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SIP REPORT

The Business Case of Open Source Software

(Summer Internship Project Report)

Submitted in Partial fulfilment of the requirement for the award of
MASTERS OF MANAGEMENT STUDIES (MMS)

Submitted to

MET INSTITUTE OF MANAGEMENT STUDIES
Bandra , Mumbai

Submitted by
Kadambari Sable
Roll No-134
Specialization-Marketing

Business case of open
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SIP REPORT

Acknowledgements

I would like to acknowledge and thank the individuals who contributed to this
document. In particular, thanks to Vishal Mehrotra, Francis Dello Russo, David
Emery, Paul Garvey, Robert Giallombardo, Michael Macpherson, Frank
McPherson, James Moore, and Audrey Taub for their insights and helpful
reviews. I would like to thank Vishal Mehrotra for his assistance in producing
this document. Also, thanks to Janice Ballo and Theresa Dillon for the materials
they contributed through their extensive search efforts.

Signature

(Kadambari Sable)

Date:

Business case of open
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SIP REPORT

Certificate from Company

Business case of open
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SIP REPORT

Index

S.No Particulars Page No
1 Need and Justification of Project 1
2 Introduction
3 Company Background and
information
4 Data Collection and Data Analysis
and Interviews
5 Processes and Procedures
6 Problem framing and Problem
solving
7 Suggestions and Recommendations
8 Ethical, Social, Environmental
impact of project
9 My learning’s
10 Conclusions
11 A peep in to the future
12 Bibliography

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So as the Open Source Initiative explains. Programmers who have access to a computer program's source code can improve that program by adding features to it or fixing parts that don't always work correctly. The Initiative's definition of "open source" contains several other important provisions. or gaming consoles connect to a global network of computers that routes and transmits their data to the "local" devices they have in front of them. This kind of software is frequently called "proprietary software" or "closed source" software. LibreOffice and the GNU Image Manipulation Program are examples of open source software. because much of the Internet itself is built on many open source technologies—like the Linux operating system and the Apache Web server application—anyone using the Internet benefits from open source software. mobile phones. or share it. it's the code computer programmers can manipulate to change how a piece of software—a "program" or "application"—works. In fact. "open source doesn't just mean access to the source code. In order to use proprietary software. As they do with proprietary software. view. or organization who created it and maintains exclusive control over it. Need and Justification of Project Open source software is software whose source code is available for modification or enhancement by anyone. The computers that do all this important work are typically located in faraway places that users don't see or can't physically access—which is why some people call these computers Business case of open source5 . because its source code is the property of its original authors. SIP REPORT 1. What's the difference between open source software and other types of software? Some software has source code that cannot be modified by anyone but the person. or play multiplayer video games. stream music online. and modify open source software whenever they like—as long as they let others do the same when they share their work. Is open source software only important to computer programmers? Open source software benefits programmers and non-programmers alike."Source code" is the part of software that most computer users don't ever see. who are the only ones legally allowed to copy or modify it. chat with friends. alter it. Every time computer users view webpages. check email. team. learn from it. Microsoft Word and Adobe Photoshop are examples of proprietary software. their computers. they could be violating the terms of some open source licenses if they don't do this. and that no one should prevent others from doing the same. In other words. computer users must agree (usually by signing a license displayed the first time they run this software) that they will not do anything with the software that the software's authors have not expressly permitted." It means that anyone should be able to modify the source code to suit his or her needs. Open source software is different. users must accept the terms of a license when they use open source software—but the legal terms of open source licenses differ dramatically from those of proprietary licenses. Its authors make its source code available to others who would like to view that code. copy it. Some open source licenses ensure that anyone who alters and then shares a program with others must also share that program's source code without charging a licensing fee for it. computer programmers can access. Open source software licenses promote collaboration and sharing because they allow other people to make modifications to source code and incorporate those changes into their own projects. In fact.

Some people call remote computing "cloud computing. updated. Many users prefer open source software to proprietary software for important. Others like open source software because it helps them become better programmers. use. Programmers can charge money for the open source software they create or to which they contribute. users that rely on software for critical tasks can be sure their tools won't disappear or fall into disrepair if their original creators stop working on them. For example. open source software is generally fixed. Cloud computing applications run "on top" of additional software that helps them operate smoothly and effectively. like Etherpad. sharing photos. but also the global network of remote computers that form an "atmosphere" around them. Cloud computing platforms can be open source or closed source. SIP REPORT "remote computers. they simply access these programs on remote computers by using a Web browser or mobile phone application. inviting comment and critique. they use online word processing. Why do people prefer using open source software? Many people prefer open source software because they have more control over that kind of software. Doesn't "open source" just mean something is free of charge? No. someone might spot and correct errors or omissions that a program's original authors might have missed. Cloud computing is an increasingly important aspect of everyday life with Internet-connected devices. OpenStack is an example of an open source cloud computing platform. Users who aren't programmers also benefit from open source software. and troubleshoot it Business case of open source6 . Some people prefer open source software because they consider it more secure and stable than proprietary software. Instead. are closed source programs. many open source software programmers find that charging users money for software services and support (rather than for the software itself) is more lucrative. And because so many programmers can work on a piece of open source software without asking for permission from original authors. Because the source code for open source software is distributed publicly. and they can change parts of it they don't like. or watching videos) that incorporate not only local devices. people rely on remote computers when doing things they might otherwise do on their local devices." because it involves activities (like storing files. Because open source code is publicly accessible. and upgraded quickly. The software that runs "underneath" cloud computing applications acts as a platform for those applications. are open source programs. email management. They can examine the code to make sure it's not doing anything they don't want it to do. This way. and image editing software that they don't install and run on their personal computers. Others. This is a common misconception about what "open source" implies. They can also share their work with others. long-term projects. students can learn to make better software by studying what others have written." More and more. Because anyone can view and modify open source software. their software remains free of charge and they make money helping others install. because they can use this software for any purpose they wish— not merely the way someone else thinks they should. Some cloud computing applications. like Google Docs. But because most open source licenses require them to release their source code when they sell software to others.

