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Costs of Open Source

By: Collin Quiring

(Compared to SaaS and Direct Purchase)

Open Source software is often an option viewed by a company as a cost effective method to purchase and use software.  While the initial dollar savings of obtaining the software seems significant enough to justify going with open source, there are other costs in the ongoing usage of the software.  Initially, purchasing open source software is less expensive than the licensing fees and purchase price of proprietary software.  And, with both types of software there will be implementation, configuration and setup fees to either the software vendor or a knowledgeable third party.  Both types also require training of personnel and ongoing administration costs.

After the expenses associated with the preliminary installation and configuration come the ongoing costs and fees.  With open source, a company will either have to have developers on staff to maintain and modify the code to their needs or will have to hire consultants.  One of the issues with hiring consultants is that the available pool of consultants is usually fairly limited.  Also, over time, as hardware or other software that the company uses are updated, the open source software will have to be customized as well.  With proprietary software, new versions will be released on a schedule that will use more recent technology.

Another cost of using any software is the ability to hire key people that already know the software.  Just as with the consultant pool, hiring experienced personnel can be difficult since the resource pool of qualified individuals is smaller.  With proprietary software the pool is larger and there is usually a certification process as well that can help verify a person’s ability before hiring.

While this is by no means an exhaustive list of costs, a major area of ongoing costs is in collaboration – both within the organization and with customers and vendors.  If you create/send/receive a certain type of document and it can’t be read by somebody else, then it can affect the bottom line.  People don’t want to spend time trying to determine what program they may have that can read the document that was sent to them.  Here is a great example of using an open source software solution and the hidden costs:  http://www.microsoft.com/presspass/features/2008/dec08/12-03SpeedyHireQA.mspx

But, what about those companies that want the ability to use proprietary software but want to spend the last amount possible?  That is where Software as a Service (SaaS) comes in.  This makes the initial costs drop to the configuration fees only.  Ongoing costs are reduced since the burden on an internal Information Technology group goes away as the company providing the service bears the burden.  Hiring key personnel to maintain the software is no longer an issue either.  The ongoing fees are a known amount since they are contracted so maintenance can become a budgeted amount.

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