Thursday, December 21, 2006

Grameen outsources open-source development to India

Group seeks to promote development through microfinance, using open-source software.

The Grameen Foundation has outsourced to Aditi Technologies Pvt. Ltd. the development of open-source software to meet the automation needs of microfinance agencies worldwide.

A nonprofit organization in Washington, the Grameen Foundation was established in 1997 to replicate elsewhere the success of the Grameen Bank in promoting development in Bangladesh through microfinance. The foundation was co-founded by Muhammad Yunus, the bank's founder and managing director, who also won this year's Nobel Peace Prize.

Bangalore-based Aditi has been working with the open-source community on the development of this software and will continue to coordinate open-source participation in the project, said Pradeep Singh, CEO of Aditi. Grameen and Aditi will work together on new releases of the software and are exploring new models for the deployment of the software, including software-as-a-service (SaaS), Singh said.

The new software, called Mifos (Microfinance open source), has been released under the Apache License Version 2.0 to encourage technology providers in various countries to localize the software, said George Conrad, director of the Mifos initiative at the Grameen Foundation.

The first release of the software was unveiled last month at a microcredit summit in Halifax, Nova Scotia. It is a Java-based Web application, which requires users to have a Web browser and Internet access, while the back-end server can run on any operating system that supports Java, including Linux and Windows, Conrad said.

The Grameen Foundation did not use the GNU General Public License because it would not allow technology providers to use the core Mifos software to build their own proprietary add-ons around it, Conrad said. "We didn't want to close that option too early because we are still not sure how the business model will evolve," he added.

About 46% of microfinance institutions worldwide are still using spreadsheets or manual systems to manage their portfolio and client information, according to a survey in 2004 by the Consultative Group to Assist the Poor, a consortium of 33 public and private development agencies working in the microfinance area.

Another 44% of those institutions used homegrown systems that were expensive and not well designed. About 10% used commercial off-the-shelf software for which local support was difficult to get, Conrad said.

Instead of the microfinance institutions building the same functionality repeatedly, the Seattle-based Grameen Technology Center, a technology development division of the Grameen Foundation, decided to build an open-source system that is collaborative and promotes local support and control of the functionality, Conrad said.

Aditi is not likely to work on other open-source projects, said Singh. The company's core business in outsourced product development is focused on product companies, most of whom outsource proprietary software development.