as in the case of the Linux kernel exploit uncovered not long ago. Bugs in open source software also tend to get fixed immediately. it's becoming increasingly clear that price is not the only advantage such software holds. so no one outside the companies that own them has the faintest clue how many bugs they contain. What's so encouraging about this discovery. companies that adopted it during the Great Recession would surely have switched back to the expensive proprietary stuff as soon as conditions began to ease. but the example is still a perfect illustration of what's known as "Linus' Law. the creator of Linux. Rather. All it means is that those products are closed from public view. SIP REPORT 10 Reasons Open Source Is Good for Business With the many business and government organizations that now use open source software such as Linux. Security It's hard to think of a better testament to the superior security of open source software than the recent discovery by Coverity of a number of defects in the Android kernel. some of them even more valuable than the software's low price. If it were. all bugs are shallow. According to that maxim. free and open source software (FOSS) holds numerous other compelling advantages for businesses. as I noted the other day. you might even say. in other words. and that's clearly not the case. the more likely any flaws will be caught and fixed quickly." named for Linus Torvalds. is that the only reason it was possible is that the kernel code is open to public view. Does the absence of such flaw reports about the code of the iPhone or Windows mean that such products are more secure? Far from it--quite the opposite." What that means is that the more people who can see and test a set of code. 1. It's essentially the polar opposite of the "security through obscurity" argument used so often to justify the use of expensive proprietary products. Android may not be fully open source. Business case of open source7 . "Given enough eyeballs. And there's no way the limited set of developers and testers within those companies can test their products as well as the worldwide community constantly scrutinizing FOSS can.

Since the code is open. Customizability Along similar lines. SIP REPORT In the proprietary world? Not so much. 4. so are there just as many innovating new features and enhancements to those products. At least one recent study has shown. 3. or a software package created by thousands of developers? Just as there are countless developers and users working to improve the security of open source software. and that limits what they can do with the products they're paying for. requirements. typically takes weeks if not months to patch vulnerabilities such as the recently discovered Internet Explorer zero-day flaw. on the other hand. for example. 2. In general. users are in control to make their own decisions and to do what they want with the software. that technical superiority is typically the primary reason enterprises choose open source software. in fact. Customers of such vendors are at the mercy of the vendor's vision. they free themselves from the severe vendor lock-in that can afflict users of proprietary packages. Good luck to all the businesses using it in the meantime. priorities and timetable. it's simply a matter of modifying it to add the functionality they want. Business case of open source8 . Freedom When businesses turn to open source software. Microsoft. and they make it well. prices. open source software gets closest to what users want because those users can have a hand in making it so. With FOSS. It's not a matter of the vendor giving users what it thinks they want-- users and developers make what they want. They also have a worldwide community of developers and users at their disposal for help with that. dictates. Quality Which is more likely to be better: a software package created by a handful of developers. business users can take a piece of open source software and tweak it to suit their needs.

Auditability With closed source software. Flexibility When your business uses proprietary software such as Microsoft Windows and Office. however. for example. and don't want to be limited by proprietary data formats. meaning that you can run it well even on older hardware. The visibility of the code behind open source software. you have nothing but the vendor's claims telling you that they're keeping the software secure and adhering to standards. Interoperability Open source software is much better at adhering to open standards than proprietary software is. wikis. has an online community with excellent documentation. newsgroups and even live support chat. means you can see for yourself and be confident. Support Options Open source software is generally free. It's up to you--not some vendor--to decide when it's time to upgrade. mailing lists. forums. It's basically a leap of faith. SIP REPORT 5. Most every Linux distribution. forges. 6. 7. for instance. Business case of open source9 . open source software is definitely the way to go. you are on a treadmill that requires you to keep upgrading both software and hardware ad infinitum. Open source software. computers and users. If you value interoperability with other businesses. 8. is typically much less resource-intensive. on the other hand. and so is a world of support through the vibrant communities surrounding each piece of software.

there are now paid support options on most open source packages at prices that still fall far below what most proprietary vendors will charge. support charges. that your business should necessarily use open source software for everything. 9. This is partly due to the software's free price. of course. ongoing upgrade expenses and the costs associated with being locked in. too. But with all the many benefits it holds. it will typically cost you nothing to try it out first. for example. Providers of commercial support for open source software tend to be more responsive. proprietary software takes more out of your business than you probably even realize. since support is where their revenue is focused. None of this is to say. Cost Between the purchase price of the software itself. Try Before You Buy If you're considering using open source software. the exorbitant cost of mandatory virus protection. No commitment required until you're sure. SIP REPORT For businesses that want extra assurance. and partly due to the existence of LiveCDs and Live USBs for many Linux distributions. And for what? You can get better quality at a fraction of the price. 10. you'd be remiss not to consider it seriously Business case of open source10 .

