2008, so it may not have as much room to grow. Drupal has moved up-market into the enterprise and can reasonably displace proprietary incumbents, but its absolute number of sites has plateaued because decisions move more slowly at that level. 

For example, I expect newcomer technologies like GatsbyJS and NextJS to see an uptick in interest. It's a good time to experiment with modern web experiences, especially those delivered via modern front-end stacks, particularly with companies that have internal resources that are eager to take on new architectural patterns. Almost certainly new projects will emerge as more R&D cycles are applied to the web. 

WordPress and Drupal might feel a little passé to developers on the cutting edge, but these are the proven workhorses of the web. Companies with a legacy CMS (including those with no CMS), or those who aren't quite ready to dive headfirst into microservice architecture should give them a thorough evaluation. They offer a reliable, low-risk foundation for driving value online, and present a compelling opportunity for companies to level up just when it matters most.

 

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