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The SME Guide to Open Source

June 29th, 2005

The general view of open source software is that it is free; however, as with many things in business, information technology is never that easy. Switching to open source needs to involve careful planning and consideration of the business benefits and potential downsides to such a migration.

The idea behind open source is simple. Anyone can access the software from the internet without paying license or maintenance charges. Programmers can review the source code and fix bugs or add features and then redistribute it. With all those people checking it, it is less likely to contain defects than many commercial packages, hence less susceptible to be attacked by hackers.

The use of open source is growing; five years ago it was a playground for enthusiasts, however recent estimates indicate that 25% of servers now run an open source operating system (Linux). Over half the websites in the world are powered by open source software, and several governments in Europe and the Americas are considering large deployments of open source software.

Open source is supported by major vendors including IBM, HP and Oracle, so the main question is why isn´t everyone turning to it? And what considerations does a business need to make to assess the business benefits and return on investment by migrating to open source?

What open source software is available?

Essentially, it´s any software that´s developed under a licensing model that allows the source code to be accessed, modified and distributed by anyone who wants to use it. Some of the key products include:

• Linux – the dominant open source operating system

• mySQL, PostgreSQL and Ingres – open source databases

• Tomcat, Zope and Jboss – application servers

• Apache – web server

• Plone and OpenCMS – content management systems

• SugarCRM – customer relationship management (CRM) system

Most of these are fairly technical tools – things that developers can use to create business systems. Developers have always created tools for themselves and shared them with their friends. Most open source software has been developed from this tradition. It´s likely that more business-oriented systems (e.g. for CRM and Enterprise Resource Planning) will become available over time, now that the basic tools are there.

Why isn´t everyone using it?

The licence may be free, but you still need to support the software! If a business has lots of IT personnel in-house, retraining everyone for the new software may be more expensive than any cost savings from free licences. Likewise, if a business needs specialist applications or support, then they may not yet be available on open source. Businesses should carefully weigh up the maturity of the open source software available and the skills they have in-house, in order to decide whether there is a business case for switching.

How do open source developers pay their mortgages?

Some people develop open source applications for the kudos – the bragging rights for having solved a difficult problem. There is now a strong community of such developers.

Many organisations have developed business models based on the supporting elements that go around open source. For example, they charge for services to install and manage systems, but give away the base software for free. Giving it away for free can create a larger installed base for their services, hence increasing their overall revenues. Depending on your company´s circumstances, using such “free” software may be cheaper than buying software and managing it yourself. However the overall cost implications must be taken into account when considering a migration to open source.

Many software products are now commodities. example, most organisations´ needs for operating systems and databases can be met by standard products, and many don´t need the bells and whistles that come with the expensive, high-end packages. For such commodity software, the cost of maintaining the software can be higher than the revenue a vendor might get from selling new versions of it (especially when the cost of employing a large sales and marketing team is considered). these cases, it can be a better business model to eliminate the maintenance costs by opening up the source code for a committed community of developers to maintain, and then to generate revenue by delivering value-added services.

All this means that open source is a classic “disruptive technology”. ´s a low-cost technology that´s good enough to meet the needs of 90% of companies.

Key Considerations

These are the key questions a business needs to ask itself about migrating to open source:

• Does the right open source software exist to support our business systems?

• Can this open source software add any value to our services?

• What are the business benefits of switching?

• What will be the cost implications of implementing an open source system (e.g. personnel re-training, outsourcing support).

• What will be the return on investment?

In short, there is no regulatory body for open source. However, The Open Source Initiative (OSI), a non-profit making organisation, is dedicated to managing and promoting the Open Source Definition for the good of the community, specifically through the OSI Certified Open Source Software certification mark and program. You can read about successful software products that have these properties, and about its certification mark and program on its website, which allow you to be confident that software really is “open source.” The organisation also makes copies of approved open source licenses.

As more people adopt open source, the market for more expensive software is likely to get smaller. This could mean that proprietary developers have a smaller market to address, hence less money for Research and Development. This could in turn mean that cheaper-to-operate open source technology one day overtakes more expensive commercial technology. It´s time for businesses to question whether migration is an option for them.


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