and in society as a whole. The impact of open source technology is expected to be quite noticeable in the software industry. What is open source software? It is not easy to define the term ‘open source software’ with few words. This document tries to provide some facts. On the contrary. the open source software phenomenon is not historically new. as we will show in this document. But it is not too complicated. SIP REPORT 2. opinions and references. It also enables completely new business models. Despite these facts. open source software2 recently got the attention of the press as a totally new thing that ‘suddenly appeared’. a very positive impact as an enabler for the creation of new markets and business opportunities. in general. many other believe that changes caused by open source will be so deep that they will completely shape the software industry of the first decade of the 21st century. which have already been demonstrated to be especially well suited to efficiently take advantage of the work of developers spread across all corners of the planet. However. Introduction Open source software is becoming the most interesting ‘new’ phenomenon of the entire information technology landscape. Exactly like the personal computer and the Internet. Many people believe that the impact of open source software in the information technology industry and in society in general will be huge. since the idea in itself Business case of open source11 . so that the reader can decide if all of this is just nonsense. generating a level of interest similar to that of the first moments of the Internet. to the point that the current rules by which the software industry behaves will completely change. which has allowed it to enter the mainstream software market . many people think that the open source movement is merely another temporary fashion in the software industry. and without precedent in its nature. either. And it has. due to the many categories and variants that exist. or if it deserves more and better study and consideration. It allows for novel development models. although in recent years it has reached a critical mass. which are shaping a network of groups and companies based on open source software development.

augmenting its functionality. and not obligation. If programmers have access to the source code of a program. in this document. SIP REPORT is simple. usually written in a high level programming language. but in general. get knowledge of all its details. Of course. But in any case. The source code of a program. if they feel it is appropriate.  Redistribute the software to other users. who could themselves use it according to their own needs. they can redistribute it.  Have the software at their disposal to fit it to their needs. or at a charge. in a relatively informal way. Therefore. let us devote a moment to explain. in any technically appropriate situation. it is necessary to “protect” it with a licence which impose certain restrictions on the way that it can be used and distributed . they can study it. in English. to modify it and to improve it. etc. The use of the Spanish and French word ‘libre’. In the same way. there is a fourth one which is basic. Because of that. about ‘free software’. they can decide to protect it with several different licences. General idea of open source software When we talk. To satisfy those previous conditions. and studying its operation. Therefore. before going into more detail. and is necessarily derived from them:  Users of a piece of software must have access to its source code. Anyway. Even more. fixing its bugs. Business case of open source12 . people holding this view maintain that it is necessary to limit the ways of use and distribution. they are not forced to do so. This fact causes some controversy in certain circles. by the way. they are not forced to do so. It is important now to make clear that we are talking about freedom. it is a good idea to state clearly that open source software does not have to be gratis. not completely. or at least.. and work with it as the original author would. users of an open source program can modify it. there is a dangerous ambiguity. more pragmatic. this includes improving it. with current legislation. for whatever they wish. it usually is not. is absolutely necessary to be able to understand its functionality. what do we understand as open source software. not fixed before hand . because it is considered that these licences make the software distributed under them “less free”. The main features that characterize free (open source) software is the freedom that users have to:  Use the software as they wish. is that software will be made more free by guaranteeing the perpetuation of these freedoms for all its users. Depending on the ideas and goals of the authors of a piece of code. if this freedom is to be guaranteed for a given piece of software. and ‘gratis software’ when referring to zero acquisition cost. on as many computers as they wish. due to ‘free’ meaning both ‘freedom’ and ‘gratis’. That is. we will use mainly the term ‘open source’ when referring to users freedom of use. This redistribution can be done for free. redistribution. has been adopted in many environments to refer to open source software. but will not be used here for the sake of uniformity. Another view. before using stricter definitions. Paradoxically.

educational institutions. Business case of open source13 . It differs in the manner in which it is produced and distributed. and individual users. the most important and substantive economic impact of FOSS is as a substitute for proprietary software. In this report the term FOSS is used to reflect these common values. in their outlook on issues such as open standards and patents. For many cases. government departments. it is a substitute for proprietary software.” While adherents of the “free software” term emphasize the ethical and philosophical aspects of community use and development of software. The economic impact of any technology introduction is studied by considering the impact that the technology has on the adoptive population. It should be pointed out here that there is some difference in the meanings and values associated with terms such as “open source” and “free software. The various software packages and applications available in FOSS have assumed a serious and non-hobbyist position vis-a-vis proprietary software. FOSS is a competitive technology to proprietary software. There is much in common between the adherents of both the phrases. SIP REPORT It is widely believed that Free and Open Source software (FOSS) has an important and lasting role to play in a developing country such as India. FOSS has already made a strong impact as it has been adopted by many businesses. In this context it is important to ask whether the adoption of FOSS has a specific economic impact and whether the adoption decisions are justified by sound economic rationale. Many Indian government departments and businesses have now made it policy to use and deploy FOSS wherever possible. the “open source” adherents emphasize the pragmatic and business- friendly aspects of this technology. as well as to reflect a term that has currency in the community in India.

