Software-Defined Vertical Industries: Transformation Through Open Source is a Linux Foundation report about a shift in how businesses across seven sectors develop technology: from using open-source software to building collaboration and shared infrastructure into research and product development. Published June 27, 2024, and sponsored by LF Energy, it covers agriculture, automotive, energy, entertainment, financial services, media, and telecommunications.
What are software-defined vertical industries?
A vertical industry is a sector organized around a particular market or field, such as energy or financial services. Calling an industry “software-defined” emphasizes the growing role software plays in how its products, services, and operations are developed and delivered.
The report uses the phrase to describe more than the adoption of software. Its central idea is that organizations are increasingly making open-source software, standards, and collaborative development part of their research-and-development and product-development models. Instead of treating open source only as a component to use, companies can contribute to shared projects and infrastructure that others can also build on.
That distinction matters: using a project can provide a starting point, while contributing can give an organization a role in improving software and shared technical foundations. The report frames collaboration as a way to increase innovation speed across industries whose needs differ but whose technology challenges can overlap.
How does open source affect the industries in the report?
The Linux Foundation identifies examples of open-source and standards-driven transformation across all seven sectors. Its overview connects collaboration with interoperability, faster development, innovation, lower costs, and longer lifespans. These are potential benefits, not a guarantee that every project or organization will achieve them.
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- Agriculture
- Automotive
- Energy
- Entertainment
- Financial services
- Media
- Telecommunications
The report’s scope establishes that the transformation is cross-industry; it does not establish a definitive ranking of which sector benefits most. The industries also face different conditions. Safety and regulation may be especially consequential in some settings, while interoperability or portability may be the more pressing constraint in others. A useful comparison therefore asks what each sector needs from shared technology rather than assuming that one open-source approach suits them all.
Why collaborate instead of building everything alone?
Shared development can let organizations work on common foundations instead of separately recreating similar capabilities. Standards can help systems work together, while open collaboration can make improvements available for broader use. The report associates this model with faster development, innovation, reduced costs, and longer technology lifespans.
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Those gains depend on execution. Reusing software does not automatically remove the costs of integration, maintenance, security, or governance. Nor does access to a project mean an organization has influence over its direction. The practical case for participation is strongest when a company can identify a shared need, contribute resources to address it, and manage the software it depends on over time.
The publication page also attributes a “three times the impact on innovation” finding to McKinsey & Company: top-quartile companies adopting open source had three times the innovation impact of companies in other quartiles. The page does not state the underlying McKinsey publication year, so the statistic should be read with that limitation rather than treated as a dated result for every industry.
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What roles do AI, cloud native, IoT, and software-defined networking play?
The report identifies artificial intelligence (AI), cloud-native computing, the Internet of Things (IoT), and software-defined networking as major enabling trends. They point to areas where shared software and standards can matter: data and intelligent applications, modern application infrastructure, connected devices, and programmable networks.
Their relevance is not identical in every sector. Connected devices may be central to one use case, while cloud infrastructure or networking may matter more to another. The report’s overview presents these as broad technological trends, not as a universal recipe or a claim that every industry adopts them at the same pace.
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How can a company move from using open source to contributing?
Moving from consumption to contribution is a change in practice, not just a change in license or procurement. A company can begin by identifying software it relies on and determining whether its needs overlap with those of a community or project. It can then decide what sustained participation is realistic.
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- Map dependencies. Identify open-source projects and shared standards that support products or internal systems, and clarify which dependencies are strategically important.
- Find shared needs. Look for maintenance, interoperability, or feature requirements that other users may share. A contribution is more sustainable when it advances a common need rather than only a one-off internal customization.
- Choose a contribution model. Participation may involve code, testing, documentation, review, standards work, or resources for project maintenance. Select a form that fits the company’s expertise and capacity.
- Plan for stewardship. Assign responsibility for ongoing participation, security review, and lifecycle management. Shared development does not remove the need to understand and maintain the software in a product.
Neutral governance and clear standards can help align contributors with different commercial interests. They do not eliminate disagreements, so organizations still need to assess project health, decision-making, and whether the project’s direction fits their needs.
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What does supply-chain transparency look like?
The Zephyr Project illustrates one way an open-source project can make software supply-chain information part of its development process: its builds include three software bills of materials (SBOMs) by default. An SBOM records software components and dependencies, helping teams understand what is included in a build. That example shows an operational practice; it should not be assumed to describe every project covered by the report.
Transparency is useful but not a substitute for security work. Organizations still need processes for reviewing dependencies, responding to vulnerabilities, and maintaining software over its lifecycle. Open development can make information and collaboration more visible, but it does not make software risk-free.
Who should read the report?
The report is most relevant to technology and business leaders deciding whether open-source participation belongs in product development, R&D, or shared infrastructure strategy. It also offers context for people working on interoperability, standards, and cross-industry collaboration. Readers looking for detailed implementation instructions for a specific sector should treat its broad seven-industry scope as an orientation rather than a substitute for project- or industry-specific guidance.
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Its framing echoes innovation scholar Eric von Hippel’s argument in Democratizing Innovation that users—including firms and individual consumers—can innovate for themselves, developing what they need rather than relying solely on manufacturers. In the report’s context, open collaboration is one way for organizations to participate in shaping the technologies on which they depend.
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