Companies are spending billions of dollars on software, software maintenance, licensing, and renewals annually. In recent years, many private, government, and school organizations have turned to open source software as a cost-effective alternative to proprietary, closed source software. The Brazilian government expects to save over $120 million this year since announcing its intention to switch to open source in 2005 . Companies should consider the use of open source software in their day to day operations, because, despite lower total cost of ownership, functionality and ease of use is not compromised.
Open Source Has a Place
Since the Microsoft Windows operating system is currently installed on 98%  of the desktops in the world, changing desktop operating systems would not necessarily be the primary use for open source within your organization. However, business relevant applications like e-commerce, Point-of-Sales, inventory, warehouse, order processing, and customer relationship management (CRM), are ideal candidates for open source software and can be tied to the same database.
Closed Source Software
Typically business software acquisition involves the purchase of closed source software solutions from major vendors. Closed source software is any software whose source code is not available to the public. Additionally, closed source is extremely difficult to customize to your specific business needs without having to go to the software vendor for changes and alterations. Larger software companies do not even offer these customizations outside the scope of the originally written program. Under most licenses the user cannot modify the program or redistribute it, even within their own organization. Closed source products include everything from server operating systems, application development platforms, office productivity suites, to small yet often expensive utilities, such as virus protection. Each of these software solutions has an initial investment cost, maintenance and/or upgrade costs, and regular licensing fees. Closed source stand-alone point-of-sale packages typically cost anywhere from $900.00 to $30,0000.00 or more, depending on the scale in which the application is deployed.
Who’s Using Open Source?
Probably the most recognized open source product is the operating system Linux, which is used in thousands of business critical applications such as email, web servers, and database. Amazon.com cut $17 million (about 25%) from it’s technology expenditure by deploying a Linux-based infrastructure to process millions of transactions per day . The open source program Sendmail is used on over 600,000 email servers and Linux is used on over 7 million computers . Open source software solutions span a broad range of technologies from productivity suites to web browsers, data bases, security tools, etc. It is possible today to run a fully open source desktop and still be compatible with most closed source applications.
Many business, government and military agencies have adopted open source solutions, including NASA, the US Post Office, and several state governments.
- A Waukesha, Wisconsin internet retail company was spending nearly $700,000.00 per year just to renew it’s licensing for their popular closed source database server. With just under $10 million in annual sales, that’s more than 7% of their yearly revenue just to legally use software that it had already ‘purchased’. Open source database servers exist that can match the functionality of proprietary servers with no added annual fees cutting into profits. This company is currently in the process of transitioning to open source platforms and is already realizing a savings in licensing fees.
- In 2003, NASA implemented an open source model for software development and deployment because the process is much more efficient than traditional models. Developers can collaborate and troubleshoot code much more effectively than before and programs are completed with fewer bugs and security flaws .
- Since 1999, the US Postal Service uses some 900 Linux based servers to read the addresses on more than 670 million pieces of mail per day to determine its routing and final destination using OCR (optical character recognition technologies) .
- Several counties in north-western Colorado are rolling out an e-government initiative which aims to provide online services that are traditionally accessed by visiting the local town halls in person. These services are built on the Typo3 open source content management system and run on open source servers (Apache web server and MySQL database). The Typo3 software rivals closed source products costing upwards of $60,000.00 .
- The California Franchise Tax Board (FTB) is using select open source products by including them as alternatives to any potential software purchase. The largest installation is a product called Virtual Network Computing (VNC) with a base of 5,000+ clients, which allows helpdesk staff to access computers remotely and fix problems without physically going to the computer. The comparable closed source solution costs approximately $66.00 per client license. For this one installation FTB realized a total savings of $330,000 .
Key Features of Open Source Software
More and more organizations are starting to embrace open source software as a cost-effective alternative to closed source products. Open source differs from closed source in various ways, only one of which is cost. Open source solutions are typically free of charge, although some companies such as IBM, Oracle, Hewlett Packard (HP), Novell, and Apple often sell versions of open source software with related maintenance. The following 8 features distinguish open source software:
- Free Redistribution: The software can be given as part of a package with other applications.
- Source Code: The code must either be distributed with the software or easily accessible.
- Derived Works: The code can be altered and distributed by the new author under the same license conditions as the product on which it is based.
- Integrity of the author’s source code: Derived works must not interfere with the original author’s intent or work.
- Distribution of license: The rights of the program must apply to all to whom the program is re-distributed without need for an additional license.
- License must not be specific to a product; Meaning that an operating system product cannot be restricted to be free only if used with another specific product.
- License must not contaminate other software.
- License must be technology-neutral .
The advent and acceptance of open source software represents a significant shift in the software development and procurement cycle. It also represents a significant change in thinking since the majority of us believe ‘you can’t get something for nothing’ or ‘you get what you pay for’ and often rightly so. It is difficult for most of us to download a free version of software from the Internet and then use it in a mission-critical Cenvironment rather than buying software out of the box from a major software vendor. However, arguments can be made that open source is a better choice for some business uses than closed source software.
The following are just a few of the potential reasons for choosing open source:
- More secure due to the extreme scrutiny of the source code before being deployed.
- Can be run in multiple environments (i.e. Linux, Mac, Microsoft, and UNIX).
- May be less expensive to manage (no maintenance contracts or upgrade costs).
- Often less vulnerable to viruses .
 Steve Kingstone, ‘Brazil Adopts Open Source Software’, http://news.bbc.co.uk/2/hi/business/4602325.stm (last visited September 19, 2013)
 Daniel Lyons, ‘Desktop Linux’, http://www.forbes.com/2006/08/31/linux-opensource-vista_cz_dl_0831sled.html (last visited September 19, 2013)
 C/Net, “How Linux Saved Amazon Millions,” http://news.cnet.com/2100-1001-275155.html (last visited September 19, 2013).
 David A. Wheeler, “Why Open Source Software/Free Software (OSS/FS)? Look at the Numbers!” (June 8, 2004), http://www.dwheeler.com/oss_fs_why.html (last visited September 2, 2006).
 Patrick J. Moran, ‘Developing an Open Source Option for NASA’, http://www.nas.nasa.gov/assets/pdf/nas-03-009.pdf (last visited September 19, 2013)
 Phil Hochmuth, ‘Linux Delivers for US Postal Service’, http://www.networkworld.com/techinsider/2004/0119linuxcase.html (last visited September 19, 2013)
 Ingrid Marson, ‘Colorado Readies Open Source E-Government System’, http://news.zdnet.co.uk/software/applications/0,39020384,39253449,00.htm (last visited September 19, 2013)
 California Franchise Tax Board, ‘E-Government Blueprint’, http://www.ftb.ca.gov/aboutFTB/egov_937b.pdf (last visited September 19, 2013)
 Bruce Perens, “The Open Source Definition,” http://www.opensource.org/docs/definition.php (last visited September 19, 2013).
 David A. Wheeler, “Secure Programming for Linux and UNIX HOWTO,” Chapter 2.4 “Is Open Source Good for Security?” http://www.dwheeler.com/secure-programs/Secure-Programs-HOWTO.html (last visited September 19, 2013).