BPO. ● Digital enterprise.4 billion for the year ended March 31. consulting and business solutions organisation that delivers real results to global businesses. The company generated consolidated revenues of US $13. recognised as the benchmark of excellence in software development. and is listed on the National Stock Exchange and Bombay Stock Exchange in India. ● BI and performance management. ● Business process services. Business case of open source14 . infrastructure. This is delivered through its unique Global Network Delivery ModelTM. integrated portfolio of IT. TCS offers a consulting-led. ● Consulting. 2014. India’s largest industrial conglomerate. Services TCS helps clients optimise business processes for maximum efficiency and galvanise their IT infrastructure to be both resilient and robust.000 of the world’s best-trained consultants in 46 countries. TCS offers the following solutions: ● Assurance services. SIP REPORT 3. Company background and information Tata Consultancy Services (TCS) is an IT services. engineering and assurance services. ensuring a level of certainty no other firm can match. TCS has over 318. A part of the Tata group.

● Enterprise security and risk management. ● Government. transportation and hospitality. oil field services and renewable. ● Life sciences. SIP REPORT ● Eco-sustainability services. ● Media and information services. ● Engineering and industrial services. mitigate risks and become operationally excellent. ● IT services. ● Travel. ● Insurance. ● High tech. ● Enterprise solutions. ● Platform solutions. ● Supply chain management. mining and construction. ● Telecom. TCS helps clients from various industries solve complex problems. ● Healthcare.small and medium business. Business case of open source15 .metals. ● Utilities. Industries TCS has the depth and breadth of experience and expertise that businesses need to achieve business goals and succeed amidst fierce competition. Some of the industries it serves are: ● Banking and financial services. ● iON . ● Energy . ● IT infrastructure services. ● Manufacturing.oil and gas. ● Retail and consumer products. ● Resources .

● TCS MasterCraft. 4. SIP REPORT Software ● Digital software and solutions. The Secondary research pointed out the following data: Below mentioned study examines the economic impact of FOSS technology for organisations in India. Data Collection and Data Analysis and Interviews Data analysis is the process in which the acquired data is organized in a way that it can make sense Creswell (2003). Government organisations include government departments and public sector undertakings (PSUs). The methodology relies on both primary data obtained from interviews of personnel in the organisations as well as secondary data and reports available in the public domain. including large multi-national firms. Life Insurance Corporation of India Business case of open source16 . This methodology entails a detailed and context-specific analysis of the organisation that unravels the conditions under which FOSS was adopted and the manner in which the decisions were made. The case study methodology is adopted for studying the organisations. they cannot be numerically expresses as such. In the commercial segment firms are selected from small and medium enterprises (SMEs) and from large firms. education and commercial segments. the impact the technology has had. Location TCS is headquartered in Mumbai. The method is that of directly studying organisations that have adopted FOSS and measuring. As triangulated. operates in 45 countries and has more than 208 offices across the world. in multiple ways. It is made up of answers to open-ended questions. Some organisations that have not adopted FOSS are also studied to understand the reasons why FOSS was excluded by them. ● TCS BaNCS. Organisations are selected from government. ● TCS technology products.

LIC deployed Linux on some of its servers and saved Rs 120 million. Of this. Rs. NIA invests heavily in information technology and the yearly IT budget is about Rs. Each branch has one dedicated server while the divisional and zonal office have about 10 servers each and the central corporate office has about 50 servers.000 employees. it initiated a massive computerisation drive with a view to enhancing customer responsiveness and services. New India Assurance Company New India Assurance Company Limited (NIA) is a public sector general insurance company. 50 Crores on software while the Business case of open source17 . thus making all the divisional offices achieve the distinction of 100% branch computerization. The company has a range of more than 150 products and is one of the largest non-life insurance companies. LIC's tangible cost savings are summarised in the table below. 7 Zonal offices and the Corporate office. All the branches are connected to the zonal and divisional offices through Wide Area Network (WAN) while the offices in the same city are connected via a Metropolitan Area Network (MAN). having started in 2001. Subsequently. in particular. It began by moving servers to Linux. Data pertaining to almost 100 million policies is being held on computers in LIC. to the rural areas with a view to reach all insurable persons in the country. not only in India.100 offices. while being headquartered in Mumbai. The total desktop count is close to 30. but also in the Afro-Asian region. These computations are based on extrapolations of the data provided by LIC. prompt acceptance of their premium payments. Thus. In 1995. In a pilot in 2003. Each branch has about 20 to 30 workstations. the server count is close to 3500. in 2003-04 it migrated all its servers to Linux. 200 Crores. in order to provide them adequate financial cover at a reasonable cost. is spread over 26 regions. Its network of 1. 60 Crores is spent on hardware and Rs. in total. LIC’s Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. All the 2048 branches across the country were covered under front-end operations.000. with over 22. 100 Divisional offices. LIC was a pioneer organization in India to introduce and leverage information technology in their business. LIC migrated almost 60% of its desktops to Linux and open source based applications. and then moved desktops to Linux too. SIP REPORT Life Insurance Corporation of India (LIC) is one of the largest insurers in India and was created to spread life insurance widely and. This service enabled policyholders to receive immediate policy status reports. Today LIC functions with 2048 fully computerized Branch Offices. and to get a revival quotation or a loan quotation on demand. LIC is one of the pioneers in FOSS deployments in India. Later.

