Total Cost of Ownership (TCO) of FOSS based system is very low
The Total Cost of Ownership of any computer system can be evaluated in terms of hardware costs (including purchase price and hardware maintenance), direct software costs (including purchase price support and maintenance), indirect software costs (especially administration of licenses), staffing costs, support costs and downtime. Free/Open Source Software (FOSS) has many strong cost advantages as compared to most proprietary software as discussed below;
FOSS costs less to initially acquire
Free/Open Source Software (FOSS) costs much less to initially acquire. The “free” in free software refers to freedom of using the software and not free of price. FOSS is not absolutely free since you will still spend money for paper documentation, support, training, system administration etc in the same way you do with proprietary software. Despite this, FOSS costs extremely far less to acquire.
To see how far this is true, let’s examine the price differences when trying to configure a server, such as public web Server or an intranet file and email server, in which you would like to use C++ and an RDBMS. Using the prices from “Global Computing Supplies” (Suwanee, GA), September 2000, rounded to the nearest dollar, here is a quick summary of the purchasing costs:
According to the data in the above table, a public web server with windows 2000 and an RDBMS might cost $ 3610 ($ 1510 + $ 2100) while to set up a similar server with Red Hat Linux might cost a maximum of $ 156. Similarly setting up an intranet server with Windows 2000 and an email server might cost $ 2810 ($ 1510 + $ 1300) versus a maximum of $ 156 for Red Hat Linux. The GNU/Linux system always comes with unlimited number of licenses. This example confirms that Microsoft’s server products cost thousands of dollars more server than the equivalent GNU/Linux system.
FOSS costs less to initially acquire
Free/Open Source Software (FOSS) costs much less to initially acquire. The “free” in free software refers to freedom of using the software and not free of price. FOSS is not absolutely free since you will still spend money for paper documentation, support, training, system administration etc in the same way you do with proprietary software. Despite this, FOSS costs extremely far less to acquire.
To see how far this is true, let’s examine the price differences when trying to configure a server, such as public web Server or an intranet file and email server, in which you would like to use C++ and an RDBMS. Using the prices from “Global Computing Supplies” (Suwanee, GA), September 2000, rounded to the nearest dollar, here is a quick summary of the purchasing costs:
According to the data in the above table, a public web server with windows 2000 and an RDBMS might cost $ 3610 ($ 1510 + $ 2100) while to set up a similar server with Red Hat Linux might cost a maximum of $ 156. Similarly setting up an intranet server with Windows 2000 and an email server might cost $ 2810 ($ 1510 + $ 1300) versus a maximum of $ 156 for Red Hat Linux. The GNU/Linux system always comes with unlimited number of licenses. This example confirms that Microsoft’s server products cost thousands of dollars more server than the equivalent GNU/Linux system.
For another in-depth analysis comparing the initial costs GNU/Linux with Windows, see Linux vs. Windows: The Bottom Line by Cybersource Pty Ltd. Here’s a summary of their analysis (in 2001 U.S. dollars):
Upgrade/maintenance costs are typically far less
Long-term upgrade costs are far less for OSS/FS systems. For example, upgrading a Microsoft system will typically cost around half the original purchase. What’s worse, you are essentially at their mercy for long-term pricing, because there is only one supplier (see Microsoft Turns the Screws). In contrast, the GNU/Linux systems can be downloaded (free), or simply re-purchased (generally for less than $100), and the single upgrade be used on every system. This doesn’t include technical support, but the technical support can be competed since if you don’t like your GNU/Linux supplier (e.g., they’ve become too costly), you can switch.
Open Source Software does not impose license management costs
Proprietary vendors make money from the sale of licenses, and are imposing increasingly complex mechanisms on consumers to manage these licenses. Customers who cannot later prove than they paid for every installed copy of proprietary software (e.g., due to copying by an employee or losing the license paperwork) risk stiff penalties. In short: by using proprietary software, you run the risk of having the vendor sue you. To counter these risks, organizations must keep careful track of license purchases. This means that organizations must impose strict software license tracking processes, purchase costly tracking programs, and pay for people to keep track of these licenses and perform occasional audits. Organizations must also be careful to obey licensing terms, some of which may be extremely noxious or risky to the user.
