Open Source Saves the Day

The most important information technology initiative at automotive industry supplier Ogihara America Corporation is one the company couldn’t afford at all right now if not for the economic edge it gets from using open source software.

Part of Japan’s Ogihara Corp. family of companies, manufacturers stamped body parts for U.S. carmakers. That’s a tough business to be in right now. “We’re dangling on the fortunes of the Big 3,” says Dennis Henning, Ogihara’s IT Manager. His company has been downsizing in response to its customers’ troubles. The firm has shrunk to about 300 employees, from about 900 a few years ago, and its IT team has been cut from 9 employees to 3.

In the midst of this contraction, the one significant IT initiative he has managed to keep going is a Product Lifecycle Management (PLM) initiative based on software from Aras Corp. [www.aras.com] of Andover, Mass., which is offered under an open source license (the Microsoft Public License). Although Ogihara pays Aras for a software support contract, the fact that the contract is optional gave Henning leverage to negotiate when his business began to suffer.

“Budgets are so tight in this environment that a few months ago we told them we were going to have to discontinue our support subscriptions. But they worked a deal with us,” Henning says. Rather than $85,000 a year, Aras agreed to charge $15,000 a year in recognition of how much Ogihara’s business had contracted – with the understanding that the price will go back up if (or, hopefully, when) the manufacturer’s business recovers.

Aras founder and president Peter Schroer says it’s “standard practice” for his company to adjust for the health of its customers. “If they scale up or down, we price accordingly,” he says. “It is very much an honor system, but we have a pretty good idea of what our customers are using it for.” Since Aras isn’t charging for access to the software per se, the fees reflect the demand for service and support from each customer, which tends to reflect the customer’s level of business activity, he says.

Aras develops and supports software for manufacturers, the Aras Innovator suite, which includes modules that support a variety of data and process management challenges related to developing, engineering, and refining products and all the materials that go into a product. It runs on the Microsoft platform and includes visual design tools that allow customization with a minimum of programming. After releasing the first production version of the software in 2001, in 2007 Aras moved to open source licensing.

What the company gave up in licensing revenue it made up for by firing its sales force and letting the product sell itself online, Schroer says. “What made it popular you can download it risk free, and then when you need some help you can buy our consulting or support.”

Some manufacturers have deployed the software “without paying us a penny,” Schroer says, just by downloading the software and taking advantage of the free advice from other users available in the support forum on the Aras website. But most, like Henning, prefer to have recourse to a formal support contract when they need it, Schroer says.