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

Business case of open
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So as the Open Source Initiative explains. 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. who are the only ones legally allowed to copy or modify it. In fact. SIP REPORT 1. "open source doesn't just mean access to the source code. 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. team. Its authors make its source code available to others who would like to view that code. Microsoft Word and Adobe Photoshop are examples of proprietary software. mobile phones. or share it. they could be violating the terms of some open source licenses if they don't do this. 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 . 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. 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." It means that anyone should be able to modify the source code to suit his or her needs. and that no one should prevent others from doing the same. LibreOffice and the GNU Image Manipulation Program are examples of open source software. stream music online. In other words."Source code" is the part of software that most computer users don't ever see. check email. or play multiplayer video games. their computers. 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. because its source code is the property of its original authors. This kind of software is frequently called "proprietary software" or "closed source" software. Need and Justification of Project Open source software is software whose source code is available for modification or enhancement by anyone. Is open source software only important to computer programmers? Open source software benefits programmers and non-programmers alike. computer programmers can access. view. 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. 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. Every time computer users view webpages. In fact. or organization who created it and maintains exclusive control over it. it's the code computer programmers can manipulate to change how a piece of software—a "program" or "application"—works. learn from it. copy it. 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. alter it. and modify open source software whenever they like—as long as they let others do the same when they share their work. In order to use proprietary software. Open source software is different. As they do with proprietary software. chat with friends.

They can also share their work with others. 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. This is a common misconception about what "open source" implies. OpenStack is an example of an open source cloud computing platform. open source software is generally fixed. and troubleshoot it Business case of open source6 . Because the source code for open source software is distributed publicly. Why do people prefer using open source software? Many people prefer open source software because they have more control over that kind of software. inviting comment and critique. but also the global network of remote computers that form an "atmosphere" around them. use. they simply access these programs on remote computers by using a Web browser or mobile phone application. Cloud computing applications run "on top" of additional software that helps them operate smoothly and effectively. are open source programs. Others." because it involves activities (like storing files. Some cloud computing applications. But because most open source licenses require them to release their source code when they sell software to others. and image editing software that they don't install and run on their personal computers. They can examine the code to make sure it's not doing anything they don't want it to do. Cloud computing is an increasingly important aspect of everyday life with Internet-connected devices. or watching videos) that incorporate not only local devices. Programmers can charge money for the open source software they create or to which they contribute. Others like open source software because it helps them become better programmers. The software that runs "underneath" cloud computing applications acts as a platform for those applications. like Google Docs. long-term projects. 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. like Etherpad. Because anyone can view and modify open source software. Users who aren't programmers also benefit from open source software. Instead. This way. someone might spot and correct errors or omissions that a program's original authors might have missed." More and more. Doesn't "open source" just mean something is free of charge? No. they use online word processing. their software remains free of charge and they make money helping others install. people rely on remote computers when doing things they might otherwise do on their local devices. email management. and upgraded quickly. Some people prefer open source software because they consider it more secure and stable than proprietary software. Because open source code is publicly accessible. Cloud computing platforms can be open source or closed source. students can learn to make better software by studying what others have written. Many users prefer open source software to proprietary software for important. and they can change parts of it they don't like. are closed source programs. sharing photos. Some people call remote computing "cloud computing. because they can use this software for any purpose they wish— not merely the way someone else thinks they should. updated. SIP REPORT "remote computers. For example.

1. Bugs in open source software also tend to get fixed immediately. If it were. What's so encouraging about this discovery. 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. so no one outside the companies that own them has the faintest clue how many bugs they contain. is that the only reason it was possible is that the kernel code is open to 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. "Given enough eyeballs." What that means is that the more people who can see and test a set of code. all bugs are shallow. All it means is that those products are closed from public view. it's becoming increasingly clear that price is not the only advantage such software holds. some of them even more valuable than the software's low price. you might even say. According to that maxim. It's essentially the polar opposite of the "security through obscurity" argument used so often to justify the use of expensive proprietary products. as I noted the other day. 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. but the example is still a perfect illustration of what's known as "Linus' Law. the creator of Linux. 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. as in the case of the Linux kernel exploit uncovered not long ago." named for Linus Torvalds. Android may not be fully open source. the more likely any flaws will be caught and fixed quickly. and that's clearly not the case. 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. in other words. Rather. free and open source software (FOSS) holds numerous other compelling advantages for businesses. Business case of open source7 .

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

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

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

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

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

it is a substitute for proprietary software. the “open source” adherents emphasize the pragmatic and business- friendly aspects of this technology. and individual users. educational institutions. In this report the term FOSS is used to reflect these common values. For many cases. Many Indian government departments and businesses have now made it policy to use and deploy FOSS wherever possible. FOSS is a competitive technology to proprietary software. The economic impact of any technology introduction is studied by considering the impact that the technology has on the adoptive population. as well as to reflect a term that has currency in the community in India. There is much in common between the adherents of both the phrases. It differs in the manner in which it is produced and distributed. Business case of open source13 . FOSS has already made a strong impact as it has been adopted by many businesses. 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. in their outlook on issues such as open standards and patents. the most important and substantive economic impact of FOSS is as a substitute for proprietary software. 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.” While adherents of the “free software” term emphasize the ethical and philosophical aspects of community use and development of software. government departments. 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.

