Possibilities and Limits of Open Source Software

A Thesis

Presented to the Faculty of

SBS Swiss Business School

in Partial Fulfillment

of the Requirement for the Degree

Master of Business Administration

by

Roberto Saccon

August 2003

Promoter: Dr. Helmut Steigele

Abstract

Swiss Business School SBS

Possibilities and Limits of Open Source Software

A Thesis by Roberto Saccon

Promoter: Dr. Helmut Steigele

Keywords: Open source software, IT costs, software licenses

This thesis studies the possibilities and limits of open source software at the enterprise. The thesis

analyzes the history of the open source movement, describes the open source community and

collaboration model, analyzes the open source development process, describes business models

based on open source software, analyzes possible cost savings and presents case studies of popular

open source projects.

Recommendations are presented, how companies and organizations might benefit from open source

software and in which cases it should be avoided, because the hidden costs will not pay off the

license costs savings.

Along the process of writing the thesis, more than 20 IT managers from companies and

organizations all over Switzerland had been interviewed. The evaluation of their experiences

contributed significantly to the conclusions of the thesis.

Table of Contents

1 Introduction.................................................................................................................................... 11

2 What is Open Source Software.......................................................................................................13

2.1 Myths and realities..................................................................................................................14

2.2 Free and Open Source Software FOSS...................................................................................15

2.3 Open Source Definition.......................................................................................................... 15

2.4 OSS Licenses.......................................................................................................................... 18

2.4.1 General Public License (GPL)........................................................................................ 182.4.2 Lesser General Public License LGPL............................................................................. 182.4.3 Mozilla Public License MPL.......................................................................................... 192.4.4 BSD License....................................................................................................................192.4.5 Apache Software License................................................................................................192.4.6 Public Domain.................................................................................................................192.4.7 OSS License Summary....................................................................................................202.4.8 Non-Open Source licenses.............................................................................................. 20

2.5 OSS and intellectual property................................................................................................. 21

2.6 The Open Source Community................................................................................................ 23

2.6.1 Development Model........................................................................................................252.6.2 The Source Code Repository...........................................................................................262.6.3 Software Quality............................................................................................................. 26

2.7 OSS and the Internet............................................................................................................... 27

2.7.1 The Internet as driving force behind OSS.......................................................................272.8 OSS and Digital Media........................................................................................................... 27

3 History of OSS...............................................................................................................................29

3.1 Linux Operating System......................................................................................................... 29

3.2 Apache Webserver.................................................................................................................. 30

3.3 Netscape and the Mozilla Web Browser.................................................................................30

3.4 The Halloween documents......................................................................................................31

3.5 OpenOffice..............................................................................................................................32

3.6 JBoss Enterprise Application Server...................................................................................... 32

3.7 Eclipse Development Platform............................................................................................... 33

3.8 City of Munich decides for Linux...........................................................................................33

3.9 Microsoft's call-to-arms.......................................................................................................... 34

3.10 The SCO / IBM lawsuit........................................................................................................ 34

4 Engaging with the Open Source Community................................................................................. 36

4.1 Commercial OSS and Services............................................................................................... 36

4.2 Deploying OSS directly from online repositories..................................................................36

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4.3 Active Participation................................................................................................................ 37

4.4 Active Participation with leading function............................................................................. 38

4.5 OSS without community.........................................................................................................39

5 Global trends in OSS adaption....................................................................................................... 40

5.1 Europe.....................................................................................................................................40

5.1.1 Germany.......................................................................................................................... 405.1.2 Spain................................................................................................................................41

5.2 Asia......................................................................................................................................... 41

6 OSS from economic point of view................................................................................................. 43

6.1 Total Cost Of Ownership TCO...............................................................................................43

6.1.0.1 Possibilities and limits of TCO calculations........................................................... 436.1.1 Components of a TCO calculation..................................................................................44

6.1.1.1 Acquisition costs..................................................................................................... 446.1.1.2 Quality components.................................................................................................446.1.1.3 Administration.........................................................................................................446.1.1.4 User involvement ................................................................................................... 44

6.1.2 TCO - Summary..............................................................................................................466.2 Return on Investment (ROI) and Business Value...................................................................46

6.2.1 The decision.................................................................................................................... 496.3 Open source effect on value of software.................................................................................50

6.4 Devaluation of software..........................................................................................................52

6.4.1 Devaluation as a competitive advantage......................................................................... 526.4.1.1 Aggressive patent use.............................................................................................. 536.4.1.2 Monolithic Software ...............................................................................................536.4.1.3 Competition.............................................................................................................54

6.4.2 The OSS based business model for software vendors.................................................... 556.4.2.1 OSS and the Apple Mac OS X................................................................................ 56

6.4.3 How does Microsoft deal with devaluation of its software.............................................567 OSS and usability........................................................................................................................... 59

7.1 Approaches for better OSS usability.......................................................................................60

8 OSS examples and case studies .....................................................................................................62

8.1 Server Operating System: Linux ..........................................................................................62

8.1.1 SWOT analysis................................................................................................................628.1.1.1 Strength................................................................................................................... 628.1.1.2 Weaknesses:............................................................................................................ 638.1.1.3 Opportunities........................................................................................................... 638.1.1.4 Threats..................................................................................................................... 64

8.1.2 Linux Server summary and conclusion...........................................................................648.2 J2EE Application Server: JBoss ............................................................................................ 65

8.2.1 SWOT analysis................................................................................................................658.2.1.1 Strengths..................................................................................................................658.2.1.2 Weaknesses ............................................................................................................ 668.2.1.3 Opportunities........................................................................................................... 67

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8.2.1.4 Threats..................................................................................................................... 678.2.2 JBoss summary and conclusion...................................................................................... 67

8.3 Office Suites: OpenOffice ......................................................................................................68

