Saw an interesting piece this week by Joe Ruck, president and CEO of BoardVantage, talking about how “enterprise software is under attack,” mainly by free open source projects – traditional app vendors like Oracle/Siebel being displaced by SaaS (News - Alert).

“Is this a slugfest with only one winner?” Ruck asks. “Will SaaS and open source ultimately turn against each other for dominance of the software business model – WWF Smack Down style – where the once-united tag (News - Alert) team, after conquering their opponent, starts to fight between themselves?”

Ruck doesn’t think so. This reporter doesn’t either.

For one thing, Ruck’s correct when he says both SaaS and open source “are naturally suited to different parts of the market and in fact will coexist quite naturally.” Where he might be a bit sanguine is where he says he doesn’t see traditional software disappearing completely. If by “not disappearing completely” you mean “not present in a special exhibit in the Smithsonian down the hall from the Dodo” Ruck’s right. But, if you mean “a widely-used component of most companies’ IT,” I wouldn’t bet on it.

Open $ource has one huge advantage over enterpri$e product$, $ee if you can gue$$ what it i$. Business Week recently ran a rather compelling rundown – between 2001 and 2002, eTrade cut $13 million a year from its tech spending by switching to open source software. H&R Block, Men's Wearhouse, and Shinsei Bank are all now paying customers of SugarCRM (News - Alert), which posted record revenue in the third quarter. Office Depot has been steadily moving from IBM and Sun to running Linux on its servers, with about 400 servers running Linux software from Novell.

In fact, a September Gartner (News - Alert) study found that about 52 percent of enterprises surveyed are using open source server software and another 23 percent plan to use it within the next 12 months. But open source CRM or ERP adoption is still clinging to 30 percent adoption. “Wow,” you might say, “30 percent use it.” Yes. Which means 70 percent don’t.

Ruck’s point is that while “open source infrastructure software is, generally speaking, a viable substitute to its commercial counterparts,” pointing out that Apache Web servers are the best to be had today for love or money, open source application software really hasn’t matched “the same level of success as their commercial counterparts.”

He pegs “the identity of the user” as a way to understand this conundrum: “When open source programmers build a search engine component such as Lucene, the users are other developers. They are essentially building for themselves. This means they understand the requirements perfectly and the result is some of the best software available."

However, engineers don't instinctively know crucial features of business apps: “The nuances in understanding how a sales lead should get handled in a CRM system may as well be expressed to the typical engineer as if in a foreign language,” he correctly, if uncharitably, observes.

Yes, Firefox this and Linux that, and SugarCRM is ahead of the adoption curve for open source CRM, but their success as open source apps points up the lack of successful open source apps elsewhere. It’s the old “Why can’t a country that put a man on the moon develop a decent (consumer product of your choice)?” syndrome: If open source can do things as wonderful as Linux and Firefox, why can’t they beat Microsoft (News - Alert) Word?

To get better open source apps, Ruck says, “a role needs to be made for the ‘non-contributing users,’” i.e. the suits. Guys who don’t wear dashikis to work, who can carry on coherent conversations that don’t include references to Unix or UTF-8 and who have never, ever played Dungeons & Dragons. Guys who think Dr. Who sucks. Which it does.

But as industry observer Lisa Hoover says, “Don't tell your IT department or Web designers that you don't care much about the end result as long as open source (read: free) tools are used.” This is known as Insulting Your IT Staff. Not a good idea, since most of them can get jobs elsewhere with two phone calls. “While there are some really fantastic open source options on the market, there are some instances where commercial apps are more effective,” Hoover reminds us.

It’s not as easy as putting a techie and a suit in a room, locking the door and saying don’t come out until you have a decent product. “Users typically don't think through their requirements with the same depth and logic as developers do. They also have no idea as to what is technologically possible,” Ruck says, adding that “open source is fundamentally based upon equality and meritocracy.”

But users can't code, and since most users only know what they want when they see it, Ruck says, their feedback is along the lines of “nope, wrong, nope, I’ll know it when I see it, keep working.” And then the janitor has to work overtime cleaning human entrails off the wall.

Ruck finds a “successful model of collectivizing user input” via SaaS. It has more than one cook making the broth, but in his view the good ideas ultimately win out: “Over time, a SaaS product begins to represent a consolidated set of best practices. The SaaS model provides the mechanism to select the best ideas and providers.”

And the market provides necessary correction, because SaaS vendors, as Ruck points out, “can't operate for very long with a serious bug in their application. You have to fix the issue immediately.” SaaS engineers can avail themselves of the feedback of the users, but are free to pick and choose which ideas they’ll incorporate.

So what Ruck sees is a brave new world where open source hogs infrastructure development, and SaaS takes over the applications space, each one on its own turf doing what it does best.

It’s a compelling argument, and one that, whether Ruck realizes it or not, subtly undercuts his assertion that there’ll be a significant place for traditional enterprise software at the table. But hey, that’s why the future happens, right?