Most everyone knows that Yahoo, Google, and many Web 2.0 companies built their SaaS offerings using open source software. Yes, they use open source to save licensing costs. Yes, they used open source to develop their services quickly using Linux, Python, PHP and a host of other high-quality components. They also benefit from the improvements these open source components see year after year.

But, does this mean that SaaS represents the best use of open source?  No, not from a customer perspective. In my opinion, many of the discussions I've been reading lately focus on the wrong question. It's not if SaaS and open source are complementary (of course they are) but how do they complement each other and, more importantly, what does this mean for the customer.

Open source is free and SaaS is often free (as in free email and free social networks). But the primary benefit of open source isn't cost savings, it's choice (to a CIO this means "mitigating risk"). Users of open source can be assured that their data or content sitting in an application will continue to be usable, even if a commercial vendor drops a service or stops selling software.

SaaS (regardless if it was built using open source software or not) that delivers a proprietary service is still a proprietary solution and that removes customer choice. And, yes, I am equating Google Sites to Microsoft SharePoint in this regard. As a customer I may not care how a solution is built but I absolutely care about choice (and as a CIO I really care about mitigating risk).

Open source software that you install on your own equipment is interesting. It gives me choice but at the cost running it myself. But, open source software provided as SaaS is downright compelling because I get the advantages of both SaaS and open source. Someone else takes care of it and I retain choice.

I love Merlin Mann's comment about the Drupal open source content management system on the latest (Episode 55) MacBreak Weekly podcast (skip ahead to 36:40).

"That is a system that would have cost a half a million dollars...The stuff that I am able to build with Drupal that scales and handles the load and does the stuff I am able to do is just mind-blowing."

I couldn't agree more. Look at what Lori has done here using Drupal. This is from one talented designer who has programming experience but who definitely does not consider herself a php developer. Just building on the shoulders of community. Powerful stuff.

More discussion about these comments on Bert Boerland's blog.