Open Source Software can often use older hardware more efficiently than proprietary systems
Open Source Software runs faster on faster hardware, of course, but many OSS/FS programs can use older hardware more efficiently than proprietary systems, resulting in lower hardware costs - and in some cases requiring no new costs (because “discarded” systems can suddenly be used again). For example, the minimum requirements for Microsoft Windows 2000 Server (according to Microsoft) are a Pentium-compatible CPU (133 MHz or higher), 128MiB of RAM minimum (with 256MiB the “recommended minimum”), and a 2 GB hard drive with at least 1.0 GB free. According to Red Hat, Red Hat Linux 7.1 (a common distribution of GNU/Linux) requires at a minimum an i486 (Pentium-class recommended), 32MiB RAM (64MiB recommended), and 650MB hard disk space (1.2 GB recommended). This quality yields smaller hardware costs and sometimes eliminates the need for new hardware.
When used as an application server based system, the total costs for hardware drop by orders of magnitude
Many people make the mistake of deploying OSS/FS workstations (such as GNU/Linux or the *BSDs) the same way they would deploy Windows systems. Although it’s possible, this is an unnecessarily costly approach if they’re installing a set of workstations for typical productivity applications (e.g., word processing, spreadsheets, etc. for an office), For many, a better approach is to provide each user with a very old GNU/Linux-based machine which is merely a graphics display (an “X terminal”), and then run the actual applications on an “application server” that is shared by all the users. See How to create a Linux-based network of computers for peanuts for more information about this. With this application server approach, workstations can cost about $30 each (using “obsolete” machines), a server (shared by many users) can cost about $1000 each, and nearly all system administration is centralized (reducing administration costs). A nice side-effect of this approach is that users can use any workstation just by logging in. A more detailed discussion of this approach is given in Paul Murphy’s article, Total cost of ownership series revisited. Linux Style: Windows PCs vs. X Terminals: A Cost Comparison describes how the Mark O. Hatfield Library at Willamette University has used networked X terminals in its public and staff computing environments since 1995. The 15-year cost of 25 Linux systems in this environment is estimated to be $41,359 versus a 15-year cost of $100,000 to $155,000 for Windows PCs serving the same function. This is how the City of Largo, Florida, and many other organizations use GNU/Linux.
Open Source Software tends to require less ongoing administration
A survey of European governments found that administrators of FLOSS systems can handle 35% more PCs per IT administrators of proprietary systems. FLOSSPOLS’ “Results and policy paper from survey of government authorities” (Deliverable D3) did a survey in March 2005 of 955 European local governments. It found that “FLOSS users administer 35% more PCs per IT administrator than non-users -- FLOSS use appears to reduce administrator workload per PC, and IT departments with high workloads are more likely to want a future increase in FLOSS use.” About half (49%) of local government authorities reported intentionally using OSS/FS, but a huge additional portion (29%) were definitely using OSS/FS (GNU/Linux, MySQL or Apache) and were unaware that these were OSS/FS; I suspect that the true percentage of users was probably even higher. Once people started using it, they wanted more; 70% of OSS/FS users wanted to increase its use. Groklaw summarized this FLOSSPOLS survey.
Upgrade Costs for FOSS systems are too low
As the number of servers increases, proprietary solutions become increasingly costly. First, many proprietary systems (including Microsoft) sell per-client licenses; this means that even if your hardware can support more clients, you’ll must pay more to actually use the hardware you’ve purchased. Secondly, if you want to use more computers, you must pay for more licenses in proprietary systems. In contrast, for most GNU/Linux distributions, you can install as many copies as you like for no additional fee, and there’s no performance limit built into the software. There may be a fee for additional support, but you can go to competing vendors for this support.
According to Network World Fusion News, Linux is increasingly being used in healthcare, finance, banking, and retail due to its cost advantages when large numbers of identical sites and servers are built. According to their calculations for a 2,000 site deployment, SCO UnixWare (proprietary software) would cost $9 million, Windows (proprietary software) would cost $8 million, and Red Hat Linux (Free/Open Source Software) costs $180.
A European Commission-sponsored study reported savings in nearly all cases from using OSS/FS.
