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Likewise, Managing Heterogeneous Environments

Who would have ever imagined that the creators of an open source bridge between the Microsoft and Linux worlds would have come from the ranks of the Redmond colossus itself? Stranger than fiction perhaps but that’s how Bellevue, Wash.-based Likewise Software came into being nearly five years ago.

‚ÄúThe four founders, all with a Microsoft background… shared a great enthusiasm for the fast growing other platforms in the Windows environment but recognized that this [heterogeneity] created a set of problems,‚Äù said CEO Barry Crist, who joined the team in January 2005, four months after incorporation. ‚ÄúAnd Linux was the primary driver.‚Äù

Crist is the exception to the rule, chosen for his outsider (i.e. non-Microsoft) perspective, and his background in enterprise software sales, division leadership at Mercury Interactive and hands-on work with infrastructure connectivity. His seemingly Stone Age-era computing connectivity credentials include working for Apple, converting IBM System 38 spreadsheets and word processing documents into readable formats for Apple desktop computers, enabling IT staffs to shift workloads to nontechnical employees, he recalled.

The company’s first product, Likewise Administrator, tackled the interconnectivity problem by enabling Windows administrators to centrally provision and manage Linux servers. After listening to customers, however, Likewise soon recognized that the bigger pain point in mixed OS environments was identity and authentication and refocused its product development on creating a bridge to Active Directory which would enable Linux, Unix and Macintosh users to log in to Windows machines with a single sign-on. The Move to Open Source

Concurrent with the product shift from Likewise Administrator (no longer offered) to authentication solutions, Likewise made another key move: a switch from proprietary to open source. Although none of the founders had direct experience with open source, a consensus emerged that free product downloads were a better way to win a foothold in the enterprise market than a high-pressure salesforce, Crist said.

The key to its successful implementation, however was twofold: first, creating a free product of high value, and second, adding a second tier of additional services for which enterprises, once sold on the free product, would be willing to pay money, he said.

“Open source was a big business model change for us but we learned that whatever the free thing is has to be real and meaningful and provide value,” Crist said. “And you have to have a clear vision and confidence in how you monetize” the proprietary additions, he added.

For Likewise, this meant creating a free open product as well as an enterprise edition that now includes group controls, audits, and policy and event management, which collectively identifies not only the individuals but the time of their system access to assure that policies are being enforced, he said. Likewise also offers two intermediate level products, GID and UID, which provide centralized identification and management without the policy components of the enterprise edition.

“Audit is a huge driver for us,” Crist said. “Half our deals are funded out of compliance or audit budgets,” he said.

Along the way, Likewise also recognized that it needed to replace its original open-source architecture, built on Samba and Winbind, with a framework powerful enough for the largest enterprises, and with better diagnostics, Crist said.

The decision to go open source also encouraged the gradual growth of a Likewise community, which started with user submission of bug alerts and feature requests and evolved into user assistance with quality assurance, he said.

Ultimately, this user input resulted in technical partnerships with Data Domain, Citrix Systems Inc./Xen hypervisor and Isilon, who helped Likewise adapt its new architecture for their needs in deduplication, virtualization and clustered storage, respectively, as well as making it more “bulletpoof” for the largest enterprises than the original Samba/Winbind-based framework, Crist said.

In addition, these three companies opened up a new revenue stream by licensing the new LWIS (Likewise Identity Services) architecture for incorporation into their own products, he said. Licensing fees, which are fueling the company’s growth, could potentially be up to 25% of future revenues, he said.

Customers, Revenues Growing

To date, Likewise’s free software has been downloaded by 30,000 businesses and more than 300 customers are paying for the enterprise product, he said.

Despite a softer fourth quarter last year, the first half of 2009 has doubled the six-month revenues for the previous year, Crist said. If revenues continue at the same rate for the rest of 2009, Likewise would be “cash flow positive,” and in a “great place, financially,” Crist said. The company has taken $27 million in venture funding to date, with the last $4 million simply as a buffer, he said. Its major competitors include Quest, Centrify and homegrown solutions, he added.

Future Plans: CIFS, Virtualization

Next on Likewise’s horizon include expansion up the stack with Likewise CIFS (Common Internet File System), and virtualization solutions, Crist said. Likewise has already signed several licensing agreements for its CIFS product, which will provide connectivity between highly scalable Linux file systems and Windows clients, he said. Interest among technology companies, especially those in storage industries, is high, he said.

Virtualization, which creates a whole new set of authentication and management problems, also is a big focus for Likewise, with numerous ongoing research projects and joint initiatives with the leading virtualization vendors, Crist said. Announcements will be forthcoming, he added.

However, there’s no shortage of other potential opportunities to pursue, bare metal hypervisors and mobile applications, for example, he said.

Likewise’s core strength is its highly technical culture, Crist added. Marketing messages can start a conversation but success as an open source company, especially when courting large enterprises, demands an ability to sustain deep technical discussions with customers about how to solve their problems, he said.

“There’s no single dot on the line” that will signify success, Crist added. “There are always new things to explore and, as a privately held growth company, we’d like to continue to grow. “