Open Source in an economic downturn

We are in an economic downturn, perhaps even a full-blown recession. Any doubts I had about that were removed by two related, recent phenomena.

The first is that whenever I walk down a high street I see almost every single retailer involved in near permanent 'sales'. Looking into the figures confirms the picture - sales on the high street have fallen for four of the past five months. The second is that high street retailers are now deep in conversations with Open Source companies. Some, like Specsavers, are so far into migrating to Open Source that they are essentially running on it end-to-end. Retail's economic challenges will soon be everyone's...

We all know that with profit margins of 10% it takes £10 of sales to generate £1 of profit. As sales continue to fall, even those in the relatively comfortable position of 10% profit margins have to look everywhere they can to cut costs - every £1 saved goes straight on the bottom line, and can make the difference between business survival or business failure.

In these circumstances the IT budget is one of the first places to come under scrutiny, and most IT departments are coming under increasing pressure to save every penny. And there is a particular lack of grace to the position the IT department finds itself in - not only is it's own budget falling, but the proprietary vendors with which it deals need to ensure their own survival during a recession, and I'll let you imagine how flexible those providers will be in price negotiations if they are in a monopoly position and know you have no choice...

Open Source software has many virtues, but one above all others is suited to the current economic environment - it enables you to strategically cut costs more than any other IT tool available to you. When I say strategically, what I mean by that is simply this. There is an Open Source product that does the job of every single piece of software you are currently using in your business. You choose if you replace it, when you replace it, and how much of it you replace. What is elegant about this is that Open Source fits in so well with proprietary software you can leave the rest of your IT systems undisturbed. You can create a strategic migration plan that delivers consistent cost savings over any time period you choose.

There are two ways Open Source software cuts costs, directly and indirectly. It cuts costs directly by virtue of the fact that there are no licence fees associated with it, that is to say the software is freely available in perpetuity at zero cost. IT projects attract cost in three broad areas, hardware, software and know-how (whether internal staff costs or external consultancy, support or training costs). With Open Source you can remove an entire category of costs at a stroke.

It cuts costs indirectly in a number of ways, three of which we will briefly examine here.

1. The first is that Open Source extends your hardware budget. In terms of new hardware it does this by having a far lower resource requirement than alternative proprietary solutions. In terms of old hardware it does this by extending the lifetime of existing hardware.



2. The second is that Open Source drastically reduces the administration overhead on your staff. One, it 'just works' - Open Source systems are widely and justly lauded for incredible reliability and robustness once set up. Two, it is also justly famous for its resistance to viruses and other malware - a major time-sink in most IT departments. Three, it eliminates at a stroke the requirement to track licences for legal compliance and removes the threat of enforcement tactics from people like BSA, FAST and proprietary vendors.



3. Finally, Open Source in the mix at any organisation has some wonderful effects on the account management you are experiencing from your proprietary vendors. The first is that vendors attention on your account is revitalised in a way that nothing else seems able to do. The second is that prices will be held down and discounts offered in any situation where you are comparing the vendors products with Open Source (this happens much more where you are serious about Open Source, and are already running several Open Source systems).

In conclusion, Open Source software offers businesses a powerful strategic tool in their armoury to survive, perhaps prosper, in the economic downturn. Businesses of all sizes, from corner shops up to the largest high street retailers are turning to it strategically, and your business could benefit from it too.

About the author
This article was written by Mark Taylor. Mark is the CEO of Sirius, the founder and past President of the Open Source Consortium, and an authoritative writer and speaker on all aspects of the Open Source phenomenon. He has been instrumental in some of the largest Open Source deployments in the UK, working with household names in both Private and Public sectors. Flagship clients include Linklaters, BOC, Sony Ericsson, Pentax and Specsavers, the latest UK giant committing to migrate all the way to Free Software.

Send a comment about this article to editor@itwales.com

ITWales Open Source presentation
Open Source software can offer a cost effective solution for the small business user... but how easy is it to find what you need to run your business and maintain professional standards?

On Thursday 18 September ITWales Swansea will be presenting at the Liberty Stadium Business Show 2008. Join the ITWales team for a practical and interactive workshop exploring open source software opportunities and see if your business could benefit from adopting some of the enterprise standard applications that are competitive on cost and functionality. For more information and to book your place click here