8.3.1 SWOT analysis:.............................................................................................................. 688.3.1.1 Strengths..................................................................................................................688.3.1.2 Weaknesses ............................................................................................................ 688.3.1.3 Opportunities........................................................................................................... 698.3.1.4 Threats..................................................................................................................... 69

8.3.2 OpenOffice summary...................................................................................................... 698.4 Web browser: Mozilla ........................................................................................................... 70

8.4.1 SWOT analysis:.............................................................................................................. 708.4.1.1 Strengths..................................................................................................................708.4.1.2 Weaknesses ............................................................................................................ 708.4.1.3 Opportunities........................................................................................................... 718.4.1.4 Threats..................................................................................................................... 71

8.4.2 Mozilla summary and conclusion................................................................................... 718.5 ERP/CRM Software: Compiere .............................................................................................72

8.5.1 SWOT analysis:.............................................................................................................. 728.5.1.1 Strengths..................................................................................................................728.5.1.2 Weaknesses ............................................................................................................ 728.5.1.3 Opportunities........................................................................................................... 738.5.1.4 Threats..................................................................................................................... 73

8.5.2 Compiere summary and conclusion................................................................................ 738.6 Content Management Software (CMS): ez Publish ...............................................................74

8.6.1 SWOT analysis:.............................................................................................................. 748.6.1.1 Strengths..................................................................................................................748.6.1.2 Weaknesses ............................................................................................................ 748.6.1.3 Opportunities........................................................................................................... 748.6.1.4 Threats..................................................................................................................... 74

8.6.2 Ez Publish summary and conclusion...............................................................................759 OSS survey in Switzerland ............................................................................................................ 76

9.1 Expert interviews.................................................................................................................... 76

9.2 General observations...............................................................................................................81

9.2.1 Small, privately owned companies .................................................................................819.2.2 Larger enterprises ...........................................................................................................819.2.3 Internet service provider( ISP)........................................................................................ 829.2.4 Governmental organizations........................................................................................... 829.2.5 Educational institutions...................................................................................................83

10 Conclusions.................................................................................................................................. 84

10.1 Summary of advantages of OSS........................................................................................... 84

10.2 Summary of disadvantages of OSS.......................................................................................84

10.3 Possibilities for OSS............................................................................................................. 84

10.3.1 Governmental organizations......................................................................................... 8510.3.2 Educational Institutions.................................................................................................8510.3.3 ISP................................................................................................................................. 85

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10.3.4 Software Vendors..........................................................................................................8510.4 Limits for OSS...................................................................................................................... 85

10.4.1 Linux for the desktop.................................................................................................... 8510.4.2 OSS for niches.............................................................................................................. 86

10.5 First Steps for migrating to OSS...........................................................................................87

11 Bibliography................................................................................................................................. 89

11.1 Working papers.....................................................................................................................89

11.2 White papers......................................................................................................................... 90

11.3 Internet resources: ................................................................................................................90

11.3.1 Expert Interviews:......................................................................................................... 91

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List of Figures

Figure 1 IT sourcing value ................................................................................................................47

Figure 2 Total sourcing value............................................................................................................ 48

Figure 3 Open source effect on value of software as function of time..............................................51

Figure 4 Resource allocation correlated to value delivery.................................................................55

Figure 5 OSS popularity in Switzerland............................................................................................76

Figure 6 OSS at Swiss companies and organizations........................................................................77

Figure 7 OSS advantages...................................................................................................................77

Figure 8 OSS disadvantages............................................................................................................... 78

Figure 9 OSS trends............................................................................................................................78

Figure 10 Linux on the desktop..........................................................................................................79

Figure 11 OSS knowhow...................................................................................................................79

Figure 12 SCO / IBM lawsuit............................................................................................................80

Figure 13 OSS and IT costs savings.................................................................................................. 80

Figure 14 IT cost analysis..................................................................................................................81

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List of Tables

Table 1 OSS Licenses........................................................................................................................20Table 2 TCO cost components.......................................................................................................... 45

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Abbreviations

FLOSS Free / Libre / Open Source Software

FOSS Free and Open Source Software

FS Free Software

FSF Free Software Foundation

FUD Fear, Uncertainty and Doubt

GNU GNU is Not Unix

GPL General Public License

IDE Integrated Development Environment

IE Internet Explorer

ISV Independent Software Vendor

LPGL Lesser General Public License

MFC Microsoft Foundation Classes

MPL Mozilla Public License

NDA Nondisclosure Agreement

OSI Open Software Initiative

OSS Open Source Software

OSD Open Source Definition

OSI Open Source Initiative

ROI Return on Investment

SLA Service Level Agreement

TCO Total cost of Ownership

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Preface

I became interested in open source software in summer 2000. As software engineer, I had to

customize applications to fulfill the requirements of customers. I discovered that Linux and other

open source software offered possibilities for customization far beyond what comparable

proprietary software offered. During the next years I used open source software personally and

professionally wherever it made sense. And I learned that often it did not make sense, neither form

economic nor from usability point of view.

This thesis was written in summer 2003, as word processor I used the open source software

OpenOffice1.

Acknowledgments

I would like to thank my supervisor, Dr. Helmut Steigele, for all the help I received over the

research. Had not been for his guidance, this paper would not have materialized.

I also wish to thank my wife, Rosemary, for inspiring me, motivating me and for pushing me to get

work done in time.

And finally a very special thank to all those IT professionals who shared their experience and

valuable insight with me by accepting to be interviewed.

1 For further information about OpenOffice visit http://www.openoffice.org, accessed: Aug. 28, 2003

viii

1 IntroductionMany enterprises are struggling to find a solution that will help them control costs and remain

competitive. One approach many IT managers are investigating is the inclusion of open source

technologies as a key part of their overall IT strategy to reduce licensing fees and operating

expenses.

During the last decades, open source software was more of academic than economic importance.

