This article first appeared in CIO Review.
Open source is a big part of my life. So far, I’ve been the CEO of 3 open source companies. Red Hat is a superlative example of how to create revenue and maintain an organization through the monetization of open source technology via subscriptions and support. And yet, as the entire tech industry transforms with a dramatic shift toward the cloud, Red Hat will have to modify its business structure in order to stay ahead of the game. Their acquisition of 3scale shows that they’ve already identified this necessity, and are taking steps to address it.
Twenty years ago, Red Hat defined an open source development model that changed the way software was built around the world, and its effects are still reverberating throughout the industry. Now it has an opportunity to change software development once again by assisting businesses of all types with the transition to an API-first development model for our new cloud-centric IT world.
In June, Red Hat acquired 3scale, an API management vendor. It’s a brilliant response to the trends of the industry, and makes it clear that Red Hat is still a dynamic, avant-garde organization that aims to stay at the top of the IT leaderboard. Businesses are increasingly moving their infrastructure to the cloud and Red Hat has shown its willingness to move with them, now able to offer cloud-based (x)aaS that stay in line with innovations in the field.
3scale offers a hybrid cloud-based API-management platform that provides its customers all the benefits of cloud solutions – flexibility, performance, and scale. Red Hat can leverage these attributes to lay the groundwork for its own migration to becoming a cloud-based service provider. They’re in luck, as they have an incredible, robust open source ecosystem to build on, so it’s well-situated to maintain its leadership position during the cloud evolution and alongside the emerging API economy. Because of this, they should utilize APIs as more than simply a new offering; it should be the foundation of a new revenue architecture.
APIs have changed – while they used to be a hidden, technical conduit in IT infrastructure, that’s not the case anymore.
APIs have transformed into business drivers that, for many companies, are an absolute requirement for success.
And this is exactly why Red Hat should continue to push into the cloud space. They’re now able to use API technology as a launching point for a cloud-based revenue stream that will, in all likelihood, have exponential returns until it becomes a major source of revenue for the company. They’re already moving away from an on-premises subscription and pricing model, and there’s no reason to stop now.
Red Hat can extend 3scale’s API management cloud business model to include JBoss, acquiring increasing returns as the two services work symbiotically.
Applications have become mission critical all over the industry, and figuring out how to leverage existing resources to speed development and ease access to those applications is paramount for success.
Companies expecting to generate revenue related to application development need to shift from a business-oriented to a service-oriented architecture, and an important part of SOA is an API-first development model. Red Hat already has a great open source development model, and they can use their massive community to speed its transition.
With the acquisition of API technology and products, Red Hat has an opportunity to do great things for the Open API Initiative (OAI) and establish truly open frameworks for API specifications and development. It’s disheartening to see the OAI take a 1-specification approach when open source itself developed as a response to a lack of versatility and experimentation. The standardization of the OAI seems to be running contrary to open source ideals.
The emerging API economy has come about largely because of the developer-first approach to designing a great API. Developer-first, as a design principle, suggests that choice should be left in the hands of developers. Standardizing the framework doesn’t seem like a developer-first decision; it feels like a decision made in order to speed the adoption of the standard, not make the standard stronger or otherwise better. The OAI should be about laying a conscientious foundation to build on, and that means allowing the decision for the foundation, or the patchwork of foundations, to rest in the hands of developers.
Open source is universally recognized as a meritocracy, a development environment where the best creations rise to the top, and stay at the top, because they’ve been tested by fire in repositories and forums around the world. Freedom of choice is a huge part of that mindset. Open source isn’t a numbers game – one language or framework isn’t better than another just because more people use it. If that were the case, as soon as one language reached a majority threshold, there would never have been another language to compete with it. Competition is at the core of open source, and imposing a standard threatens that core.
Part of what makes the API-first development model so exciting is that you can treat it, initially, as a greenfield development project. Constraints, restrictions, and legacy designs are kept out of mind until they have to be dealt with. This is a major part of open source development – seeing past the constraints that are handed to you, in order to create something better. With Red Hat’s acquisition of a major API management company, I hope we can all help move the OAI toward a more open, truly collaborative system for improving the next wave of API development.