Leading Edge Forum Report 2004 Open Source: Open for Business
The following article describes the 2004 Leading Edge Forum report, Open Source: Open for Business.
The lure of open source software is that it is free—anyone can use it or modify it without license fees, and no vendor can lock users in for fixes and enhancements. Open source has spawned a worldwide development community that improves and fixes the software, often much faster than in the proprietary vendor world. The disruptive nature of open source software makes it the focus of the 2004 CSC Leading Edge Forum report, Open Source: Open for Business.
"Open source is a movement that is technical, political and sociological," says the report, the most recent in a series of annual Leading Edge Forum publications that detail technology with the potential to disrupt the business world. Open source software such as the Linux operating system places the scarce resource of software in everybody’s hands. The open, collaborative approach levels the playing field, enabling anyone to contribute and defying the big hand of the corporation. (Sidebar: What Is Open Source?)
Several key business drivers are putting open source software at the center of business strategy: cost reductions, technology transparency, security and risk management, time to market and new business opportunities. For CSC clients like BlueScope Steel, the Danish Ministry of Finance and Deutsche Bank, open source is offering new possibilities for solving critical business problems, providing business interoperability through standardization and technology transparency and decreasing time to market for key products and services.
At the same time, the report maintains that open source software is not inherently good just because it is open source. Nor will it displace proprietary software overnight, although the lines are blurring between proprietary and open source as software vendors begin applying open source software in their products. Open Source: Open for Business takes into account all facets of open source, from the community that sustains it to the legal and business issues that constrain it.
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The heart and soul of the open source movement is community. While community has driven IT since the dawn of computers, the network effect of the Internet today allows users to participate in open source communities more deeply. The community brainstorms and develops the software, enhances it and reuses it to spawn new innovations. The community shares and feeds off expertise in a culture that is about participation, not profits.
Community credibility is an underlying motivator for joining an open source project. The lure of open source includes creating good software; tapping into the best minds around the world; and the enhanced skills and reputation—leading to marketability—that come from being an active member of the community.
Corporate developers who learn best practices from the open source community can "share the wealth" by bringing those practices back into the corporation, opening up new opportunities for development and project management. At CSC, a small team’s initial foray into an open source project has led to standard development practices that incorporate open source methodology and mindsets.
CSC’s e-Business and Technology Center in Wiesbaden, Germany, entered the open source world to provide lower costs on a project for a subsidiary of Deutsche Börse Group (German Stock Exchange) in Frankfurt am Main. The project succeeded and led to four open source approaches that have infiltrated CSC methodology: collaborative source code management, collaborative development, automated regression testing and a more agile development methodology.
Moving up the stack: Open source is not just Linux
Linux, the best-known open source software, is virtually synonymous with the modern open source movement. The Unix-based operating system is the number two server operating system behind Microsoft’s Windows NT and is gaining momentum. Analysts predict that Linux platform revenue will increase at more than four times the overall industry average for all platforms through 2007.
But open source is more than Linux. The Open Grid Services Architecture (OGSA), for instance, builds upon various operating system platforms, including Linux, and brings high performance computational grid capabilities to the world of advanced research and science. Other open source software includes middleware like directory services OpenLDAP and cryptography software OpenSSL, databases like MySQL, server software like Apache and Samba, and desktop software like office suite OpenOffice and the browser Mozilla Firefox. [See "Open Source Short List" graphic, above.]
The open source Apache Web Server powers 68 percent of Web servers worldwide, according to UK Internet services company Netcraft, making it more widely used than all other Web servers combined. The software is both popular and mature. "If you are spending more than $0 to acquire commodity Web server software, you are spending too much," asserts Paul Gustafson, director of the Leading Edge Forum. [See "Sweet spot," below.]
Open source is industrial strength
Open source software once may have been dismissed as an iconoclast’s dream, but deployments at everywhere from Google to NASA show that its promise is real. Although not all open source software is industrial strength, there is no mistaking that open source is open for business.
CSC was enlisted by the Danish Ministry of Finance to create a data exchange system that connected roughly 400 public institutions and the Ministry. Open source components allowed CSC to use a sleek mix-and-match approach rather than a typically bloated single-vendor software suite. The solution can transmit 1.5 megabits of data per second using a commodity Intel server running Linux.