are used for this analysis. 25 Lacs inclusive of software and hardware costs saving a lot of money. rather than pose structured questions for a quantitative analysis. IT managers state that they must have saved an estimated 35% to 40% on IT expenditure every year owing to FOSS. ANALYSIS OF CASE DATA This section presents a detailed analysis of the case data. Even though. NIA managed to convert 4000 out of 7000 desktops to Linux. the company migrated all its servers – about 1500 – to Linux. which are reflected in the reduced IT budget. To summarise. This success was followed by a move to convert desktops to Linux and although this met with resistance from users. Basic summary statistics are provided. FOSS adoption is not primarily to save costs. The intention of the case studies was to inquire about FOSS usage using an unstructured set of questions. They use about 1500 servers. Chief Manager. And this entire system was built under Rs. “We began with 600 users and scaled to 3000 users without additional hardware. Soon. A summary of the organisations studied is as follows: Business case of open source18 . D K Sinha. IT at NIA. After the success of this venture.” says Mr. For NIA. The estimate is that of Rs 800 million per annum savings owing to FOSS. NIA decided to go wholeheartedly with Linux. NIA's FOSS experiment started when they deployed a corporate mailing solution using open source mailing solution of SendMail. The analysis below examines certain issues arising from the data available in the cases. SIP REPORT remaining sum is spent on managed services. NIA main benefit from FOSS adoption is the continued savings they have. of organisations that had adopted FOSS. 20 case studies. and for easy adoption of updates and new versions. The desktop count is close to 7000. The FOSS adoption is driven by security and control over pirated software.

This is particularly attractive to those adopting FOSS for desktop use. or incurred on an annual basis. as a renewable license. Many mentioned this as helping with administration also. per desktop. These costs may be one time costs. Commercial software licenses are sold on a per seat. on purchase of license. SIP REPORT The most important reason for adopting FOSS is to reduce costs.  License costs are the costs of buying licenses. operational ease and maintenance. 18 out 20 respondents mentioned this as a factor for choosing FOSS.  Security – FOSS products attracted some organisations owing to their security features. When cost calculations were conducted for FOSS adoption. Some organisations running FOSS on core servers mentioned the mission-critical nature of applications for which the choice of FOSS was made. however other factors are important for various types of organisation. some clearly mentioned that this was not the most important factor. Upgrade costs are related to licenses. The factors mentioned are:  Improved performance – This includes aspects of stability. per concurrent user or per use basis. these are mentioned in the table below. Business case of open source19 . interoperability. as these are incurred when software is upgraded to new versions and license charges have to be met. Other reasons mentioned for adopting FOSS include improved performance.  Scalability – Many organisations selected FOSS for scaling up their operations when needed. it clearly is an issue that influenced the adoption decision. the calculations involved a number of factors.  No vendor lock-in – This aspect of FOSS implies that the open source nature of the product enabled the client organisation avoid lock-in with a single vendor. Cost remains the most important reason. per server. or buying software. security. Although. stability etc. This is facilitated by the licensing and distribution aspects of FOSS.

It is important to note that these totals cover a very large range of businesses and functions that range from education to e- commerce and defence accounts. such as FOSS. The server market is also more conscious of the advantages that FOSS provides and competitively evaluates it in light of the other offerings. This is important for FOSS as organisations are acquiring these for the first time and need technical support for running and using the software. and it is here that FOSS penetration can be the highest. and rarely mission critical. operates largely in the commodity space. SIP REPORT  Service costs are charges for acquiring external or internal support for maintaining the software. Some licenses prevent distribution. 86% are using FOSS. These totals exclude the numbers for the two large commercial firms that are in the IT industry and use a lot of hardware for production purposes. 18 of the 20 FOSS-using organisations studied for this project used a total of 157731 desktops and 6689 servers. Of the servers being used.  Exit costs are incurred when data or programs have to be abandoned and work is required to modify the data/program to new or non-digital forms.  Distribution costs refer to the savings/expenses incurred while distributing the software within the organisation. The responses are from the perspective of the organisation and unique requirements for which prices were sought. in that the requirements of desktop operating systems and application software are not very stringent. The totals reflect the values for organisations that use IT for assisting their internal functioning and operations.  Integration costs are those incurred while introducing new technology. where IT is not their main line of business. on the other hand. FOSS has commanded a much better competitive position in the server market than in the desktop market. particularly when they have to be used on new operating systems. The desktop market. Respondents were asked to provide competitive pricing of various software available in both FOSS and in proprietary forms. 48% are using FOSS. and hence the advantages of FOSS are in reducing distribution costs as FOSS can be easily shared. Migration may be required for programs also. Business case of open source20 . and it is where most of the FOSS vendors have also concentrated their sales. and these are shown in the tables below. This cost is incurred very rarely by the respondents. and then having it work with existing technology in the organisation. Integration will include modifying data and programs to suitable forms and also training of personnel. Of the desktops being used.  Migration costs are incurred when data that was created with an old software has to be converted to that which can be used with the new software. There is thus a wide variability in the prices mentioned.

and certification facilities. as seen by respondents. we classified them into IT Service company. Many also mentioned the lack of training and certification facilities as challenges to FOSS adoption. IT Product Company and Others. Primary Research on Adoption of Open Source from Peer Clients ● Of the Surveyed Client peers’. have specialised servers available at a price. although for some of the larger firms this was not important – they are able to attract FOSS-savvy personnel. many users perceive these prices to be much lower than proprietary servers. as the licensing and upgrade costs are very low. Availability of trained personnel is an issue. FOSS vendors price their products based on the services and additional features they package. provided they are able to do the installation and management themselves. Red Hat for instance. The following Results were tabulated: Business case of open source21 . users sometimes download FOSS servers at no cost. availability of trained personnel. SIP REPORT Note : Table 5 indicates that prices for most types of FOSS-based servers. However. Also. Some commercial FOSS vendors. About 50% of the respondents believe that training is an important challenge for FOSS administration. are zero. Administration Issues Data from the cases reveals that amongst the strongest challenges for FOSS administration are – training of personnel.

