OpenSure Blog

Impact of Open Source on Software Industry

We’ve looked at how open source delivers cost savings, and the top reasons for choosing open source: quality of code and business agility (or, to quote from this article How Open Source Software is Eating the Software World, “major advantages open source has in quality, security and innovation”). What impact is this having on interplay between open source and the software industry as we used to know it?

Increased investment and wide adoption

Clearly, open source is being adopting in every sector and at a rapidly increasing pace. One measure of this is the leap in investment in open source: in 2012 $553m was invested, an 80% increase on the previous year (according to this report).

Consider the platforms across which open source is deployed: mobile, content management, server management, telecoms, to name just a few. To have such change in so many technical arenas simultaneously is more or less unprecedented. This article in The Raynor Report describes such change as “as disruptive as disruptive gets” and “fundamentally different”. In a slug-it-out between open source and the software industry of yore, we know where we’d place our bets.

Adapt or die

To return to the impact on proprietary software houses, the threat is hard to ignore, despite these companies’ efforts to dismiss open source. As The Raynor Report article says:

The technology companies that don’t embrace the major open-source movements will be destroyed. The ones that embrace them will succeed.

It’s one of those crossroads moments when companies have to decide whether to adapt or wither. Traditional companies are starting to lose developers to more attractive open source development platforms. Almost every new technology emerging has an open source basis, steadily eroding the market share of those companies used to dominating the market. It would be nice to think open source and the software industry in its proprietary form could co-operate, but the old business model of divide and rule prevents this in many cases.

And those companies not developing the software, but running their business systems on them? Open source is being endorsed from the very top of these companies, in every sector and around the world. This directly takes business away from the traditional operators.

Public sector openomics

It’s a widely-held belief and frequently reported that government will see the biggest transformation from the adoption of open source. Consider the traditional models of government IT adoption: several enormous companies have long held public administrations in the vice-like grip of vendor lock-in. As governments free themselves of this, these proprietary companies will have to make money on their merits, not because of a lucrative contract guaranteed to benefit Megacorp far more than anyone else involved in the project, let alone the poor end user. How refreshing to see that era slowly coming to an end.

Where do Open Source cost savings happen?

Switch to open source and save money, right? It’s to miss the point of open source, but it’s a nice side-effect, and something frequently cited amongst the benefits of switching to open source. But where do those open source cost savings come in? How, to be blunt about it, does switching to open source save you money?

Croation pensions and open source cost savings

One recent convert is the Croatian pension fund. Previously reliant on proprietary software that could handle only a relatively low number of requests a day and that crashed frequently, pension customers were preferring to submit change requests in paper form. You don’t need me to explain the manpower required to handle that volume of paperwork, and its associated costs. The fund needed to address these performance issues in order to increase the numbers of online clients.

So in one fell swoop, the Croatian pension fund was able to process a far greater number of requests and waste a great deal less valuable time pushing paper around, but a greater and more direct open source cost saving has been in maintenance costs. Maintaining the new system costs just ONE FOURTEENTH of maintaining the old one. That’s a walloping saving.

In a savvy move, the pension fund required the code for the new system to be made available with the express intention of using it in other systems. Again, you don’t need me to point out the cost saving that arises from not having to employ people to reinvent the wheel repeatedly. The Estonian Informations Systems Authority has done something similar, and, with the UK, is studying this form o recycling government IT systems such as Estonia’s X-Road, a secure document-exchange system developed by the Estonians. You can read more about Estonia’s example in this article.

The article includes the heart-warming unattributed quote:

“This may be just another online service, but it is one that will raise the bar for other government organisations.”

Let’s hope so, eh? If Croatia can do it, and now Baden-Württemberg, there’s no reason why we can’t follow suit. UK Gov, we’re looking at you.