SAP is keeping a close eye on open source

The entire concept of making code freely accessible for others to view, use and even modify would appear to clash totally with the commercial software strategy of SAP AG. So why is the world's largest vendor of business software so interested in open source?

That was a question being silently mumbled by a few software experts in the coffee breaks at the Open Source Forum backed by Hasso Plattner, SAP's billionaire co-founder.

And the answers gleaned from a few of these experts were two-fold: open source is a threat to proprietary software; but it's also an opportunity.

SAP needs to keep abreast of what the open-source community is doing because the open community approach to developing software will play a huge role in the future and will impact proprietary software, according to Adam Jollans, open-source software strategy manager at IBM Corp.

"SAP must be prepared for the next big technology, and that could be open-source software," Jollans said. "IT is changing very fast. Big players like SAP can be beaten by companies with new ideas. SAP knows this."

But it's not only open-source startups that the Walldorf, Germany, vendor needs to have on its radar screen; it's also arch-rival Oracle Corp., according to Don Wight, vice president of worldwide field operations at open-source business intelligence software vendor JasperSoft Corp.

"SAP has to be wondering what Oracle is planning in the open-source space, especially after its recent acquisition of Sleepycat," he said. "Even if Sleepycat isn't a big fish, it's certainly part of a larger strategy."

Where open source stands on SAP's priority list remains anyone's guess, but it is on that list and appears to be inching upwards.

"There is certainly a trend in the open-source space, and we're investing," said Jai Das, a partner in SAP Ventures, the company's venture capital arm, which is in Palo Alto, California.

SAP Ventures has already invested in several open-source companies including MySQL AB, Black Duck Software Inc. and Zend Technologies Ltd., as well as social communications and wiki company Socialtext Inc.

But where open source fits into SAP's long-term strategy is a well-kept secret, and understandably so.

For a company that generates billions of dollars in revenue by marrying customers to its commercial software, a move to open its code and let the open-source community peak inside and even offer some of its code for free would certainly raise a few eyebrows among investors.