SIP REPORT ● We also Surveyed the percentage of Open Source Software usage in each of the client peers and found out the following analysis: Business case of open source22 .

SIP REPORT ● We then found out how that particular client engaged in open source (as a contributor or as a consumer and found the following: Business case of open source23 .

SIP REPORT ● We then found the levels wherein Open Source is used by in the organization (Managers. Administrative staff or developers). The following are the results tabulated : Business case of open source24 .

The results are tabulated as follows: Business case of open source25 . SIP REPORT ● We then found out about the support provided to the users of Open Source Software to judge the costing involved at the macro level and found the following: ● We tried finding out if Open Source is used as a medium for software delivery or used as a tool/provide service only.

The results are as follows: Business case of open source26 . Surprisingly. SIP REPORT ● We then tried finding the Importance that this Open Source has for them on a likert scale and analyzed the responses. all of the clients used open source and every client peer had some importance of open source.

SIP REPORT ● We also tried to find out among the common factors. How has Open Source benefitted the organizations’ of client peers: Business case of open source27 .

SIP REPORT ● License awareness was also surveyed and the following results were found out: Business case of open source28 .

We also found out some concerns people had with Open Source and compiled a small list as follows: Business case of open source29 . SIP REPORT ● Finally.

SIP REPORT 5. Processes and Procedures Business case of open source30 .

For supporting the product.500 run- time licences worldwide. We just hope that these case examples may help the reader to better understand some of the business models related to open source software being used nowadays in Europe. distributed under a LGPL-like licence. using 250 development licences and 1. 3D geological mapping. product design and styling. CASCADE had been marketed using a traditional. as the Open CASCADE product. When Matra Datavision decide that Open CASCADE was to be distributed under an open source licence. From a technical point of view. Open CASCADE is a set of components for the development of technical and scientific modeling applications ranging from CAD/CAM/CAE to metrology and measuring machines. Open CASCADE can input and output using several industry standard formats. was created to contribute to Open CASCADE and guarantee its smooth operation and Business case of open source31 . neither the most successful in this respect. they gave developers free access to the source code of many 3D geometry data structures (from volume primitives to surface creation). hidden line removal. encompassing a 50 member development team. keep in mind that most of the information in this section has been provided by the involved companies. proprietary model. Matra Datavision: towards an open source business model On December 1999. This is in no way an endorsement of the business models of these companies. optical simulation. Before that announcement. SIP REPORT 6. fillets and chamfers and graphic representation of 2D and 3D objects in an Open GL-based viewer). However. biomedical software. neither of their products. with an installed base of about 130 active customers. including hundreds of modeling algorithms (such as Boolean operations. and that they are not necessarily the most related to open source. Problem framing and Problem solving In this section. a new organization. we provide some case examples of companies with some relationship to open source software. Matra Datavision announced the adoption of an open source strategy for its CASCADE geometric modeling libraries with publication of their source code on the Internet. thus ensuring exchange of application data with current software environments.

so that the real advantages that customers get with free software are perceived.000 customers worldwide. support. bug reports etc. consulting services. they also identified some (in their opinion) key factors. and make sure that they are well accepted by the contributing community. and not on software publishing. etc. The importance of this announcement was larger than the importance of the product being made free software. Customers are companies of many sizes.  Select the right type of licence. necessary in order to succeed in the open source market:  Seduce a community of developers. Benefits for customers and third parties For customers and other entities in the Open CASCADE market. Setup rules (for instance. Europe’s second largest aeronautics/defense group). The ‘release often and release early’ rule has to be followed.  Strongly communicate and capitalize on brand image The web site has to be the obvious reference for anyone interested in participating in the project. by extending its user-base. These benefits have to be communicated to them. the objectives they were pursuing when they decided to go open source are:  To create a real differentiating factor through publication of the source code. consumer product and electromechanical industries. in case this matters. so that external developers are rewarded when their work is included in the official version. etc. buying the product or services. aerospace and defence. It is a good idea to select good tools to manage development. Companies using it have more control on the product and development process: Business case of open source32 . To fulfill these objectives. It is important that it is recognized by the community as an open source licence. Objectives and key factors According to Matra Datavision.  To impose Open CASCADE as a de facto standard. several benefits are perceived.  Master the project management and communication tools. since it was probably the first one in its class made by a large European company (Matra Datavision is a wholly owned subsidiary of Aerospatiale Matra. with sales and service teams based principally in Europe and North America. general manufacturing and machinery. Make sure that applications developed for specific customers are not falling under that licence and can remain proprietary. SIP REPORT utilization. primarily in the automotive. including training packages. while in accordance with the strategy of the company.  To focus on standardization and services. Many of these benefits are generic of almost any free software product. An international team of interested developers is needed to ensure the development of the product. stating that no code will be included in the official version if not properly documented) have to be specified.  Develop an appealing services portfolio. Matra Datavision itself currently supports over 6.