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

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

they cannot be numerically expresses as such. The Secondary research pointed out the following data: Below mentioned study examines the economic impact of FOSS technology for organisations in India. 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. 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. As triangulated. Organisations are selected from government. ● TCS BaNCS. education and commercial segments. SIP REPORT Software ● Digital software and solutions. Life Insurance Corporation of India Business case of open source16 . 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). in multiple ways. including large multi-national firms. 4. Some organisations that have not adopted FOSS are also studied to understand the reasons why FOSS was excluded by them. It is made up of answers to open-ended questions. The case study methodology is adopted for studying the organisations. operates in 45 countries and has more than 208 offices across the world. In the commercial segment firms are selected from small and medium enterprises (SMEs) and from large firms. ● TCS MasterCraft. The method is that of directly studying organisations that have adopted FOSS and measuring. the impact the technology has had. ● TCS technology products. Location TCS is headquartered in Mumbai. Government organisations include government departments and public sector undertakings (PSUs).

Thus. These computations are based on extrapolations of the data provided by LIC. 200 Crores. 7 Zonal offices and the Corporate office. Later. is spread over 26 regions. 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. LIC deployed Linux on some of its servers and saved Rs 120 million. LIC’s Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. 50 Crores on software while the Business case of open source17 . In 1995. Each branch has about 20 to 30 workstations. Subsequently. not only in India. Of this. NIA invests heavily in information technology and the yearly IT budget is about Rs. 100 Divisional offices. thus making all the divisional offices achieve the distinction of 100% branch computerization. in total. LIC was a pioneer organization in India to introduce and leverage information technology in their business. to the rural areas with a view to reach all insurable persons in the country. having started in 2001.000 employees. 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). the server count is close to 3500. 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. with over 22. in particular. in order to provide them adequate financial cover at a reasonable cost. 60 Crores is spent on hardware and Rs. and then moved desktops to Linux too.000. Today LIC functions with 2048 fully computerized Branch Offices. The company has a range of more than 150 products and is one of the largest non-life insurance companies. but also in the Afro-Asian region. New India Assurance Company New India Assurance Company Limited (NIA) is a public sector general insurance company. All the 2048 branches across the country were covered under front-end operations. LIC is one of the pioneers in FOSS deployments in India.100 offices. It began by moving servers to Linux. in 2003-04 it migrated all its servers to Linux. Its network of 1. The total desktop count is close to 30. LIC's tangible cost savings are summarised in the table below. This service enabled policyholders to receive immediate policy status reports. prompt acceptance of their premium payments. and to get a revival quotation or a loan quotation on demand. In a pilot in 2003. LIC migrated almost 60% of its desktops to Linux and open source based applications. it initiated a massive computerisation drive with a view to enhancing customer responsiveness and services. while being headquartered in Mumbai. Data pertaining to almost 100 million policies is being held on computers in LIC.

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

 Security – FOSS products attracted some organisations owing to their security features. The factors mentioned are:  Improved performance – This includes aspects of stability. stability etc. or incurred on an annual basis.  Scalability – Many organisations selected FOSS for scaling up their operations when needed. as a renewable license. Business case of open source19 . Some organisations running FOSS on core servers mentioned the mission-critical nature of applications for which the choice of FOSS was made. 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. When cost calculations were conducted for FOSS adoption. operational ease and maintenance. interoperability. per concurrent user or per use basis. per server. it clearly is an issue that influenced the adoption decision. however other factors are important for various types of organisation. This is particularly attractive to those adopting FOSS for desktop use. per desktop. Although. some clearly mentioned that this was not the most important factor. the calculations involved a number of factors. these are mentioned in the table below. Cost remains the most important reason. Many mentioned this as helping with administration also. or buying software. 18 out 20 respondents mentioned this as a factor for choosing FOSS. security. This is facilitated by the licensing and distribution aspects of FOSS. These costs may be one time costs.  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. Upgrade costs are related to licenses.  License costs are the costs of buying licenses. 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.

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

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

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 .

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

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.

Surprisingly. SIP REPORT ● We then tried finding the Importance that this Open Source has for them on a likert scale and analyzed the responses. The results are as follows: Business case of open source26 . 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 .

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

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

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

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

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

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

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

well- intentioned and sincere defenders of a cause is unrelated to the ethical value of that cause. Social Impact : Business case of open source36 . The observation works the other way too: bad people can defend good causes. simply a reminder that no idea can be justified on the basis of the quality of its supporters. It should be pointed out. willing to work even without immediate monetary reward. It is this pool of enthusiastic contributors. however. 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. A corrupt and dishonest politician may sincerely support principles of democracy and freedom. a regime that cause tens of millions of deaths. 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. This example is obviously not a comparison with the free software community. As an example. and the destruction of civil society in entire countries. that has led in part to the general feeling of goodwill surrounding the free software community. 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. that the existence of a community of dedicated. energy and creativity to free software.

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

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

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

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

SIP REPORT Business case of open source41 .