But things have changed. These days everyone is talking about Linux and open source software.

Business analyst Chistopher Koch believes2, that CIOs who will not develop an open source strategy

in 2003, will be paying too much for IT in 2004. Linux got adopted by big companies like IBM and

Oracle. Many enterprises and governmental organizations are cutting costs, gaining flexibility and

discovering powerful new sources of business value with open source software. On the other hand,

IT costs often are dominated by service and consulting fees and not by license fees.

The objective of this paper is to identify the possibilities and limits of OSS at the enterprise and to

analyze how companies and organizations can benefit from OSS.

This paper addresses the following question.

• Beside of license costs savings, what are the other benefits of OSS ?

• In what cases OSS solutions are more expensive than proprietary solutions ?

• What industries or type of organization do benefit most by choosing an OSS solution ?

• What needs to be considered when migrating proprietary software to open source ?

• What are the advantages and disadvantages of software solutions which consists of proprietary

and open source components ?

• What are the possible business models based on OSS ?

• Is the common belief that volunteers are developing OSS for free still valid in the context of

professional OSS at the enterprise level.

• How do vendors of proprietary software react to the threat from OSS ?

• Will there still be a market for OSS, if proprietary software is getting better and cheaper ?

• Is Linux ready for the desktop ?

2 CIO Magazine, Issue Mar. 15, 2003, http://www.cio.com/archive/031503/opensource.html, accessed: Aug. 28, 2003

11

In examining these questions, this paper discusses existing relevant research, presents examples and

case studies of popular open source projects. Theories about business models and cost analysis will

be applied to the concept of OSS.

Beside of the the theoretical analysis, IT managers of more than 20 companies and organizations in

Switzerland have been interviewed. The summary and the statistical results of the experiences of

these IT managers are an integral part of this paper.

Finally recommendations are presented, how companies and organizations can benefit from OSS or

when OSS should be avoided. An example of an action plan is presented, with all the initial steps,

which should be followed when deciding for the OSS path.

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2 What is Open Source SoftwareBefore exploring the characteristics of OSS, an attempt is made to locate software development as

such in the larger picture of the IT industry and its history.

The evolution of the computer industry has been driven by the emergence of standardized platforms

which allow modular substitution of complementary assets such as hardware and software3. In the

early years of the IT industry, software was provided by the manufacturer of the hardware, and it

was only running on the hardware of its manufacturer. A big step towards standardization was the

emerge of hardware independent operating systems – Unix and Windows – which shifted platform

control form hardware manufacturers to operating system vendors. While Windows has always been

under full control of a single company – Microsoft – the Unix operating system had many variants,

some of them developed and maintained by academic institutions, other variants were under control

of commercial companies. The Unix operating system also inspired to a more radical shift of

platform and vendor independence, the open source movement which represents a new software

development methodology and licensing model.

The are many differences between proprietary closed source software and OSS. The most

significant ones are the availability of the source code and the development model of OSS, which is

community based. Today OSS software is associated with the following characteristics, some of

which are usually not found in commercial closed source software:

• Control resides with the user

• High security

• End-user input to evolving functionality

• Highly flexible

• No or comparable small license fees

• No vendor lock-in

• Self-determined upgrade path

• Can run on less expensive hardware

• Very cost-effective

• Freedom of vendor choice

• Fast development cycles

• Ongoing evolution

3 West, J., How Open is Open enough ?, 2002, P.2

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2.1 Myths and realitiesThere exists a common belief that open source software is developed by alternative, beard

individuals who represent the classical computer freak or “hacker”. That might have been true in a

general sense when the first open source projects emerged at the horizon. Today open source

software became professional and the businesses built around open source became conventional

ones. Many important open source projects are sponsored by commercial companies like IBM4 and

SUN5. There are successful OSS projects which are under the control of commercial companies

grown up with an open source project. An example which is analyzed later in this paper is the open

source project JBoss, controlled by its commercial entity JBoss Group6.

Another myth is that OSS must be necessarily for free. The availability of the source code does not

imply that. There are many commercial software products which ship with source code, but for

commercial use of the software, a license fee must be paid. One example is Resin, a Java based

software for serving dynamic generated Web pages. Caucho7 , the company behind Resin lets

everybody download source code and binaries8 of their software product. The license however

states that one may use the software to develop, evaluate, and demonstrate applications, but it is not

allowed to use it if one is paid to use the software or is paying anyone else to use the software.

There exists a common belief that open source is the same as Public Domain. This happens simply

because the idea of open source is confusing to many people, and they describe these programs as

public-domain because that's the closest concept that they understand. The programs, however, are

clearly copyrighted and covered by a license, just a license that gives people more rights than they

are used to.

Many people claim that OSS usually is not user friendly. This seems to be true, with some

exceptions. The explanation can be found in the nature of the OOS developers. They are experts in

providing functionality, but they give little priority to software ergonomics. User experience often is

related with the graphical appearance and quality of documentation of the software. And OSS often

lacks in both of the areas, because OSS projects which do not have a straight commercial

background usually do not have graphical artists and technical writers in the team of volunteers and

budget does not allow to outsource these tasks9. However there are exceptions, for example Mozilla

4 IBM donated the eclipse development platform to the OSS community. See chapter 3.75 SUN donated StartOffice to the OSS community, see chapter 3.56 Fleury, M., Why I love Professional Open Source, JBoss Group LLC, 20037 For further information about Caucho and its license strategy visit http://www.caucho.com 8 Binaries: executable code, as result of compiling the source code during the software development process9 Nichols, D. M., Twidale, M.B., Usability and Open Source Software, University of Waikato, 2002, P.5

14

Firebird10, a streamlined open source web browser which is comparable to commercial browsers like

Internet Explorer from Microsoft in regard to usability. Most of the successful and widely used OSS

is targeted to the server side, where the aspect of usability is less relevant compared to stability and

performance.

