The Business Value of Open Source Software

This article is a part of a series on using open source in business:


This article will explore how OSS can benefit a business from a non-technical perspective.

Open Source Development Reduces Costs

One of the major reasons more companies are adopting OSS is because it is a very effective way to reduce development costs. The two primary ways open source reduces development costs is by simplifying software licensing and increasing development speed.

Simplifies Licensing

Initially, the most obvious place OSS reduces costs is through the complete lack of licensing costs. Proprietary software typically includes initial licensing costs and ongoing maintenance contracts that can be a significant portion of the initial costs; these are often unavoidable. OSS licenses grant free use, modification, and distribution rights to everyone, meaning there is no initial costs to licensing the software, and maintenance can be customized to the needs of the specific business.

OSS also has a lower cost associated with the software procurement process since the OSS can simply be downloaded for experimentation or research, with no requirement to negotiate procurement with a proprietary vendor. Finally, OSS licenses allow a much broader range of use and customization, sometimes unlimited, this usually needs to be negotiated in a contract with a vendor in the case of proprietary software.

Increases Development Speed

In an OSS project, code functionality can be modified whenever necessary, with no need to negotiate custom contracts or statements of work with third-parties; this alone can result in significant improvements to development speed and reduce the amount of time to deploy products or services.

Any contributions that are successfully committed upstream will ultimately reduce the amount of effort required for ongoing maintenance. Once a maintainer has deemed code worthy of being included upstream, they usually do so with the implicit understanding they will maintain its functionality in the project unless something else is specifically agreed upon. Of course, there are limits to this, and the maintainer may eventually decided the functionality doesn’t comply with project requirements in the future; this may result in the code being dropped if no contributors step up to maintain its place in the source code.

Additionally, open source communities typically produce a faster evolution of upstream software that’s based on the features the community needs rather than financial motivations. The release early, release often strategy of most open source communities results in regular updates that allow anyone to take advantage of new features as soon as they’re available while also monitoring changes to experimental versions to be prepare downstream software to accommodate upcoming changes to stable versions.

The Strategic Value of Open Source

OSS has value that goes beyond the company’s bottom line; it can also be an effective route for creating strategic value. The two major ways it accomplishes this is through an avoidance of vendor lock-in and the ability to influence the direction of vital software through technical and political leadership.

Avoid Vendor Lock-in

A proprietary vendor might limit their software’s compatibility with competing services to elevate their prices. This can lead to any companies who rely on this software to face extremely high costs to migrate away from proprietary software which puts them at a disadvantage in contract negotiations.

OSS development encourages compatibility with more formats and software because it improves the functionality of the software: the primary goal of the developer community. Additionally, the ease of adaptability to niche use cases tends to make OSS compatible with a much wider range of complimentary software.

The primary benefit of this is that it mitigates the risk of upstream software discontinuation. Proprietary software vendors might discontinue a product, get purchased by another company with different business motivations, or go entirely out of business. Any of these scenarios can result in a sudden and expensive switch to new software.

On the other hand, OSS code is not generally owned by any single organization or individual, and anyone can pick up the reins to keep the project going. While this sudden changes in leadership for an OSS community still have costs for companies that rely on the code, adopters will have more options and flexibility for dealing with these changes. For example, an affected company could decide to adapt to the new direction of the project, or fork the project if the new direction conflicts with the company’s requirements.

Create Technical and Political Leadership

Open source community leadership provides an avenue to ensure important software remains viable to a company, while also ensuring the they have a voice in community decisions.

Open source leadership must be earned through an ongoing participation in the community, and is something that can be lost due to a lack of participation. Achieving OSS leadership takes persistent effort over an extended period of time, but the benefits often outweigh the costs.  Typical reasons to go through this process include a desire for improved visibility in external developer and user groups, and gaining technical influence over the direction of important projects.

A major benefit of open source leadership is that it can be leveraged to grow internal open source competence by promoting open source best practices and transferring knowledge of open source components to internal teams. Finally, engineers who dedicate time to upstream contributions improve the ability of product teams to use open source, making it easier for them to directly maintain and improve the OSS components they rely on.

The Rosy View of Open Source

The Business Value of Open Source Software - OSS-Business-Value

After reading the last two articles in this series, you might think OSS is nothing but sunshine and flowers with all the benefits it offers. These benefits might be pretty big, but they also come with significant risks and obligations any company that uses OSS needs to be aware of.  The next article in this series will cover these risks and obligations.

Author: Ben Lloyd Pearson

Ben is an open source technologist experienced in a wide array of modern IT tools. He's done a bit of everything, from web development, to systems administration, web publishing, and beyond.