Tuesday, February 5, 2008

Will the Recession Help or Hurt Open Source?

Well, it looks like we're going to find out the answer to this question over the coming months. The latest piece of data on the service sector seems to have convinced everyone that we are in a recession, and it could be a doosey.

One of the things I've heard some open sourcers say is how they often get stopped by purchasing. Line management loves their product, it does all that the expensive proprietary systems do (or all that the company needs them to do) and it usually costs a fraction. So on down the line it goes, until the proposal lands on the desk of purchasing - and when they see that the proposed BI/system management/database/enter open source solution category here costs 1/5 or less than the product it replaces, they pull out their big fat REJECT stamp and slam it down several times. Their reaction is natural, if annoying. How on earth, they wonder, could it be that something that costs so much less could be as good? And, more importantly, how can I justify all the approvals I've made over the past couple years for this obscenely expensive solution if there's an alternative out there that costs so much less?

I know there's been some discussion and debate by open source pundits about whether low cost should even be mentioned as one of open source's benefits (my opinion - absofrickenlutely!). Now, more than ever, is the time to tout this. Tout? No, Shout!!!

With top lines shrinking and business demands on IT to deliver agility and application uptime unabated, now is the perfect time for Open Source to breakthrough.


indyliberal said...

The stories of open source dying at the purchasing office desk are overstated. Purchasing agents aren't passing on Open Source applications because they lack imagination. They're passing because they have a perspective on the total cost of ownership that is broader than the department head's perspective.

Open Source products are "free" like a puppy is free. For many companies Open Source solutions require hiring additional IT operations, programming and support staff. They lose the cost savings of the "free" software and suddenly find themselves in the software management and development business instead of focusing on their core business.

Take the recent adoption of Moodle by the state of Louisiana. Their commentary said any cost savings from dropping Blackboard would need to be invested into support and maturing the product. See Feldstein’s
blog article
for details. They're not saving any money and they're taking on a line of business that has little to do with education.

So the recession may help Open Source products that meet customer's needs without burdening them with the requirement of adding staff. That means it will probably help Linux.

The impact on most other Open Source applications will likely be neutral to negative. I say possibly negative because in riskier times some folks choose to go with a "safe" solution where there is someone who is ultimately accountable for the product's success or failure.

ChipN said...

The "not really free" argument doesn't really hold water. From an acquisition perspective the bonus of open source software is that you minimize capital expenditures because: you are not paying for licenses; you are running on commodity hardware that is generally 25% to 50% the cost of proprietary hardware; you are not paying for an operating system license.

Yes, you can purchase support (but are not require to do so). Support is how open source companies "make a living," and how they fund future development and innovation. Those support "subscription" costs are usually on par with or less expensive than their proprietary counterparts. The quality of support provided is usually on par with or better than their proprietary counterparts. Oh, and you don't pay annual maintenance fees for open source software (proprietary software vendors often charge maintenance that is a percentage of the original purchase price plus support).

When money is tight most companies will try to do more with less. Eliminating software acquisition costs and minimizing the associated hardware acquisition costs allows companies the option of either saving money or providing more functionality for the same amount of money or less. It's just good business sense.

Management is scrutinized much more when times are tough. Being able to continue to deliver value during these times can make or break the career of an otherwise successful manager.

Greg Wallace said...

Hey indyliberal - thanks for the comment - I also checked out your blog and added it to my reader.

As to the whole TCO issue of Open Source, I have a different perspective. I really think that the support ecosystem for open source has matured tremendously in the past couple years to the point where enterprises have several viable options for support. There's your obvious ones in Red Hat, Novell, HP, IBM, Sun, and of course now Oracle. And several less well known but very strong big and small outfits like Canonical (the company behind Ubuntu), Spring, which just bought Covalent who provides support for several of the most popular Apache community projects, SpikeSource, Unisys, the list goes on.

No, if an enterprise wants enterprise-grade support for open source, it is available and from multiple sources. There is, I admit, a lack of awareness in the enterprise as to the quality and quantity of support options around open source, but they do exist.

indyliberal said...


I think Open Source makes great sense in some situations, and far less in others.

I do think you're off with the proprietary hardware comments. Everyone is running on generic Intel-based boxes now -- Linux, MS, Apple -- all of them.

As for the full analysis of TCO, this quote from a study done by the Coalition for School Networking. After illustrating how each camp claims superior TCO numbers, the researchers conclude: "...there is little discussion of a ‘middle ground’ TCO position however.
Such a position would suggest that while license costs are reduced using open source
software, these savings are transferred to ‘people costs’ such as technical training and
professional development. As such, there would not be any overall financial saving (i.e. a
lower TCO with using open source software), but there would be an exchange of funds from
the budget line for ‘software licenses’ and ‘software compliance costs’ to the budget line of
‘salaries’ or ‘people’. Making choices about software in such a context then becomes a cost benefit/
risk management question, where considerations include both the quantifiable and
intangible educational benefits and risks."

I think they may overstate the case for some of the more mature applications -- and understate it for others.

As with most things, the truth lies in the details. Open Source isn't always the superior choice -- and neither is commercial software.

Greg Wallace said...

Update - Article references IDC which says tighter IT budgets are causing shops to look at more open source: read more

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