2.2 Free and Open Source Software FOSSOpen source originates from free software. Free does not mean that the software is without cost.

The word “free” in this context is about freedom – meaning the freedom to copy, modify and

distribute the software11. While OSS is a general term, which basically implies the availability of the

source code, and which does not exclude commercial variants of OSS, like dual licensed code,

which must be purchased for commercial use, FOSS explicitly states that the software has to be

available for free. Usually the terms free software, FOSS and OSS have the same meaning. Another

variant which sometimes can be found in literature when referring to open source, is Free / Libre

Open Source Software FLOSS. In some countries the terms FOSS or FLOSS are more popular than

OSS. Sometimes only the inspection of the software license reveals, whether it is free software /

FOSS or just OSS.

2.3 Open Source DefinitionThere exist many license forms under which OSS is distributed. The Open Source Initiative OSI12 is

a non-profit organizations founded by Eric S. Raymond to promote open source software and

development strategies. The OSI created the Open Source Definition OSD which is more complex

than just its most important point, making the source code available. The OSI definition is very

much in the spirit of copyleft. but nor as orthodox13. The definition allows mixing between open

source and proprietary software and use and redistribution of OSS without compensation or even

credit. Distribution of open-source software must comply with the following criteria14:

1. Free redistribution

“The license shall not restrict any party from selling or giving away the software as a component

10 For further information about Mozilla Firebird web browser visit http://www.mozilla.org, accessed: Aug. 28, 2003

11 Fink, M., The Business and Economics of Linux and Open Source, P.3612 The official website of the Open Source Initiative is available at http://www.opensource.org, accessed: Aug. 28,

200313 Sandred, J., Managing Open Source Projects, P.4714 Open Source Definition, Version 1.9. Available at http://www.opensource.org/docs/definition.php, accessed:

Aug. 28, 2003

15

of an aggregate software distribution containing programs from several different sources. The

license shall not require a royalty or other fee for such sale”

It is common for providers of OSS to charge a fee for the media, the manuals and support

offerings. This provision usually results in free or low-cost software.

2. Source Code

“The program must include source code, and must allow distribution in source code as well as

compiled form. Where some form of a product is not distributed with source code, there must be

a well-publicized means of obtaining the source code for no more than a reasonable

reproduction cost–preferably, downloading via the Internet without charge. The source code

must be the preferred form in which a programmer would modify the program. Deliberately

obfuscated source code is not allowed. Intermediate forms such as the output of a preprocessor

or translator are not allowed.”

Since the purpose is to make evolution of OSS easy, modification of the source code must be

made easy. Accessing obfuscated15 source code makes modification of OSS more difficult.

3. Derived Works

“The license must allow modifications and derived works, and must allow them to be distributed

under the same terms as the license of the original software.”

For rapid evolution of OSS, the ability to read source code is not enough. Developers need to be

able to redistribute modifications.

4. Integrity of the authors source code

“The license may restrict source-code from being distributed in modified form only if the license

allows the distribution of "patch files" with the source code for the purpose of modifying the

program at build time. The license must explicitly permit distribution of software built from

modified source code. The license may require derived works to carry a different name or

version number from the original software. “

In the normal process of development, within the open source community, the main source code

is usually controlled by a “maintainer”. There may be cases where the maintainers rejects

changes to the official source tree16. With patches plus the base source code, there exists a way to

make available unofficial modifications.

15 The only purpose of obfuscating source code is to make the source more difficult to read.16 Software projects usually have their different versions of source coded organized in an hierarchical tree.

16

5. No discrimination against person or groups

“The license must not discriminate against any person or group of persons.”

This provision prevents an open source licensor form controlling or limiting the way the software

is used.

6. No discrimination against fields of endeavor

“The license must not restrict anyone from making use of the program in a specific field of

endeavor. For example, it may not restrict the program from being used in a business, or from

being used for genetic research.”

The clause is intended to prohibit license traps that prevent open source software form being

used commercially.

7. Distribution of license

“The rights attached to the program must apply to all to whom the program is redistributed

without the need for execution of an additional license by those parties.”

The intention of this clause is to forbid closing up software by indirect means such as requiring a

Nondisclosure Agreement NDA.

8. License must not be specific to a product

“The rights attached to the program must not depend on the program's being part of a

particular software distribution. If the program is extracted from that distribution and used or

distributed within the terms of the program's license, all parties to whom the program is

redistributed should have the same rights as those that are granted in conjunction with the

original software distribution.”

For example, OSS cannot be limited to use with Linux.

9. The License Must Not Restrict Other Software

“The license must not place restrictions on other software that is distributed along with the

licensed software. For example, the license must not insist that all other programs distributed on

the same medium must be open-source software.”

This clause encourages companies to distribute OSS and proprietary software an the same

distribution medium.

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10.The license must be technology neutral

“No provision of the license may be predicated on any individual technology or style of

interface.”

The clause is intended to prohibit OSS to rely on any specific distribution mechanism.

2.4 OSS LicensesThe following licenses all have been approved to comply with the OSI Definition. A copyright

owner can license his software under more than one license. This allows software developers to sell

commercial versions of OSS. Following an outline of some of the most popular licenses that have

been approved by the OSI:

2.4.1 General Public License (GPL)17

This is one of the most used licenses within OSS, because Linux is licensed under GPL. It is also

the most restrictive license. The license requires that any modifications or additions to GPL-ed

software also to be licensed under the same terms. That means that any software which is derived

from GPL-ed software must be distributed with an accessible copy of the source code. This makes

difficult for software developers to to profit financially form distributing GPL-ed software. But of

course developers can dual license their software. While Linux itself is pure GPL, many other

software that runs under Linux is dual licensed. For example the ReiserFS18. It is used by the Linux

operating system under the provisions of the GPL. But Hans Reiser, the developer of ReiserFS does

also license his file system under a commercial license, for which royalties must be paid, and which

does not contain restrictions like the necessity to make the source code of the the software product

available and therefore it is better suited for integration into commercial software19.

