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

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

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

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

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

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

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

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

they are not forced to do so. they are not forced to do so. Therefore. is that software will be made more free by guaranteeing the perpetuation of these freedoms for all its users. because it is considered that these licences make the software distributed under them “less free”. It is important now to make clear that we are talking about freedom. there is a dangerous ambiguity. if they feel it is appropriate. This fact causes some controversy in certain circles. let us devote a moment to explain. there is a fourth one which is basic. and studying its operation. and not obligation. Anyway. if this freedom is to be guaranteed for a given piece of software. Paradoxically. usually written in a high level programming language. to modify it and to improve it. Therefore. with current legislation. and work with it as the original author would. The use of the Spanish and French word ‘libre’. or at a charge. But in any case. they can study it. they can redistribute it. on as many computers as they wish. in English. get knowledge of all its details. The source code of a program. SIP REPORT is simple. it is a good idea to state clearly that open source software does not have to be gratis. To satisfy those previous conditions. Another view. In the same way. Of course. but in general. not fixed before hand . augmenting its functionality. etc. before using stricter definitions. we will use mainly the term ‘open source’ when referring to users freedom of use. fixing its bugs.  Have the software at their disposal to fit it to their needs. and ‘gratis software’ when referring to zero acquisition cost. not completely. Because of that. The main features that characterize free (open source) software is the freedom that users have to:  Use the software as they wish. If programmers have access to the source code of a program. people holding this view maintain that it is necessary to limit the ways of use and distribution. That is. this includes improving it. Even more. General idea of open source software When we talk. is absolutely necessary to be able to understand its functionality. redistribution. in a relatively informal way. Depending on the ideas and goals of the authors of a piece of code. it is necessary to “protect” it with a licence which impose certain restrictions on the way that it can be used and distributed . users of an open source program can modify it. This redistribution can be done for free. they can decide to protect it with several different licences. more pragmatic. due to ‘free’ meaning both ‘freedom’ and ‘gratis’. and is necessarily derived from them:  Users of a piece of software must have access to its source code. by the way. for whatever they wish. has been adopted in many environments to refer to open source software. but will not be used here for the sake of uniformity.. in any technically appropriate situation. who could themselves use it according to their own needs. before going into more detail. what do we understand as open source software.  Redistribute the software to other users. it usually is not. in this document. or at least. Business case of open source12 . about ‘free 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. in their outlook on issues such as open standards and patents. educational institutions. In this report the term FOSS is used to reflect these common values. There is much in common between the adherents of both the phrases. Many Indian government departments and businesses have now made it policy to use and deploy FOSS wherever possible. FOSS has already made a strong impact as it has been adopted by many businesses. 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. Business case of open source13 . The various software packages and applications available in FOSS have assumed a serious and non-hobbyist position vis-a-vis proprietary software. The economic impact of any technology introduction is studied by considering the impact that the technology has on the adoptive population. it is a substitute for proprietary software. FOSS is a competitive technology to proprietary software. government departments. the most important and substantive economic impact of FOSS is as a substitute for proprietary software. 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 “open source” adherents emphasize the pragmatic and business- friendly aspects of this technology. It differs in the manner in which it is produced and distributed. For many cases. as well as to reflect a term that has currency in the community in India. and individual users.

SIP REPORT 3. ● Business process services. consulting and business solutions organisation that delivers real results to global businesses. TCS has over 318.000 of the world’s best-trained consultants in 46 countries. ● BI and performance management. 2014. TCS offers a consulting-led. engineering and assurance services. BPO. ● Digital enterprise. and is listed on the National Stock Exchange and Bombay Stock Exchange in India. ● Consulting.4 billion for the year ended March 31. integrated portfolio of IT. This is delivered through its unique Global Network Delivery ModelTM. Company background and information Tata Consultancy Services (TCS) is an IT services. ensuring a level of certainty no other firm can match. recognised as the benchmark of excellence in software development. infrastructure. Services TCS helps clients optimise business processes for maximum efficiency and galvanise their IT infrastructure to be both resilient and robust. The company generated consolidated revenues of US $13. A part of the Tata group. TCS offers the following solutions: ● Assurance services. India’s largest industrial conglomerate. Business case of open source14 .

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

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

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

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

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

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

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

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 .

The following are the results tabulated : Business case of open source24 . Administrative staff or developers). 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.

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

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

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 .

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

proprietary model. Open CASCADE can input and output using several industry standard formats. hidden line removal. using 250 development licences and 1. keep in mind that most of the information in this section has been provided by the involved companies. CASCADE had been marketed using a traditional. SIP REPORT 6.500 run- time licences worldwide. Before that announcement. However. a new organization. product design and styling. and that they are not necessarily the most related to open source. 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. Matra Datavision: towards an open source business model On December 1999. 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. fillets and chamfers and graphic representation of 2D and 3D objects in an Open GL-based viewer). 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. distributed under a LGPL-like licence. thus ensuring exchange of application data with current software environments. was created to contribute to Open CASCADE and guarantee its smooth operation and Business case of open source31 . 3D geological mapping. This is in no way an endorsement of the business models of these companies. biomedical software. they gave developers free access to the source code of many 3D geometry data structures (from volume primitives to surface creation). we provide some case examples of companies with some relationship to open source software. neither the most successful in this respect. with an installed base of about 130 active customers. encompassing a 50 member development team. From a technical point of view. For supporting the product. neither of their products. optical simulation. Problem framing and Problem solving In this section. as the Open CASCADE product. When Matra Datavision decide that Open CASCADE was to be distributed under an open source licence. including hundreds of modeling algorithms (such as Boolean operations.

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

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

not only advantages were perceived. able to download the software. Since it is no longer possible to sell licences in a traditional way. Matra Datavision no longer has a monopoly on the product. Some (if not all) of them are common to almost any free software project:  Kill the product if the project fails. In the following years it will be seen whether the Matra Datavision decision of making CASCADE an open source product was a right one. that have to be defined among the following possibilities :  Generic software provider.  Components and facilitators provider. Perhaps they are forced to go open source too. 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. able to bring new components to the existing open source library or to the proprietary component gallery  Application provider. Of course. Since anybody can release improved versions of Open CASCADE. which could dismiss the competitive advantage of Open CASCADE being the only free software product in its market niche. in charge of the support and assistance. Each partner can play different roles. All of those partners should help to improve the collection of products and services around Open CASCADE. usually supplier of specific applications and often an independent software vendor. SIP REPORT parties have an outstanding importance as partners.  Total loss of control over the project. simultaneously or separately. Some risks where also identified due to the decision to go open source. specially due to the ignorance of how the open source model works. there is some risk that a third party becomes the preferred source of distribution and services for it.  Business integrator.  Main competitors possible reactions. Business case of open source34 .  Generic software user. and providing services for Open CASCADE project implementation. able to download the software and disseminate and support it inside their community while adding value and services.  Misunderstanding from our service customers. and whether it fulfills its expectations.

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

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

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

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

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

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

SIP REPORT Business case of open source41 .