supported product. since the code (and even binary packages ready to install) are available for free. high quality. This is the case.  Availability of source code makes many research projects possible. but also from the core components supplied by Matra Datavision. SIP REPORT  They can now be sure that their specific development is based on a perennial.  Low adoption fee. which is usually not possible if they are based on proprietary products. the availability of source code ensures that third parties could provide such support. this is a mixed business model. In fact.  They can influence the research and development of Open CASCADE.  Sell services: training. for instance. since its source code is available. etc. with a traditional proprietary model.  Entities devoted to research and education benefit mainly from the openness of the process:  They are able to completely disseminate and share research results. where the investment in free software development and maintenance is recovered in part by selling proprietary software based on it or complementing it. multi platform environment.  Market proprietary components built by third parties. All those components are available to the vendor for incorporation into its products. third Business case of open source33 . by collaborating in the open development model. consulting. since large parts of that process are being made with complete openness. As the reader many notice. but maintaining their own improvements.  Increase their notoriety through the component gallery. it is almost zero.  Influence the research and development of the product. Within the Open CASCADE development plans. and even participate in it.  Advantage of the components added by the open source community. when modification of the existing code is necessary. Even if Matra decides to discontinue the support of the software. Business model The proposed business model around Open CASCADE is based on the following sources of income:  Provide specialized components as proprietary software.  They can have an independent specific development strategy in a multi CAD.  Enhance their application maintainability. hot line. and in collaboration with external contributors. by having knowledge not only of the components they develop. Independent software vendors have a more direct access to the base technology:  Entrance fee is low. since the software can be studied and tested just by downloading it from the Net. using the parts of Open CASCADE that they prefer.

Perhaps they are forced to go open source too. Some (if not all) of them are common to almost any free software project:  Kill the product if the project fails. able to download the software. Business case of open source34 . Some risks where also identified due to the decision to go open source.  Total loss of control over the project. in charge of the support and assistance. and providing services for Open CASCADE project implementation.  Components and facilitators provider. usually supplier of specific applications and often an independent software vendor. making it more interesting to potential customers. there is some risk of never getting enough resources to continue development. and to develop its own specific in-house applications. not only advantages were perceived. there is some risk that a third party becomes the preferred source of distribution and services for it.  Misunderstanding from our service customers. Matra Datavision no longer has a monopoly on the product. simultaneously or separately. that have to be defined among the following possibilities :  Generic software provider. In the following years it will be seen whether the Matra Datavision decision of making CASCADE an open source product was a right one. Since it is no longer possible to sell licences in a traditional way. Of course. able to bring new components to the existing open source library or to the proprietary component gallery  Application provider. Since anybody can release improved versions of Open CASCADE. and whether it fulfills its expectations. which could dismiss the competitive advantage of Open CASCADE being the only free software product in its market niche. SIP REPORT parties have an outstanding importance as partners. able to download the software and disseminate and support it inside their community while adding value and services. All of those partners should help to improve the collection of products and services around Open CASCADE.  Business integrator.  Main competitors possible reactions. Each partner can play different roles.  Generic software user. specially due to the ignorance of how the open source model works.

a quasi-standard for preparing theses in computer science departments. to judge human actions as morally good or bad. Ethics is about right and wrong. Through these and other products. Apache. the FreeBSD operating system kernel. This does not mean that "right" and "wrong" mean exactly the same for everyone. SIP REPORT 7. the free software movement has already established an indelible mark on the computer industry. Suggestions and Recommendations 8. simply that everyone possesses a notion of right and wrong. the EMACS and VIM text editors. from a commercial company).some having for-a-fee variants too --. a Linux competitor.include the TEX and LATEX document processing utilities. for a price. developed under the leadership of Linus Torvald and nominally available at no cost (although usually installed from a CD obtained. The growth of free software has indeed been remarkable in the past few years. Business case of open source35 . Human beings are equipped with an ability. GCC. the GNU project's C and C++ compiler. Environmental impact of project Ethical impact : It is useful first to define a basis for this discussion by recalling some principles of ethics. Other widely used free tools --. partly innate and partly acquired. the dominant Web server. Social. I will stay away from controversial issues and focus on generally recognized ideas. Ethical. One of the most visible results has been the Linux operating system.

willing to work even without immediate monetary reward. however. SIP REPORT Perhaps the most striking aspect of this movement is the world-wide availability of often talented software developers willing to contribute their time. This example is obviously not a comparison with the free software community. a regime that cause tens of millions of deaths. that the existence of a community of dedicated. His personal failings do not disqualify the ideas of democracy and freedom any more than the Nazi regime's impressive building of autobahnen disqualifies the merits of freeways. one of the tragedies of the twentieth centuries has been the diversion of the energy and passion of countless honest and idealistic volunteers towards support for Soviet- style communism. uncounted cases of human misery. simply a reminder that no idea can be justified on the basis of the quality of its supporters. The observation works the other way too: bad people can defend good causes. Social Impact : Business case of open source36 . and the destruction of civil society in entire countries. It should be pointed out. It is this pool of enthusiastic contributors. As an example. A corrupt and dishonest politician may sincerely support principles of democracy and freedom. that has led in part to the general feeling of goodwill surrounding the free software community. well- intentioned and sincere defenders of a cause is unrelated to the ethical value of that cause. energy and creativity to free software.