2.4.2 Lesser General Public License LGPL20

The LGPL is less restrictive than the GPL. Closed sourced software can use LPGL-ed software

without being turned automatically into GPL and its requirement make the source code available.

That means on the one hand it gives the copyright owners less protection, on the other hand it might

encourage the widest possible use of LGPL-ed software. However, modifications to the LGPL code

itself must be returned to the copyright owner of the original LPGL code, if the modified version is

17 GNU General Public License, http://www.gnu.org/copyleft/gpl.html, accessed: Aug. 28, 200318 ReiserFS is a filesystem for Linux, which provides fast recovery after a system crash and other advantages. More

information available at http://www.namesys.com, accessed: Aug. 28, 200319 Fink, M., The Business and Economics of Linux and Open Source, P.4120 GNU Lesser General Public License, available at http://www.gnu.org/licenses/lgpl.html, accessed: Aug. 28, 2003

18

distributed. This is particularly interesting for libraries and frameworks. The LGPL license

facilitates common used libraries and frameworks to become de-facto standard. Many open source

projects have chosen the LPGL because it is a good compromise between protecting the copyright

owners and their work, but still allowing to use LGPL-ed software for commercial purpose. An

examples of a popular open source project using the LPGL license is the JBoss21 Java application

server.

2.4.3 Mozilla Public License MPL22

This license was created 1998, when Netscape decided to release all the source code of its Netscape

Web browser. The popular Mozilla web browser is derived form that code base. The MPL was the

first commercial open source license, and many other software licenses from commercial companies

are derived form the MPL license.

2.4.4 BSD License23

This license is even less restrictive than the LPGL license. The license allows to take BSD code,

modify and distribute the changes, without requiring to publish the source code of the

modifications. The BSD license allows developers to make the code private and than to distribute

it under a proprietary license.

2.4.5 Apache Software License24

The Apache web server is the most popular example of OSS released under the Apache Software

license, which is very similar to the BSD license. The major difference is the fact that the Apache

trademark is not licensed along with the software. By modifying and distributing modified versions

of the Apache code, the changed software cannot be called “Apache” anymore.

2.4.6 Public DomainIf software is public domain, the creator has transferred ownership of that software to the public25.

Public domain software comes without a formal license, and whoever downloads and uses it, can

treat it as his personal property, and do what he wants with a public-domain program. One can even

re-license a public-domain program, removing that version from the public domain and also

21 More information about JBoss at chapter 3.622 Mozilla Public License Version 1.1 available at http://www.mozilla.org/MPL/MPL-1.1.html, accessed: Aug. 28,

200323 The template for the BSD License is available at http://www.opensource.org/licenses/bsd-license.php, accessed:

Aug. 28, 200324 Apache license available at http://www.apache.org/licenses/LICENSE, accessed: Aug. 28, 200325 Sandred, J., Managing Open Source Projects, P.39

19

removing the original author's name.

When using and modifying public domain software, it should be considered to apply ones own

copyright to the program and re-license it. The original version will still be in the public domain,

but the modified version will be under a license that others must heed if they use it or derive from it.

2.4.7 OSS License SummaryTable 1 presents a summary of the most popular OSS Licenses. There exist currently more than 40

OSS licenses approved by the OSI.

License Can be mixed

with

non-free software

Modifications can

be taken private

and not returned

to original

copyright holder.

Can be re-licensed

by anyone

Contains special

privileges for the

original copyright

holder over your

modificationsGPL no no no noLGPL yes no no noBSD yes yes no noMPL yes yes no noPublic Domain yes yes yes no

Table 1 OSS Licenses

Most commercial companies which release source code, create there own license. Some companies

let approve these license by the OSI.

2.4.8 Non-Open Source licensesThere are few licenses which allow access to the source code but which do not comply with the

Open Source Definition. These non-open source licenses have been created to solve very specific

business issues. Most of this non-open source licenses belong to one of the following categories26:

1. The copyright owner wants to give the unrestricted ability to the user to debug27 an application

which depends on a library. For example, Microsoft ships source code to most of its foundation

classes MFC, which are used to develop Windows applications.

2. The software developer or company does not own all the rights. In such cases, even if it would be

26 Fink, M., The Business and Economics of Linux and Open Source, P.5027 Debugging an application, in this context, means to observe with the help of a software tools in real time each

step of a running application at source code level.

20

admirable to apply a real open source license, there are restrictions which prevent form doing so

because of contracts with other parties.

3. The software developer or company wants feedback from customers or the development

community without giving up intellectual property rights. If a company wants to let their code

peer review by the developer community, but the business model of the company is dependent on

the the software license revenue, than this type of license may be appropriate. The Microsoft

Shared Source License28 falls into this category. This license is most often used for software

components which are running on non standard devices such as operating systems for handheld

computers. The Shared Source License provides no redistribution rights and Microsoft gains all

the rights for bugfixes or enhancements a developers makes.

2.5 OSS and intellectual propertyThe following section categorizes software in general from the view point of intellectual property

and its related legal issues:

1. Open Source Software29

Briefly: the software is delivered with the source and the user can do with that software what

ever he wants, including redistribute it and selling it. The only restrictions, which depend on the

open source license, might be the requirement to provide the source code when redistributing or

to give back modifications of the software to the license owner.