The project was the client’s first use of open source software in a server environment. "The government was somewhat relieved to find that there were large vendors, like CSC, that would propose—and deliver—an open source software solution," says Hans Jayatissa, head of eSolutions for CSC in Denmark.
Open source plays a major role in applications requiring mission-critical performance. The Associated Press, for example, supports hundreds of thousands of transactions a day with its MySQL database, while Google handles some 200 million searches a day using over 100,000 Linux computers spread across more than a dozen data centers.
Because different applications have different requirements for scalability, throughput and reliability, not all organizations can move to an open source alternative. But as organizations consider their IT strategy, they need to remember that open source offers a viable option, not just in the back office but in mission-critical environments.
Sweet spot: Open source yields targeted savings
The core of the open source savings proposition is no software license fees, reduced hardware costs from commodity hardware and less unplanned downtime. Companies can also save development costs because they are able to reuse existing pieces of code. Even if open source software is not deployed, it can be used as a powerful negotiating tool to lower proprietary software license fees and support charges. Further, "as open source software moves into higher levels of the software stack, there are bigger savings opportunities," the report says.
The cost question is tricky and must be evaluated on a case-by-case basis. Costs may decrease in one area with open source but increase in others. What a company saves in license fees may be offset by increased technical support, training and consulting costs. The cost and disruption to transition from current application packages to open source alternatives may be prohibitive.
Many of the savings associated with Linux come from its ability to scale horizontally, or use large numbers of low-cost computers instead of an expensive high-end server to meet processing demands. Because companies don’t have to pay for a license for each machine as they would with proprietary systems, software costs do not go up as networks scale.
If the commodity hardware is already in place, savings with Linux are less clear. While Linux licenses are free, a business wanting vendor support for Linux either will have to pay for support packages via a commercial distribution of Linux—which can be more expensive than licenses and support for a comparable proprietary operating system—or opt for a riskier free non-commercial Linux distribution.
Desktop software such as OpenOffice, while still reaching maturity, could offer significant savings for large organizations. Office suite software can cost roughly $300 per seat—or $3 million in an organization of 10,000 people. That creates real savings when going to acquisition costs of $0.
Software revolution: Open source accelerates development and incubates new ideas
The new software development norm is collaboration. Rather than work within the confines of the organization and create everything from scratch, developers should use readily available open source tools and components to accelerate the development process and tap the open source community for support and inspiration.
Open source has been used to accelerate development of CSC offerings, including H.E.A.T. (Hydra Expert Assessment Technology), CSC’s security tool for assessing information system vulnerabilities across an enterprise. CSC tapped into several core open source components, saving money and at least three months in the first year of development.
"H.E.A.T. would have been developed even if we hadn’t used open source software, but it would have taken much longer and the product would not be as robust," states Jason Arnold, H.E.A.T. program manager. Inherently secure code was critical to the security tool; the developers were comfortable using open source code because so many people review it.
Open source software allows companies to bootstrap a new product based upon existing open source code; extend an existing product, particularly one that was not originally open source; and use communities to create commercial products. "Open source software development is agile; it enables people to bat around and release new ideas unencumbered," the Leading Edge Forum report says. "In its agility, open source revolutionizes software development and fuels innovation."
At your service
There is a common perception that technical support is a serious shortcoming of open source software: How does the software work? Who is accountable? Who takes ownership when problems arise? But support provides business opportunities for IT service and solution providers, application service providers and others.
While in the traditional software world either a customer or a vendor provides software support, the open source world adds a third responsible party: the open source community. The expertise of the community can be used to provide support in conjunction with the customer, the software vendor or distributor and service providers such as CSC. The community amplifies support interactions. Software that fails, for instance, may be fixed more quickly by a collaborative effort than by individual vendors.
Many open source users, however, refuse to trust their support to the open source community, instead seeking out established companies. "Organizations using open source software will seek a trusted intermediary because they want accountability," says LEF vice president Bill Koff. It is legitimate from a management perspective to have someone to blame for software problems you cannot or do not want to solve. Service providers like CSC could play a role as the trusted intermediary for open source because providing IT service and support is their primary business.
