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Chef has overhauled the licensing terms for its IT automation software and some customers are apprehensive about what the changes might mean for their future IT budgets.
Chef has operated under what it terms a "loose" open core business model, where it distributes open source versions of Chef software for configuration management, InSpec for security and compliance, and Habitat for application automation. Chef Automate, a proprietary product, tied together Chef's other software components for paying customers.
Starting this week, however, all of Chef's software code, including Chef Automate, is available in open source repositories and developed under an open Apache 2.0 license, and customers that buy support have two suite subscription options. Effortless Infrastructure includes Chef Infra, the new name for Chef's configuration management tool, as well as InSpec and Automate; and the Enterprise Automation Stack, which adds Habitat. Each product will also be available separately as a subscription with updated pricing.
A sticking point for some users comes in the fine print for the new Chef licensing terms. This is where Chef retains its trademarks, which include Chef, InSpec, Habitat and Automate. Small IT teams can experiment with Chef's binaries for free, but should they use the Chef software for commercial purposes, Chef requires them to pay for support or host their own renamed distribution of the code. These changes take effect with the release of Chef 15 next month, at which point Chef 13 support will end. Customers that use Chef 14 will have a year to decide how they'll proceed with support contracts.
Customers that already have a commercial relationship with Chef will see no change to their costs, said Corey Scobie, senior vice president of product and engineering at Chef. "Users who have purely open source Chef at scale will have some decisions to make about whether to go out on their own or start a contractual relationship," he said.
Chef users' reactions mixed
Longtime Chef software customers said the move could enable Chef to prioritize enterprise customer support, and an open source version of the Chef Automate tool may pique fresh interest among developers.
"It makes a lot of sense from a business perspective to focus the company on the people who fund it," said Michael Hedgpeth, director of software engineering at Atlanta-based NCR Corp., which makes point-of-sale systems, self-service kiosks, ATMs and other retail data processing systems.
However, Hedgpeth said he hoped to use open source Chef software to manage an internet of things (IoT) environment with millions of endpoints spread out over tens of thousands of customer locations, and is concerned about how the new license terms might play out there.
Michael HedgpethDirector of software engineering, NCR Corp.
"It could upset the economic and operational equation," he said. "As a hosted Chef Automate customer, I think it's a positive thing, but as a technology evangelist working to expand Chef's reach within NCR for IoT, it's frustrating."
Hedgpeth drew a comparison between Chef's licensing terms and Red Hat's business model for Red Hat Enterprise Linux. CentOS, a similar but free and open source version of that operating system, sprang up in the community about 10 years ago and is now supported by Red Hat.
"I want an official free alternative -- if Chef wants to be Red Hat, let's make a CentOS," Hedgpeth said.
Chef isn't opposed to that idea, said Brian Goldfarb, chief marketing officer at Chef. However, he pointed out that Red Hat and CentOS did not start out as collaborators and it will take time for a community-based version of Chef's software code to mature.
Hedgpeth is a staunch Chef loyalist. NCR began with Chef Server five years ago, and its configuration management features eliminated 97% of deployment-related outages for his team. NCR renewed its Chef software license last week under the previous terms. But Hedgpeth said he isn't sure how Chef license costs will play out in the next contract renewal next year.
"I'm kind of anchored to the pricing I remember from the beginning," he said. "If I was looking for an IT automation platform now and had 100 or so nodes, it might make more sense, but I have thousands, and there's the IoT issue."
Chef is willing to negotiate volume discounts with large-scale customers such as NCR under the new licensing terms, Goldfarb said.
Business strategy a pervasive issue for open source companies
Chef's licensing changes come amid an uneasy climate for vendors that base their business on open source code, from MongoDB and Redis spats with AWS to executive shuffles at companies such as Puppet and Docker Inc.
Chef's founder and former CTO, Adam Jacob, who stepped down as CTO and switched to a role with the board of directors at Chef in January 2019, weighed in on the future of open core business in a December 2018 blog post. That kicked off a project founded by Jacob, Sustainable Free and Open Source Communities, "organized around the development of a set of shared principles that we believe lead to healthy, sustainable open source communities," according to the group's website.
Chef executives said they plan to take a different path to address the same problem that's riled up MongoDB, Redis and similar vendors. They said their belief is that those peers have moved away from true open source code, while the open source donation of Chef Automate represents a step further toward it.
Some Chef software users in small shops predict that open source Chef Automate will expand the product's influence and name recognition.
"We're just getting started, but now we'll have access to the whole suite, to experiment and test," said Christopher Maher, a software engineer at a startup he asked not to be named. Maher previously used Chef software in an enterprise IT environment at Alaska Airlines. "Chef Automate can also benefit from community input, thousands of eyes that look at the product instead of a closed development group focused on the business," he said.
The bottom line is that while Chef said it pulled in record revenue in the fourth quarter of 2018, it must focus on long-term financial growth and enterprise contract renewals in a fiercely competitive market.
"Making money in open source is really hard, and a lot of companies as they mature have to think about where their revenue is going to come from, and what their differentiation is," said Stephen Elliot, analyst at IDC. "I expect them to have more focus on the bigger customers that want to choose Chef as a strategic platform, prioritize their feedback in feature backlogs, and increased levels of support."