My learning’s Software as a product. Its manufacture and sale generates revenues. This aspect of software is directly measurable as the revenues and costs incurred by organisations are recorded and accounted for. SIP REPORT 9. Software’s incarnation as a final product too has differences in free and proprietary software. while its purchase and maintenance entails costs. Business case of open source37 . FOSS introduces subtle variations in software's role as an intermediate good. and a final good. has a different impact on the economy.

conforms to open data standards that are accepted across the world. Operating and intangible criteria are derived from usage of FOSS. This benefit is possible if the source code is used by the organisation to tailor the software to its needs. modifying software to meet the needs of the organisation. operating and intangible criteria. This cost is associated with training users on the new software. Benefits associated with being able to distribute the (possibly modified) software within the organisation. It is well known that once a particular kind of primary software is adopted. organisations incur a lock-in to the product and to change to another kind (for example. Switching costs are usually higher if the lock-in period is longer or more people in the organisation are locked-in to the older system. but also in terms of the ease and convenience that are possible for distribution across departments. and so on. and the managing the multiple versions of software that may begin to creep across the organisation. This has to do with the ease with which software applications can be upgraded across the organisation. in most cases. This is primary software available as packages such as operating systems or office suites. This is not an exhaustive list. from a proprietary operating system to a free operating system or vice versa) a cost has to be incurred. Benefits associated with compatibility with regard to data standards and data governance. The list includes cost. Cost Criteria Cost reductions achieved from acquiring and installing FOSS. migrating data to a new format. The following is a list of criteria that may be used to measure the economic impact of FOSS. Switching costs associated with moving from one type of software to another. Business case of open source38 . The advantage of FOSS is not only in terms of costs. and the standardisation and centralised management that is made possible. Cost reductions are mainly achieved from the need of not having to install complementary software. This software is available as packages. mainly obtained from using zero-price software or lower cost packages. Benefits associated with easier servicing and upgrade of software. FOSS. and assists the primary software although it is not essential that this software be used. Cost reductions achieved from not having to install complementary software such as security and virus protection software. Cost reductions from upgrading of software as new versions are made available and are installed to meet the needs of new hardware. For commercial organisations this could entail competitive advantages over rivals. SIP REPORT To measure the economic impact of FOSS it is necessary to account for both the productivity gains incurred as well as the cost reductions achieved by the software. Operating Criteria Benefits associated with being able to customise FOSS to the needs of the organisation.

It enables organisations and individuals to experiment with. tinker with and play around with different combinations of hardware. However. • Because causal contributors are supported in the development process. Stronger involvement can lead to better technical understanding that can increase productivity. Conclusions Drawing conclusions about exactly how usage of these OSS would impact development inside a particular organization would require specific knowledge about that organization. sales. nondeveloper stakeholders such as management. Intangible Criteria The culture of sharing defined by FOSS affects the nature of information sharing within organisations. more members of the development team will be able to access and contribute to artifacts in all phases of development. software and applications. FOSS has immense innovation potential. which can increase the satisfaction of internal customers. and support. teams using them should be better able to produce releases early and more often. • Because many of the tools support incremental releases. This helps with knowledge dissemination and knowledge management within the organisation. and smooth hand-offs at key points in the development process. • Because the “source” to all artifacts is available and up-to-date. improve quality. the descriptions above can suggest changes to look for after adoption: • Because the OSS tools are free and support casual use. Stronger involvement by more stakeholders can help quickly refine requirements and better align expectations. Further. SIP REPORT This helps large organisations ensure their data is accessible and relevant across the world and across functions. marketing. This prevents use of restricted or pirated software that has legal implications for organisations. this implications for society as a whole as it encourages use and proliferation of legal products. Working with up-to-date information can reduce rework on down-stream artifacts. there is less wasted effort due to decisions based on outdated information. should be more able to constructively participate in the project. The peer recognition that employees derive helps to motivate them to further innovate and contribute to the organisation. FOSS invariably sensitises people to the licensing issues of software and helps create a sense of responsibility. This has a potential to create immense benefits for the organisation and for the society as a whole 10. It provides a platform for creative formation of software and aggregations of applications. Early releases help manage Business case of open source39 .

In the short-term. CDEs can reinforce and compound the effects of individual tools. A peep into the future 12. • Because many of the tools aim to reduce unlikable work. and improved quality. they offer both short. leading to long-term benefits including: accumulation of development knowledge in a durable and accessible form. • Because project web sites. SourceForge is a trademark of VA Software Corporation 11. and aid the professional development of team members. HOWTOs. mailing lists. accessible issue trackers. and CDEs provide access to the status and technical details of reusable components. Inc. other projects may more readily evaluate and select these components for reuse. increased quality and reuse. SIP REPORT project risk and set expectations. and issue trackers help to cost-effectively support reused components. and make secure access to diverse development artifacts practical. projects may be able to catch more defects in review or conduct more frequent small reviews in reaction to changes. and more consistent adoption of the organization’s chosen methodology. Frequent internal releases can have the additional benefit of allowing rapid reaction to changing market demands. FAQs. • Because peer review is addressed by many of the tools. Expected benefits of increased reuse include faster time-to-market. Also. Productivity increases. reduce rework. faster time-to-market. and increased developer satisfaction are some potential benefits. Peer reviews are generally accepted as an effective complement to testing that can increase product quality. Bibliography Business case of open source40 . development communities can reduce the administrative and training cost of using powerful tools. more development effort should be freed for forward progress. lower maintenance costs.and long-term benefits. SourceCast is a trademark of CollabNet. • Because CDEs help establish communities.

SIP REPORT Business case of open source41 .