Study on the: Economic impact of open source software on innovation and the competitiveness of the Information and Communication Technologies (ICT) sector in the EU (November 20, 2006) said “Our findings show that, in almost all the cases, a transition toward open source reports of savings on the long term “ costs of ownership of the software products... Costs to migrate to an open solution are relevant and an organization needs to consider an extra effort for this. However these costs are temporary and mainly are budgeted in less than one year... Our findings report no particular delays or lost of time in the daily work due to the use of OpenOffice.org.... OpenOffice.org has all the functionalities that public offices need to create documents, spreadsheets, and presentations... OpenOffice.org is free, extremely stable, and supports the ISO Open Document Standard.” A Groklaw article on this study summarizes the report. This study presents a lot of quantitative data on other OSS/FS topics as well.
References
David, A. (2007). Why Open Source Software / Free Software (OSS/FS, FLOSS, or FOSS)? Look at the Numbers! Retrieved from http://www.dwheeler.com/oss_fs_why.html
Other important sources
Robert, C & Richard C. (2004) . Free and Open Source Software. Overview and Preliminary Guidelines for the Government of Canada. Retrieved from www.sita.co.za/FOSS/Gov_Canada-OSS_Guide-Dec04.pdf
Allen, G. (2008). Good to Great FOSS: Learnings from Africa . Retrieved from www.aspirationtech.org/files/GoodToGreatFOSS-LearningsFromAfrica.pdf
Kenneth, W.(2004). Free/Open Source Software: Government Policy. Retrieved from http://www.sita.co.za/FOSS/Gov-OSS_Guide-04.pdf
Upgrade/maintenance costs are typically far less
Long-term upgrade costs are far less for OSS/FS systems. For example, upgrading a Microsoft system will typically cost around half the original purchase. What’s worse, you are essentially at their mercy for long-term pricing, because there is only one supplier (see Microsoft Turns the Screws). In contrast, the GNU/Linux systems can be downloaded (free), or simply re-purchased (generally for less than $100), and the single upgrade be used on every system. This doesn’t include technical support, but the technical support can be competed since if you don’t like your GNU/Linux supplier (e.g., they’ve become too costly), you can switch.
Open Source Software does not impose license management costs
Proprietary vendors make money from the sale of licenses, and are imposing increasingly complex mechanisms on consumers to manage these licenses. Customers who cannot later prove than they paid for every installed copy of proprietary software (e.g., due to copying by an employee or losing the license paperwork) risk stiff penalties. In short: by using proprietary software, you run the risk of having the vendor sue you. To counter these risks, organizations must keep careful track of license purchases. This means that organizations must impose strict software license tracking processes, purchase costly tracking programs, and pay for people to keep track of these licenses and perform occasional audits. Organizations must also be careful to obey licensing terms, some of which may be extremely noxious or risky to the user.
Open Source Software can often use older hardware more efficiently than proprietary systems
Open Source Software runs faster on faster hardware, of course, but many OSS/FS programs can use older hardware more efficiently than proprietary systems, resulting in lower hardware costs - and in some cases requiring no new costs (because “discarded” systems can suddenly be used again). For example, the minimum requirements for Microsoft Windows 2000 Server (according to Microsoft) are a Pentium-compatible CPU (133 MHz or higher), 128MiB of RAM minimum (with 256MiB the “recommended minimum”), and a 2 GB hard drive with at least 1.0 GB free. According to Red Hat, Red Hat Linux 7.1 (a common distribution of GNU/Linux) requires at a minimum an i486 (Pentium-class recommended), 32MiB RAM (64MiB recommended), and 650MB hard disk space (1.2 GB recommended). This quality yields smaller hardware costs and sometimes eliminates the need for new hardware.
