Beyond the hype: Where open source actually saves you money

Talk to any open-source vendor (myself included), and we'll tell you that there's a lot of money to be saved by dropping your proprietary software in favor of open-source alternatives. But is that always the case? And, if so, what are the necessary preconditions for saving money?

I chaired a panel at OSCON 2009 where we explored this topic, with some interesting results.

Jeffrey Hammond, a senior analyst with Forrester, provided the underlying data, but Matt Deuel (Virgin Mobile) and Barry Klawans (San Francisco International Airport, IT&T Department) offered real-world experience deploying open-source software, while Zack Urlocker (MySQL/Sun/Oracle) highlighted the balance open-source vendors must strike when working with customers and communities.

Hammond noted that in the rush to save money, CIOs are increasingly turning to open source, though often "open source" isn't the end goal, per se, but rather it's a natural road to vendor independence, IT flexibility, and other goals.

Hence, while we see increased interest in open source, that interest doesn't adequately measure just how pervasive open source has become:

Even so, Virgin Mobile's Deuel and SFO's Klawans both reported savings of 80 percent or better with open-source solutions, this despite ongoing maintenance/subscription costs, higher salaries for qualified developers/architects, etc.

In fact, a full 87 percent of companies surveyed by Forrester in a 2008 report indicated that they reduced costs using open source.

Why? Or, perhaps more appropriately, where?

Yes, there is the obvious fact that open-source software comes with a $0.00 license charge, which cost savings can be significant.

But while Microsoft and Oracle duke it out over price increases on licensing, there are far better ways to save money than just reducing license fees, according to the panel.

One way, as Urlocker points out on his blog, is that open source allows enterprise IT projects to succeed or fail with little risk. You know before you pay anything--if you pay anything--that open-source software is going to work, or not.

Klawans suggested that particularly in this economy, he has more people than budget, which makes investing in open source a great idea, because he can use those people to trial and deploy open source rather than consume demos and slideware from vendors.

But there's a much deeper point, and it's something that is often overlooked:

Open source tends to offer best-of-breed solutions that aim to do a limited range of functions well, rather than to be all things to all people.

Indeed, it is this desire to get the core right that enables open source to be all things to all people, because enterprise IT can take an open-source solution that might be 85 percent of what it needs, and spend some time and consulting dollars to custom-fit the software.

Hence, customers can spend less money to get exactly what they want, rather than buying into a vendor's bloatware, which is bloated precisely to justify the upfront license fees ("Look at all this stuff we're selling you!") and ongoing maintenance fees ("Even more stuff we're selling you!").

And because buyers are not locked into a vendor at the code level--though there is always a certain amount of lock-in that derives from committing to a particular software choice, be it open source or proprietary--enterprise IT buyers remain more agile, able to proactively save money rather than slavishly paying into a vendor's most profitable (and arguably least valuable to the customer) maintenance revenue stream.

In summary, yes, open source can save your company money. Lots of money. But often those cost savings materialize in unexpected areas, rather than simply by saving on license fees.

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