2. Proprietary Software which is not protected by patents

This kind of closed source software provides a functionality which can be imitated by other

software. With other words, this kind of software is open to re-engineering. A typical example

are file formats. Some companies have released the specification of proprietary file formats to

facilitate the interoperability with other software. An example is Macromedia, which has released

the specification of its Flash vector file format30. An example of a protocol which has been kept

secret, but third party developers managed to re-engineer, is the Microsoft network filesystem

protocol SMB. The result of this re-engineering effort by OSS developers is Samba31, a popular

28 Microsoft Shared Source Licenses available at http://www.microsoft.com/resources/sharedsource/Licensing/default.mspx, accessed: Aug. 28, 2003

29 OSS as defined by the Open Source Definition OSD.30 The Macromedia Flash file format specification is available at:

http://www.macromedia.com/software/flash/open/licensing/fileformat/license.html, accessed: Aug. 28, 200331 For further information about the Samba open source project visit http://www.samba.org, accessed: Aug. 28,

2003

21

Linux project. Samba allows sharing files between a Linux and Windows computer over a local

network. Microsoft has not taken any legal actions against Samba so far, however there are parts

in the Microsoft network filesystem protocol which are protected by patents32, but which are

currently not used by the Samba project.

3. Proprietary Software protected by patents

The least open kind of software is entitled to patents. The patent owner can prevent anyone else

from using it and the idea and/or method behind it - unless they get permission, which usually

means paying a royalty fee.

Unfortunately most patents go beyond that - they can put controls on the process that software

allows to happen. A example is Amazon.com and its One-Click patent33. Amazon thought it

would be a good idea to allow its customers to click just one button to buy a book, rather than

have to go through various screens confirming their credit card, address, delivery etc.

It was a very good idea but not a huge leap in imagination. The tough part was writing software

that provided the functionality. Amazon.com patented the one-click idea, for allowing them to

take legal actions against competitors from offering the same thing - even if the code was written

from scratch. Barnes & Noble was prevented from offering a one-click option until the two

settled years later out of court. Amazon still holds the patent.

Patents exist for a very good reason. Let's take pharmaceutical companies for example. It costs

billions to develop and test new medicines until a commercially feasible one is found. Without a

patent on this, competitors would be able to copy the drug and benefit from the other company's

research and development. It is easy to imagine that without this protection, there would be no

new drugs. One of the major arguments for software patents is the protection of investment. This

encourages companies to spend money developing new ideas. This argument is simple and easily

explained and lawyers instinctively understand it.

The counter-arguments are more complex. The strongest one is that software works by building

on top of other software. Patenting aspects of software breaks down the process by which new

software is created.

Another very strong argument is the huge success built on top of common, patent and royalty-free

standards. The Internet is so successful because there weren't constraints or patents on it. Due to

this, it has grown hugely, created new markets and so benefited everyone.

32 Howorth, R., Samba avoids patents costs, IT week, Issue 03-05-2002, available at http://www.itweek.co.uk/News/1131485, accessed: Aug. 28, 2003

33 For further information about Amazon's one click patent visit http://swpat.ffii.org/patente/wirkungen/1click/index.en.html, accessed: Aug. 28, 2003

22

2.6 The Open Source CommunityOSS is not different than any other kind of Software, not technically at least34. The most important

issue in open source development is organizational35. In the broadest sense, an open source

community includes everyone who uses OSS. However, many users of OSS are passive consumers,

they do not actively contribute to the evolution of an OSS project by posting questions on mailing

lists, participating in online discussions, posting bug reports or developing and contributing source

code. For the purposes of this paper, the author refers to the active open source community when

using the term open source community. Each OSS project has its community. An individual open

source community is characterized as a loose association of people who have a common interest in

developing and using a particular piece of software. These people are typically geographically

dispersed, communicating via email and instant messaging and using various open source

development tools in order to collaborate on the software that they are jointly developing, testing,

using, and improving.

Eric S. Raymond has pointed out that the OSS development approach violates many of the well

established ideas in software engineering36. He introduced the concept of the “cathedral” and the

“bazaar”. He associates the traditional, corporate, closed source methods to the “cathedral” model

and the open source development process to the “bazaar” model.

Questions which can be found at most academic papers, that try to analyze the phenomena of OSS

are:

• Why do programmers write Open Source codes if no one pays them to do it?

• How do hundreds of developers located all over the world and without hierarchical structure

based on the ownership of the developed product manage to coordinate each other ?

Menzolas Tzouris articulates in his research about the motivation of people to contribute to open

source projects37: “When open source programmers volunteers their time into writing code for an

FS/OSS project, they freely give away the code they write for the good of the FS/OSS community; at

the same time, they benefit from of the contributions of others within this community by getting

really good software, and so the whole movements benefits and grows.”

34 Tzouris, M, Software Freedom, Open Software and Participant's Motivations, The London School of Economics and Political Science, 2002. P. 9

35 Sandred, J., Managing Open Source Projects, P.7336 Raymond, E.S. The Cathedral and the Bazaar, 1999, O'Reilly, Sebastopol, CA.37 Tzouris, M, Software Freedom, Open Software and Participant's Motivations, The London School of Economics

and Political Science, 2002, P. 43

23

There is also a strong relationship between the academic world and the OSS movement. Many

successful OSS projects have an academic origin. Developing OSS is often part of scientific

research, and motivation to invent something new or improve something existing, is a driving force

for developing OSS. And the interchange of ideas without restrictions of intellectual property

protection for the benefit of all involved and not involved parties is common to academic research

and development of OSS.

Some people see writing code as an art. And the more independence an artist has, the better are his

results. Under the umbrella of OSS, code artists enjoy independence and they reach a large

audience, what is another motivating factor.

Those who contribute to an open source community typically are not compensated financially

within the community for their work. Members join the community because they have an

intellectual interest in the software or because they have an association with some other

organization that is interested in or actively using the software. However, many open source

community members are paid for their work directly by those enterprises that employ them, and

their contributions to the community are simply made in the course of their normal employment.

Intangible status and rewards within an open source community invariably come as a result of

contributing significantly to the software developed by the community.