Market force: Open source increases competition
Open source is a catalyst for competition in the software market. In the past, competition came from existing companies and startups attempting to unseat established market powers. Today the open source community is showing it is a viable source of competition—on a par with, if not stronger than, traditional competitors—and helps to keep commercial software prices in check.
Many of the open source products challenge the desktop hegemony of Microsoft, which currently owns most of the PC operating system and office suite markets. Linux has put pressure on Windows, which has more than 90 percent of the PC market. Analysts expect Linux to continue to grow rapidly and take over the number two spot this year.
Meanwhile, OpenOffice has climbed to a 14 percent share of the large enterprise office systems market. Microsoft, however, still holds a 94 percent share of the overall office market. "It is a David and Goliath story, to be sure," the report says, "but David is getting stronger."
More importantly, open source’s collaborative nature creates "co-opetition," getting competitors to pull in the same direction. The openadaptor open source code project has several German financial institutions working on common code to create cheaper alternatives to enterprise application integration (EAI) tools. While these banks are competitors, they all stand to benefit from better and cheaper software tools to integrate disparate systems; application integration can cost more than a million dollars in license fees.
Standards change the nature of competition and the open source community can accelerate their development. By setting requirements that vendors must conform to in order to attract the largest possible market, standards prevent the proliferation of diverging and incompatible technologies. As the world moves faster, the open source community, in its global networked collaboration, has the potential to work through standards issues faster than traditional standards bodies, which can get bogged down in face-to-face meetings and bureaucracy.
The open source environment forces products to compete and survive based on their quality and functionality, not marketing hype. Sometimes the hype about open source software gives the impression that all open source software is good, which is not the case. As with commercial software, only a select few products are really good and widely used. The best products survive, such as Linux, as do products that are "good enough" (with robust basic functionality but not all the bells and whistles of a full-featured product), such as MySQL.
Open source everywhere The low costs and collaborative culture of open source have helped it find its way into areas outside of traditional enterprise software development. With zero license fees, open source Linux is an attractive option for electronic device manufacturers who need embedded operating systems to power their devices. Many networking devices such as firewalls and routers use embedded Linux in their firmware. Linux and other open source software are also being used in smart phones and PDAs. One of the most noteworthy consumer device uses of Linux is the digital video recording device, namely TiVo, which is used by more than a million subscribers. Another DVR employing Linux and other open source software "under the hood" is the Dreambox DM7000, which has a large community enhancing the device beyond the offerings of the vendor, Germany-based Dream-Multimedia-TV GmbH.
LEGO ’s MINDSTORM programmable robotic toys are the focus of an open source community.
Open source principles have made it into nonprogramming domains as well. Wikipedia is a global open source encyclopedia on the Web to which anyone can contribute. Wikipedia began in 2001 and today boasts over 230,000 articles in the English-language version. The open source approach lets Wikipedia have the most accurate, up-to-date information possible. The Human Genome Project is a type of open source project in which researchers work around the world together to decode Human DNA. In construction, MIT’s Open Source Building Alliance focuses on developing and testing better materials, technologies, applications and services for buildings.
Open source development gives developers an opportunity to show off their talents. They can work on what interests them, independent of work or school. As a result, a number of open source applications have sprung up around hobbies, ranging from audio and video compression technology to gaming communities. When toy maker LEGO created its MINDSTORMS programmable robotic toys, the toys were reverse-engineered by well-intentioned hackers. So LEGO embraced open source, opening up the product specifications and ultimately creating a vibrant development community.
Businesses can learn much from game communities, since developers frequently participate in open source because it’s fun for them. "Play influences work and how business can be done, sparking creativity and motivation," the report says. "The fun factor that open source imparts should be recognized and harnessed for business success."
Legal and business issues
Before an organization uses open source software, it must understand that although the source code may be free to use, it is not free of obligations. Unless the software has been placed in the public domain, one’s access to open source software is subject to stated conditions of use, or license terms, determined by the owner.
The license terms may be different than other more familiar software license terms, and in some cases the open source license terms may defeat the reason a business wanted to use open source software in the first place.
