No Longer an IBM Partner, Randr Navigates the Open Source Track
You don't need an expert economist to see that the AS/400 midrange market is not what it used to be. A once thriving market, it's now maybe a tenth of its previous size, and more resellers and software vendors leave every day. One of the former IBM AS/400 business partners that has evolved its business plan to suit the times is Randr, Inc., which has made a clean break with the traditional midrange, and moved to open source software.
While Randr made its final break with IBM last month, when it was removed from the rolls of the IBM business partner program, the events leading to the breakup have been playing out for many years.
Randr started out in the 1970s selling S/3xs and ERP systems from its headquarters in Riverside, California. The company, which was founded by former IBM executive John Richmond and his partner, was a reseller for JD Edwards, MAPICS, S2K, and other popular midrange ERP systems.
Around the turn of the century, Randr got into the software development business. The company wrote a series of add-on products that it sold to its largely AS/400 customer base. This software, originally written in IBM's Net.Data scripting language for OS/400, was the precursor to today's Web Business Suite, which the company offers for free via downloads from its Web site. The company also developed a warehouse management system in RPG.
Like a good business partner, Randr followed IBM's lead and started developing in Java. In fact, it was one of a handful of AS/400 business partners to sign on to the San Francisco project, the IBM initiative to develop a business application framework in Java, which eventually was merged into WebSphere.
Around 2003, a series of events started leading the company away from IBM middleware, IBM servers, and eventually IBM itself. For starters, the company found that its Java-based software--including Web Business Suite, which the company had converted from Net.Data--ran extremely slow on the WebSphere application server running on iSeries hardware.
Then, an iSeries Model 270 development box was delivered from IBM without WebSphere pre-loaded on it, like it was supposed to be. In a pinch, the company turned to the open-source Tomcat Web application server to get its development going. But at that point, the open source ball was rolling at Randr, and it didn't look back on IBM middleware or proprietary software development.
Going Open Source
John Richmond, the son of Randr's founder, explains how the company turned from a loyal AS/400 business partner and backer of proprietary ERP applications, to a supporter of Linux, X64 hardware, and its own free and open source business applications.
"The '400, being a great database system and having a hell of engine in it, could not do the Web stuff without major hardware upgrades," Richmond says. "This usually forced customers into one, maybe two, P groups above where they were. Since we were already running on Tomcat, we said, 'OK, we're just going to move to Linux.' And we didn't look back."
Randr also had problems with the fees that IBM was charging, and its general approach to the small and medium-size businesses that make up the bulk of the AS/400 installed base.
"Our price point for this package was $10,000," Richmond says. "When IBM sent a representative out to talk about selling this stuff, they said that's going to be a problem because we want $19,000 per license. We said that's going to be a problem. Then they wanted $300,000 up front. And we said, 'OK, this ain't going to work. Great looking out for us partners here."
There is no love lost between Randr and IBM. While many IBM business partners express disappointment with Big Blue, they tend to shy away from making public comments. That is not the case with Randr, which has largely pulled up its IBM midrange stakes, and is going it alone in the open source world.
"We tell customers, 'Assume the '400 you're on is the last one you're going to be on,'" Richmond says. "They're really cutting out support for the small and medium-sized businesses. They really don't want to talk to them."
Here, Richmond refers to stories of people being asked to pay thousands of dollars to get support because they haven't upgraded their systems. "Big John," Richmond says, referring to his father, "came up in the late '70s and early '80s. They just didn't do that to customers back then. They didn't do the forced marches. Like most [AS/400] customers will tell you, you put in a system, and it'll run for 10 to 20 years. Forced upgrade is not in their vocabulary."
The New Software Paradigm
Randr's current business is based on the commercial open source model, and eliminates much of the built-in money-making mechanisms that exist in traditional software companies--namely, the capability to extract maintenance fees through the implied threat of abandoning a customer if they don't stay current on releases.
The company's Web site, www.randrinc.com, lists two product categories, "free" and "not free." In fact, all of the company's products are free--it only charges customers to implement them. It's suite of Java-based software, called Second Derivative, is basically a modular ERP system, except that the company prefers the moniker of transactional software.
Second Derivative is divided into two categories, including the Web Business Suite, and the eBusiness Suite. The Web Business Suite includes four components, including: Order Portal, a B2B and B2C e-commerce Web site and Web ordering system; Sales Portal, which provides CRM capabilities, including e-mail sales and marketing functionality; Information Portal, which provides Web-based reporting for the Order Portal, Sales Portal, and Financial Portal products; and Data Migration Portal, which helps integrate data from third-party systems, such as AS/400-based ERP systems.
eBusiness Suite, meanwhile, is composed of five modules, including: Rental Portal, a transactional system designed for the needs of companies in the rental industry; the Financial Portal, which includes sales, purchasing, inventory management, accounts receivable, accounts payable, and general ledger functionality; the Order Entry Portal, a Web-based transaction system that also includes the Financial Portal; the Warehouse Management Portal, which features integration points with JD Edwards, MAPICS, and S2K, and which is Randr's only RPG-based program (it is due to be converted to Java soon); and the Failure Data Portal, which provides return material authorization (RMA) functionality for equipment repair and warranty businesses.
All of Randr's software (with the exception of the warehousing module), is written in J2EE in the Eclipse IDE. The company recommends running its applications on the Ubuntu Linux operating system with the Tomcat application server; many customers also install the PostgreSQL database, which is also free. Support is provided via forums hosted on Randr's Web site, and via telephone.
Randr serves about 20,000 downloads of its software per year, says Richmond, who estimates more than 100 companies are running the company's software in production. The company makes its living from about 30 to 50 core customers that contract with Randr to install and modify the software.
The fact that Randr uses the Berkeley Software Distribution (BSD) open source license, as opposed to the General Public License (GPL), means that Randr's customers don't have to contribute any changes to the code back into the project. "For businesses, it makes sense to stick with the BSD license," Richmond says.
Richmond says Randr has been approached by third-party vendors in the System i community who are looking to partner with the company. But Randr doesn't see a lot of use in that. "We say, 'The software is free, guys. Go download it. You get the source code. Do whatever you want with it. If you don't like it, the only thing you've wasted is your time.'"
The company still does a lot of work with AS/400 shops, including integrating Second Derivative modules with i5/OS-based ERP systems. But Randr has moved on, and encourages AS/400 shops to look past familiar horizons, too.
"What we're finding with traditional '400 accounts is they have very few places to go," Richmond says. "I'm not holding my breath on them, but when they call for help, we're always here."