Most successful open source projects display a clear hierarchical organization, but the roles within

the hierarchy are are not strictly assigned since the beginning38. The leadership deeply influences the

evolution of the project, but does not have to carry out the bulk of coordination effort, that would be

necessary within a comparable corporate closed source project. Members of the open source

community typically choose for themselves what piece of programming or other development tasks

they will work on, depending on their interests and skills.

Typically one or more senior members of the community will organize a prioritized list of things

that need to be done, but it is up to the individual members to choose their own self-assignments. It

is considered good form to work on tasks from the prioritized list; consequently the recognition is

greater for those who cooperate with the agreed-upon priorities. Most open source communities are

fairly cooperative, but members are free to contribute however they wish.

There is typically a group of core developers who write the most formidable constructs and

algorithms. A larger peripheral group of less committed developers often exists that contributes

interfaces, subroutines, device drivers, and the like. Some members may focus their efforts on

38 Bonnacorsi, A. Why Open Source can succeed, Sant' Anna School of Advanced Studies, Pisa, 2003

24

functional or performance testing, while others might write documentation. Perhaps the largest

group are the involved users who contribute bug reports and feature requests. Everyone involved is

free to make comments, argue for one approach over another, and generally discuss the direction

and technical details of the software under construction. Peer recognition, honest and direct

criticism, and the weight of one's own reputation among other members of the community combine

to make these open source communities self-regulating.

2.6.1 Development ModelBecause the members of open source communities are usually geographically dispersed,

communicate almost exclusively by email and other Internet enabled electronic means, and typically

haven't ever met each other face-to-face, the socio-economic hierarchies of the physical world don't

apply in cyberspace. Therefore corporate position, economic status, and formal education don't

interfere with the meritocracy of open source communities. The factors that matter in open source

development projects are raw coding talent, incisive logic, hard work, and attention to detail. Most

programming members of open source communities compete with each other in a collaborative way

through their ideas, arguments, and especially their software submissions. Concepts and solutions

that are clearly superior win out through the consensus of critical, multi-level peer review and

rigorous testing in a wide variety of different software and platform environments. Over time, those

developers who consistently devise more elegant, complete, and better performing solutions gain

well deserved peer recognition, stature within the project, and more responsibility in their own

assignments as well as for reviewing the work of others. Since a very talented software developer

can be substantially more productive and efficient than the average developer, this might have a lot

to do with why open source communities can be more effective than proprietary software

corporations and most independent in-house software development organizations.

With OSS any teenager with a personal computer and an Internet connection can compete - on a

level playing field - with seasoned systems development professionals in academia and industry.

Another characteristic of open source development is vigorous criticism. It's well known that email

communications often lack the tact of personal interactions. Any open source developer who

submits a badly formatted and gratuitously complicated, spaghetti-code module or patch to the

maintainer of an open source project, gets publicly criticized within the community. Corporate

programming managers cannot get away with such enthusiastic correction of subordinates in

modern office environments with strictly enforced human resource policies. But open source

contributors are all volunteers, so they either work up to the standards of their peers, or drop out,

and someone more able takes their place. Open source communities are very capable of enforcing

25

high standards among their contributors, either quickly training or losing any poor performers.

2.6.2 The Source Code RepositoryOpen source projects need a physical server or to store ans organize the source code, to host the

project website and mailing list. If the project is sponsored by a commercial company, than this

company usually also provided the web and mail server. Most oft the independent open source

projects are running on SourceForge39, a code repository which hosts more than 50 000 open source

projects. SourceForge provides collaboration and project management tools for free. Everybody can

start the development of an open source project at SourceForge.

2.6.3 Software QualityOpen source communities typically follow a philosophy of "release early and often"40 with daily

build releases of the software within the community not uncommon. External releases are made on a

schedule dictated by the relative maturity, level of bug-free quality, and functional stability of the

software. Members of the community continually review the current build level of the software as

well as designs, testing scaffolds, test results, documentation and other information contributed

within the community.

Another piece of Open Source philosophy is characterized as "many eyes make all bugs shallow."41

The continual review process used by open source communities produces a "many eyes" effect of

massively parallel peer review that has been demonstrated to produce very high quality oversight of

the software development process and products. Constant, repetitive peer review, coupled with a

release schedule tied to objective software quality rather than marketing deadlines, consistently

results in open source software quality orders of magnitude higher than that of commercial releases

of similar software.

Open Source software is constructed primarily by those who want to use it, so they don't release it

until they're satisfied that it's usable by the majority of the user community involved, that is, when

it's done.

39 Open source code repository SourgeForge is available at http://www.sourgeforge.net, accessed: Aug. 28, 200340 Fink, M., The Business and Economics of Linux and Open Source, P.5641 Raymond, E.S., The Cathedral and the Bazaar, O'Reilly, Sebastopol, CA, 1999

26

2.7 OSS and the InternetThe Internet as it has evolved over the years and as we know it toady, is tight together with OSS.

The following list shows that there would have been no Internet without the following examples ,

which opened the path and most of them still play a dominant role:

• Domain Name Server - The most visible element of the Internet are domain names. All this

domain names are mapped to IP addresses. This mapping called Domain Name Service (DNS) is

provided by nameservers. The most popular nameserver software is BIND42, an open source

software for Unix servers developed during the early years of the Internet at Berkeley University.

Any other nameservers software has just a marginal market share.

• E-mail Server - The most popular software for E-mail servers is Sendmail43. It has come to age,

it was first released more than 20 years ago. Eric Allman, one of the main developers has built a

for profit organization around Sendmail. Initially Sendmail had many bug and security issues, but

it has matured and today Sendmail still processes about three quarters of all Internet mail.

• Web Server - The most popular web server with a market share of 64% is Apache44.

2.7.1 The Internet as driving force behind OSSThe Internet is a low cost standard which allows fast interactivity, acts as cheap information

distribution channel and reduces information asymmetries between transacting parties. It is the

perfect environment for developing OSS projects and products. The Internet as cheap way for

information distribution made it possible, for OSS, to be developed and maintained in the form of

distributed collaboration and to be distributed at very low cost.