Linux was made available to the open source community under the General Public License, or GPL. While the GPL gives organizations the right to run the software, modify and distribute it, it also comes with a catch, called "copyleft." Basically, any new work that contains, in whole or in part, open source software licensed under the GPL must also be licensed under the GPL. So if a development group adds even a small chunk of Linux code to its own software, the source code of the new software must now be shared with everyone else.
This approach will please many, but it "has unnerved software development organizations that have expended many millions of R&D dollars to create source code that is viewed as proprietary and therefore closed code," the report says.
Because of the copyleft impact, the open source community has created many versions of license agreements that allow organizations, for example, to link their own software to open source code without having to give away their own code. These licenses arose from the desire to ensure the continued involvement of commercial organizations in open source projects, potentially increasing positive contributions to open source software. Other license agreements somewhere in between the GPL and commercially oriented open source licenses. It is important for businesses to understand which license governs the use of the specific open source software they wish to use.
A current legal issue is the lawsuits by Unix vendor SCO Group against various Linux distributors, claiming that Linux contains pieces of SCO code that are proprietary. The lawsuits have led some Linux vendors to provide indemnities to their users, protecting them from such lawsuits. But the SCO situation should remind organizations of the complexities of software use and ownership. The report advises: "If open source code is used, the software development organization must fully document and retain the knowledge concerning that code."
Coupled with greater emphasis on transparent and accurate information systems to meet the more rigorous demands required by active corporate governance, the SCO cases are gaining attention at the board level as directors consider, perhaps for the first time, the extent to which software used within the organization has been licensed appropriately. Getting started
Open source offers a development alternative that organizations need to consider in their IT strategy. Open source may not be for every situation, but in that case organizations should understand why. Organizations must examine the business value of open source and look closely at their IT infrastructure and development processes. If they decide to undertake open source, they should map out business strategy, administrative and technical moves.
Some of these include:
Look for "sweet spots" in the business with high potential return from using open source software.
Develop legal expertise internally about open source licensing—both legal staff and software developers.
Update human resource policies on intellectual property to reflect open source.
Encourage developers and system administrators to get involved with open source projects that relate to their jobs.
Create a "safe list" of open source software for the organization to use or consider, and keep the list current.
CSC is committed to the open source movement. Open Source: Open for Business does not view open source as an either-or battle with proprietary software vendors; rather, open source is about understanding the value that a higher degree of openness and collaboration can bring to the business.
For consumers, producers and service providers, now is the time to get started with open source. It is a business decision that should factor into IT strategy. Wise companies will manage and leverage open source, not ignore it. Open source is open for business.
Sidebar: What Is Open Source
In general, open source refers to software that is free to use, modify and share without license fees. The Open Source Initiative has created the Open Source Definition, a set of standard criteria that open source licenses are required to incorporate to be "OSI Certified." These criteria include:
Free redistribution—The user has an unlimited right to give away the software royalty-free to third parties.
Source code—Source code must be available in a form suitable for modification.
Derivative works—Derivative works and other modifications must be permissible and must allow for their distribution under the same terms as the license of the original software.
Integrity of the author’s source code—The license may restrict source code from being distributed in a modified form if the license allows distribution of patches with the source code, so that patches can readily be distinguished from the base source code.
Distribution of license—The rights of the license automatically pass through to all of the parties to whom the software is distributed (that is, the software can be redistributed to third parties without the permission of the original author).
Non-discrimination—Usage cannot be denied to any person, group or field of endeavor.
The lure of open source software is that it is free—anyone can use it or modify it without license fees, and no vendor can lock users in for fixes and enhancements. Open source has spawned a worldwide development community that improves and fixes the software, often much faster than in the proprietary vendor world. The disruptive nature of open source software makes it the focus of the 2004 CSC Leading Edge Forum report, 
Open source software once may have been dismissed as an iconoclast’s dream, but deployments at everywhere from Google to NASA show that its promise is real. Although not all open source software is industrial strength, there is no mistaking that open source is open for business.
The core of the open source savings proposition is no software license fees, reduced hardware costs from commodity hardware and less unplanned downtime. Companies can also save development costs because they are able to reuse existing pieces of code. Even if open source software is not deployed, it can be used as a powerful negotiating tool to lower proprietary software license fees and support charges. Further, "as open source software moves into higher levels of the software stack, there are bigger savings opportunities," the report says.
