Sun, 07 Aug 2005

Does Open Source Software save money?

People often ask us if Open Source Software saves money over proprietary software. It would be great to always answer that question in the affirmative. Unfortunately, you can't directly compare open source software with proprietary software. It's like comparing apples and oranges. In many ways they are the same: fruit, spherical, reddish-orangish-greenish, sweet, nutritious, high in fiber, a good source of vitamin C. In many ways they are different: cold tolerant vs intolerant, many varieties of apple vs few of orange, thin skin apples vs thick skin oranges, many eat applesauce but nobody eats orangesauce.

In a perfect world, everyone knows everything. In this perfect world, everybody uses the correct mix of proprietary software versus OSS. By definition, in this world, nobody would use OSS unless it really saved money by reducing the business's reliance on somebody else's monopoly supply of software, or by using software which is easily customized for the enterprise, or by using software with no licensing fees.

We don't live in a perfect world.

The lack of perfection means that people will make mistakes. They won't switch to OSS even though it will save them money. Or they'll switch to OSS even though they would have been better off staying with their old proprietary solution. There is no one set of advice that works for everyone which will help them save money.

The most general advice is to look at the money saved from paying licensing fees for proprietary software, the risk avoided by not depending on a proprietary vendor, and the flexibility gained from having the source and permission to modify it. Against that you have to weigh the cost of modifying the software to meet your needs. This cost can exceed the license fees saved.

You don't always spend less money on software with OSS. In any enterprise, you spend money on the mix of inputs which generates the most value. If you are using proprietary software, and you switch to OSS, you can often modify or configure the software to better fit into your organization. This changes the best mix of inputs. When OSS creates more value for your organization, you would be wise to spend MORE money on software.

Many people have saved money with OSS. A few have not, and proprietary software vendors are happy to give voice to stories as cautionary tales. They are correct: there is non-zero risk involved in switching to OSS. It's possible to botch the job. The benefits available, however, are so large that switching to OSS is always the best advice.

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