Open Source Could Suffer from Exaggerated Expectations

There is an article/advertorial floating around the Internet by Roger Burkhardt, CEO of Ingres, that asks the question, “Can Open Source Help the Economy?”.

I am afraid Burkhardt is suggesting possibilities that open source software terms, conditions and marketing techniques cannot deliver. As such, it sets up expectations which—when not met—will spread more misinformation and doubt about the open source culture and movement. Open source cannot relieve “pressure on global IT budgets” in any kind of significant way for two reasons, neither of which can be controlled by the open source culture and its fans in the supplier world:

1. First, annual “new-new” licensing of software is a small percentage of the overall IT spend in any given year (about .5%--$20 billion of $5 trillion--depending on whose market-size spending numbers are used). That means the opportunities to save vis a vis an individual IT budget are also small, even if Burkhardt is saying open source could replace the "new-new" license spend totally (very unrealistic). IT budgets consist mostly of personnel costs, overhead, systems and storage hardware acquisition and maintenance, implementation and other types of consulting, IT-based services such as software as a service (SaaS), maintenance on existing installed software and “new-old” licensing, where new but required versions of installed software are not included in the maintenance fee. Of course, Burkhardt's company naturally treats the latter two types of spending as sales opportunities but very few such situations turn into migrations simply because of human nature and the odd happenstance that a large number of IT users are happy with their software.
2. Second, there is a significant personnel cost (training, implementation time, and so forth) associated with bringing in open source software and no one in the open source movement would tell you otherwise. In addition, typically—but not always—a maintenance support cost equal to the maintenance fees associated with any other kind of software is involved. As with point 1, anyone looking at total costs of ownership is not going to find a large nut to trim. The open source movement is always careful to position its deliverables as free as in speech (or some such similar analogy where speech isn't free), not "free as in beer."

Burkhardt cites 25% savings found by Forrester. But I would guess they are realized against the half of a percent mentioned in point 1 above. So now the "global IT budget savings" that could be realized with open source software are down to around a tenth of a percent. Every little bit helps, as they say, but don’t promise “much lower costs.” (The 25% savings on hardware costs he mentions could be realized by using any software on commodity servers.)

Even if “proprietary vendors” were foolish enough to raise license fees by 45% (unlikely in a down economy), everyone solely competing in the software market--whatever the terms and conditions of their licenses--is competing for this sliver of the "global IT budget."

And what is a "proprietary vendor" anyways? Ingres' top competitor Oracle (ORCL) just published how it's involved in the open source culture and its activity probably dwarfs Ingres', simply because of scale.

So the answer to his question is "No, open source cannot help the economy very much, and should not be expected to." For Linux in particular, publicly available IDC research illustrates that Linux is replacing older Unix versions as would be expected because of the way IBM, HP (HPQ) and other systems suppliers promote Red Hat (RHT) and Novell (NOVL) as a replacement for their own heritage Unix software (Q3 IDC data is available but I have not yet posted on it; the trend remains the same). I do not see any suppliers making a similar recommendation for the “higher level software applications” that Burkhardt mentions. There is one systems supplier making a recommendation like that vis a vis Oracle RDBMSs, but I don't see how Sun (JAVA) pushing MySQL helps either open source or Ingres.

Leave open source to what it can deliver--more open development processes that save suppliers (trickling down to users) research and development expense. As it has delivered for the last 50 years.