User Costs
- Contents:
- Abstract
- User Costs
- Conclusion
- References
- Related Articles:
- User Benefits
- User Risks
Abstract
Many companies equate open source software with "free" software. The truth is that open source software is not free. This section discusses some of the costs associated with the adoption of open source software.
User Costs
Each year, IT departments spend millions of dollars in software licenses and upgrades. With the availability of mature and reliable open source solutions, there has been a shift in corporate attitudes toward open source as more and more companies ask, "Why are we buying a vendor product when we could use this open source option?"
Many companies equate open source software with "free" software. The truth is that open source software is not free. Despite the cost savings from low initial software price and low-cost Intel or AMD hardware, more hands-on and expensive processes might be expected: integration, testing, training, maintenance, and so on. According to Forrester, five companies tracked their total ownership costs for Linux implementation and, compared to Windows, Linux was between 5% and 20% more expensive. Based on numerous commissioned studies, Microsoft claims that Windows computing environments offer a lower cost of ownership than Linux and open source systems. However, other case studies indicate clear cost savings accompany UNIX migrations to Linux.
According to a Forrester survey of 140 North American companies on the use of open source software, 86% of firms responded that low acquisition cost is one of the primary reasons for their open source adoption, despite the fact that acquisition cost is only one part of the total ownership costs. Indeed there are many other costs to be aware of when considering open source options.
Due to their lack of in-house expertise with open source systems, many companies may have to rely on third-party vendors to provide training, support and consulting services to maintain open source systems. Depending on the scope and scale of a system, the costs incurred might be considerable. When Linux-based systems become popular and standardized in consulting offerings, the market will become more competitive and corporate IT departments will have greater negotiating power and more choices so as to lower the costs of running a Linux-based environment. In the interim, firms without in-house expertise and resources to support open source products must understand the total cost of ownership by performing cost-benefit analysis of open source adoptions.
Total cost of ownership may be analyzed in terms of the following aspects in evaluating open source adoption:
- Acquisition costs. This category primarily includes sale price and other sales-related costs.
- Deployment costs. To implement open source solutions, systematic deployments such as planning, installation, migration, testing, monitoring, etc., need to be in place. The budgets for these processes are components of the total cost of ownership.
- Staffing costs. The category includes costs in hiring, training, new payrolls, etc., in relation to the adoption of open source systems.
- Support and services. Professional consulting costs fall in this category.
- Opportunity costs. The decision to choose open source instead of proprietary solutions might miss the benefits of some offerings in proprietary systems.
Conclusion
When open sourced systems, such as Linux, become popular and standardized, the market will become more competitive and corporate IT departments will be able to lower the costs of running these systems. In the interim, firms without in-house expertise and resources to support open source products must consider the total cost of ownership by evaluating acquisition costs, deployment costs, staffing costs, support and services costs, and (lost) opportunity costs.
References
- Giera, Julie (April 2004), The Costs and Risks of Open Source, Forrester Research.
- Giera, Julie (December 2004), The Impact of Open Source on Service Delivery, Forrester Research.