When used as an application server based system, the total costs for hardware drop by orders of magnitude
Many people make the mistake of deploying OSS/FS workstations (such as GNU/Linux or the *BSDs) the same way they would deploy Windows systems. Although it’s possible, this is an unnecessarily costly approach if they’re installing a set of workstations for typical productivity applications (e.g., word processing, spreadsheets, etc. for an office), For many, a better approach is to provide each user with a very old GNU/Linux-based machine which is merely a graphics display (an “X terminal”), and then run the actual applications on an “application server” that is shared by all the users. See How to create a Linux-based network of computers for peanuts for more information about this. With this application server approach, workstations can cost about $30 each (using “obsolete” machines), a server (shared by many users) can cost about $1000 each, and nearly all system administration is centralized (reducing administration costs). A nice side-effect of this approach is that users can use any workstation just by logging in. A more detailed discussion of this approach is given in Paul Murphy’s article, Total cost of ownership series revisited. Linux Style: Windows PCs vs. X Terminals: A Cost Comparison describes how the Mark O. Hatfield Library at Willamette University has used networked X terminals in its public and staff computing environments since 1995. The 15-year cost of 25 Linux systems in this environment is estimated to be $41,359 versus a 15-year cost of $100,000 to $155,000 for Windows PCs serving the same function. This is how the City of Largo, Florida, and many other organizations use GNU/Linux.
Open Source Software tends to require less ongoing administration
A survey of European governments found that administrators of FLOSS systems can handle 35% more PCs per IT administrators of proprietary systems. FLOSSPOLS’ “Results and policy paper from survey of government authorities” (Deliverable D3) did a survey in March 2005 of 955 European local governments. It found that “FLOSS users administer 35% more PCs per IT administrator than non-users -- FLOSS use appears to reduce administrator workload per PC, and IT departments with high workloads are more likely to want a future increase in FLOSS use.” About half (49%) of local government authorities reported intentionally using OSS/FS, but a huge additional portion (29%) were definitely using OSS/FS (GNU/Linux, MySQL or Apache) and were unaware that these were OSS/FS; I suspect that the true percentage of users was probably even higher. Once people started using it, they wanted more; 70% of OSS/FS users wanted to increase its use. Groklaw summarized this FLOSSPOLS survey.
Upgrade Costs for FOSS systems are too low
As the number of servers increases, proprietary solutions become increasingly costly. First, many proprietary systems (including Microsoft) sell per-client licenses; this means that even if your hardware can support more clients, you’ll must pay more to actually use the hardware you’ve purchased. Secondly, if you want to use more computers, you must pay for more licenses in proprietary systems. In contrast, for most GNU/Linux distributions, you can install as many copies as you like for no additional fee, and there’s no performance limit built into the software. There may be a fee for additional support, but you can go to competing vendors for this support.
According to Network World Fusion News, Linux is increasingly being used in healthcare, finance, banking, and retail due to its cost advantages when large numbers of identical sites and servers are built. According to their calculations for a 2,000 site deployment, SCO UnixWare (proprietary software) would cost $9 million, Windows (proprietary software) would cost $8 million, and Red Hat Linux (Free/Open Source Software) costs $180.
A European Commission-sponsored study reported savings in nearly all cases from using OSS/FS.
Study on the: Economic impact of open source software on innovation and the competitiveness of the Information and Communication Technologies (ICT) sector in the EU (November 20, 2006) said “Our findings show that, in almost all the cases, a transition toward open source reports of savings on the long term “ costs of ownership of the software products... Costs to migrate to an open solution are relevant and an organization needs to consider an extra effort for this. However these costs are temporary and mainly are budgeted in less than one year... Our findings report no particular delays or lost of time in the daily work due to the use of OpenOffice.org.... OpenOffice.org has all the functionalities that public offices need to create documents, spreadsheets, and presentations... OpenOffice.org is free, extremely stable, and supports the ISO Open Document Standard.” A Groklaw article on this study summarizes the report. This study presents a lot of quantitative data on other OSS/FS topics as well.
References
David, A. (2007). Why Open Source Software / Free Software (OSS/FS, FLOSS, or FOSS)? Look at the Numbers! Retrieved from http://www.dwheeler.com/oss_fs_why.html
Other important sources
Robert, C & Richard C. (2004) . Free and Open Source Software. Overview and Preliminary Guidelines for the Government of Canada. Retrieved from www.sita.co.za/FOSS/Gov_Canada-OSS_Guide-Dec04.pdf
Allen, G. (2008). Good to Great FOSS: Learnings from Africa . Retrieved from www.aspirationtech.org/files/GoodToGreatFOSS-LearningsFromAfrica.pdf
Kenneth, W.(2004). Free/Open Source Software: Government Policy. Retrieved from http://www.sita.co.za/FOSS/Gov-OSS_Guide-04.pdf
