The Hidden Costs and Hidden Value of Open Source

There’s no doubt that open source’s time has come. Enterprises are openly embracing open source solutions up and down the stack, to the point where it has become the “ new normal.” But what’s the true cost of this kind of software?

A Unisphere Research study of 434 companies, commissioned by IBM last fall, confirmed that Linux had clearly become an enterprise-class operating system for supporting mission-critical applications, such as ERP. Other open source solutions are popular within the surveyed enterprises as well – however, while many compa­nies are or will soon be running mission-critical enterprise systems such as ERP on Linux, the applications themselves are still dominated by commercial vendors.

A new survey of 500 executives released by Unisys Corp. says this may be chang­ing as well. More than half of the respondents – 58 percent – stated that they now use open source software for mission-critical applications. More than 79 percent report­ed using open source in the application infrastructure – databases, Web servers and application servers – that provides the underpinning for mission-critical applications. For many enterprises, the value proposition of open source seems to be about cost savings. About 77 percent of the study respondents called open source important or very important for improving IT efficiency and delivering more with less.

However, the economics of open source are a tricky proposition, and one that companies and IT professionals are just beginning to understand. Of course, there already have been raucous industry debates about open source TCO in recent years. There are some estimates that staff skills and maintenance costs – which form the bulk of IT costs – are the same for open source systems as they are for their com­mercial counterparts.

In our own survey work for Unisphere Research, we found adoption of open source in many parts of the stack – except databases. Our statistics from across var­ious user groups finds leading open source DB products such as MySQL firmly embedded in about a third of enterprises, but showing no further signs of growth. That’s because the level and costs of skills needed to manage an open source data­base amount to the same as for commercial databases, and companies we’ve spoken with prefer to remain with their commercial vendors.

The open source industry is actually built upon two foundations at this point: communities of volunteers, and developers working within supporting organiza­tions. Dirk Riehle, who leads the open source research group at SAP Research, recently published a paper that takes a hard look at the impact of open source on developers’ market rates, including professionals that work for vendors, systems integrators, and end-user companies. While many open source solutions have been built and are maintained by volunteers, there’s also an impressive base of develop­ers who contribute time to open source projects on company time (and are encour­aged to do so). Riehle concludes that such “committers” are likely to be perceived by their employers as having more value, as well as having skills that are in greater demand in the marketplace.

Riehle observes that “a developer who chooses the right project can gain and maintain a position that will increase salary-negotiation power and job prospects. The developer will enjoy those benefits as long as the project is of significance to potential employers.”
In addition, Riehle writes, “open source reinforces the trend toward employees becoming ‘free agents,’ ” adding that “committers who rationally follow their eco­nomic interests are likely to be more loyal to the open source project than to their current employer because that’s where their market value lies.” However, attaining “committer” status to the point where companies will fund your time requires a prominent role in an open source project.

Still, the move to open source represents a substantial shift in where corporate IT dollars are being spent. At one time, software licenses were a big part of the pie – and still are. But with open source, as well as software as a service deliv­ered on a metered basis, software has become as commoditized as the air around us. IT suppliers are now scrambling to beef up their service and support rev­enues as the value- add.

There haven’t been any studies that I’m aware of that have measured the costs to end-user companies for supporting open source committers. While this is likely a far cry from the costs of maintaining commercial software licenses, there is still cost that is being absorbed in terms of compensation and support. And, to an extent, since code is contributed back to the communities, companies are supporting devel­opment that eventually benefits other companies, even competitors.

The bottom line is that the advantage of open source solutions has little to do with the fact that this software is “ free.” The advantage is in the robustness and flexibility of the software, and the ability of the community ( or supporting ven­dor) to provide support on a timely basis. And, as is the case with commercial products, companies bear some risk that open source solutions will lose support in the marketplace.