January 19, 2006

Consultants report corporations embracing, saving with open source

Author: Jay Lyman

Linux and open source software are jumping the hurdles to wider corporate adoption, and are delivering significant cost savings to companies that use them, according to a report released last month by consulting firm Optaros.

From an August-September survey of 512 US companies, government agencies, and others, Optaros reported that 87 percent were using open source software. Dave Gynn, application infrastructure practice lead at Optaros, said all companies and agencies are likely using open source software in reality. "There's still a gap of many people who don't realize they're using open source," Gynn said.

He explained that in a similar survey a year and a half ago, almost all companies large and small said they were not using open source, but when told that "open source" included Linux, Apache, MySQL, and other popular open source software, the responses turned to, "Oh, yeah yeah yeah."

IDC vice president Dan Kusnetzky, whose research shows Linux server revenue is growing at three times the rate of Windows servers, agreed open source awareness and use is up. "The overall sense is that the use of Linux, and more broadly open source, has moved from the early-adopter stage to early mainstream," he said.

Kusnetzky added that open source is moving beyond basic infrastructure to more critical uses, including databases and application servers and software.

Illuminata senior analyst Gordon Haff called it a "pretty low hurdle to cross" if organizations are asked if they use open source, which is extremely widespread among corporations and agencies today. "I would question the CIO who wasn't reasonably familiar with open source or didn't have some idea about his organization's use of it," he said.

Gynn said the bulk of open source use -- primarily Linux, Apache, open source Web browsers, JBoss, and Nagios -- is coming from workgroups, as opposed to organization-wide use. "Anywhere it's not a corporate decision and it is a workgroup decision, then you see the greater adoption because no one had to approve it," he said.

Gynn highlighted the use of open source for content management, with Plone and eZ publish earning favor over Vignette on many departmental servers.

Another area where open source is accelerating is CRM, an application area that won use by 16 percent of surveyed organizations -- are expected to double in the next three years, Optaros said. Gynn said the two main drivers of more open source CRM use were cost savings and easier integration with other applications. He explained that while organizations may be able to reduce costs using SalesForce.com, they did not get the level of control possible with open source. "As people want to get control back, they still want to keep costs down," he said. "Open source allows you to get both."

In terms of costs savings through open source, Optaros reported that organizations with annual revenue of more than $1 billion saved an average $3.3 million in 2004 from open source. Medium-sized companies with revenues between $50 million and $1 billion saved an average $1.1 million, while companies making less than $50 million saved about $500,000.

Gynn attributed the cost savings to the flexibility afforded by open source solutions, which are generally not governed by company-wide licensing terms or support contracts. "I think part of the cost savings is being able to pay for what you want support for. You can kind of choose how you want to support. That's a big area [of savings]. We're seeing a switch to open source not to save money, but to take the money you saved and make the application meet your needs. You can customize it to fit, rather than customizing your business to fit the money you've spent on the software."

IDC's Kusntezky, who pointed out that only 30 percent of IT costs are the actual hardware and software, said the cost savings from open source solutions often depend on the ease with which they can be dropped into an organization's infrastructure without additional support or training required. "The real costs center directly on staff," he said. "Those are the big costs in a computing solution."

Indicating that organizations with Unix expertise tend to be better positioned to derive savings from open source, Kusnetzky said that many companies still struggle with the idea that open source automatically equates to cost savings. "It isn't a panacea," he said.

Haff, who said the lower costs of Linux and open source are a driver of the software's use, highlighted other advantages of non-proprietary, community-produced solutions, such as faster advancement and patches.

"With an active community, these things can happen," he said.

While the Optaros report highlighted open source gains, it also outlined the challenges to further adoption. Gynn said while legal issues were an inhibitor a year and a half ago, those concerns have largely gone away. Gynn said the next big challenge that is being addressed by the likes of SpikeSource and other companies is support for open source solutions.

"Support, I think, is the next one that's going to fall," he said. "Now the support is there and we see success in building support around open source projects. I think 2006 will be the year support gets pushed away [as an issue]."

Haff said while the flexibility of open source can actually usher in support problems, there are more and more ways to avoid the issues. "There's a lot of companies who have capabilities to get you around the support issues there are," he said. "With the proper procedures and the proper support contracts, I don't see inherent issues with open source software support."

Gynn stressed that once the issues are addressed, they are solved for good. "No one says, 'This sucks, not paying for compatibility and support.'"

The biggest remaining challenges, then, are identifying and procuring open source software solutions for organizations, Gynn said. He explained that the traditional software purchasing department is not ideal for finding and getting the right open source software solutions. "Companies need to find out how to replace software purchasing departments to enable open source use."

Gynn added it is still difficult for organizations to find the right open source applications out of all of the community projects available. However, he said the process gets easier as companies adjust to the new model.


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