2.8 OSS and Digital MediaFree availability of information and information based products is a topic of hot discussions since

the Internet has become commercial. An example which is source of lots of controversial discussion

is distribution of digital media. Millions of users are exchanging illegally over peer-to-peer

networks like Kaaza45 music files and digital movies. But, the RIAA has started to file subpoenas

against some of these files sharers. Because user demand for easy and cheap access to digital media

is high, many new services like iTunes46 from Apple emerged, to offer MP3 songs for purchase and 42 For further information about BIND visit http://www.isc.org/products/BIND, accessed: Aug. 28, 200343 For further information about Sendmail visit http://www.sendmail.org, accessed: Aug. 28, 200344 For further information about the Apache Webserver see chapter 3.2 of this paper45 For further information about the Kaaza file sharing system visit: http://www.kaaza.com, accessed: Aug. 28, 200346 For further information about the Apple iTunes visit: http://www.apple.com/itunes, accessed: Aug. 28, 2003

27

legal download.

Beside of the online availability, which OSS and digital entertainment media have in common, there

are fundamental differences between these two types of digital information. First there are licensing

differences. OSS comes with a license, which exactly states what one is allowed to do with the

downloaded product. OSS is usually much more complex than digital content, and has an extended

life cycle and requires often large amount of interaction with the end user. A major difference

between OSS and other digital information available on the Internet is the life cycle of OSS, which

usually is tied to the Internet from its very first idea appearing on mailing-lists, to the actual

development of the software in an collaborative approach, to the distribution. OSS development

process might represent the process of global collaboration between individuals, something which

can be applied to other activities than software development.

28

3 History of OSSIn the early days of computing, software was only available together with hardware. Otherwise the

hardware would simply not operate without it. In the 1980s commercial Unix Systems47 dominated

the computer industry. It was at that time when people started to write free available and

distributable UNIX imitations48. One of them was Minix, developed by Andrew Tannenbaum.

Another popular Unix imitation was BSD developed at the University of Berkeley in California. I

later formed the basis of Solaris, Sun Microsystems Unix operating system.

In the 1980s Richard Stallman founded the Free Software Foundation49 which served as vehicle for

making real his vision of an open source operating system. At that time, Stallman developed an

editor called EMACS (which is still the favorite editor for many software developers today).

Stallman gave away the editor including the source code for free, but charged $150 for actually

making the copies and for providing support. He asked to sent back to him all modifications and

improvements. In this way he developed the model of the GPL license, which is described in detail

in the further on. More and open source tools which run on top of any Unix implementation and

which are paving the road toward an open source Unix like operating system were developed by

Stallman and the community. These tools are known as the GNU tools and every Linux Distribution

today contains a significant amount of this GNU tool. The term GNU itself comes from “GNU is

Not Unix”

3.1 Linux Operating SystemWhile Richard Stallman had started to create tools for his vision of a new open source operating

system, and left the kernel itself to last, another geek, the finish student Linus Torwalds started in

the early 1990s to develop a a UNIX kernel. When Torvalds released version 0.01 of Linux, he

announced his project to the comp.os.minix newsgroup:

From: torvalds@klaava.Helsinki.FI (Linus Benedict Torvalds)Newsgroups: comp.os.minixSubject: What would you like to see most in minix?Summary: small poll for my new operating systemMessage-ID: <1991Aug25.205708.9541@klaava.Helsinki.FI>Date: 25 Aug 91 20:57:08 GMTOrganization: University of HelsinkiHello everybody out there using minix -I'm doing a (free) operating system (just a hobby, won't be big andprofessional like gnu) for 386(486) AT clones. This has been brewing

47 Sandred, J., “Managing Open Source Projects”, P.6-1448 Rosenberg, Donald K., Open Source: The Unauthorized White Papers, 2000, P.1249 Free Software Foundation, Internet: http://www.fsf.org, accessed: Aug. 28, 2003

29

since april, and is starting to get ready. I'd like any feedback onthings people like/dislike in minix, as my OS resembles it somewhat(same physical layout of the file-system (due to practical reasons)among other things).I've currently ported bash(1.08) and gcc(1.40), and things seem to work.This implies that I'll get something practical within a few months, andI'd like to know what features most people would want. Any suggestionsare welcome, but I won't promise I'll implement them :-)Linus (torvalds@kruuna.helsinki.fi)PS. Yes - it's free of any minix code, and it has a multi-threaded fs.It is NOT protable (uses 386 task switching etc), and it probably neverwill support anything other than AT-harddisks, as that's all I have :-(.

Torvalds used and integrated the GNU Tools into Linux. While Linus Torvalds was the Linux

project administrator, many hundreds people form all over the world provided feedback, help, and

support. The Internet made for the first time in history such a joint effort of an open source project

possible. 1994 the version 1.0 of the Linux kernel was released. Over 120000 programmers have

been contributing to Linux about 2 billion dollars worth of labor50.

3.2 Apache WebserverThe most popular web server is an open source software called Apache51. The name comes from its

early days, when it was called a “patchy” server52. It was the begin of the Internet era. The most

common browser was the Mosaic from NCSA (National Center for Supercomputing Applications at

the University of Illinois, USA). They also provided a server for it, which later served as the base

for the apache webs server. 1995 the apache group was formed, a on-profit organization to unify the

development effort for the apache web server. Today apache organization hosts beside of the

Apache web server also many other open source projects53. An interesting fact is that most of the

contributors of apache projects are officially employed at commercial companies like SUN and

IBM. But because apache projects are mainly frameworks and not end user products, even

competing companies benefits from joint development efforts on a open source base.

3.3 Netscape and the Mozilla Web BrowserDeveloped at the NSCA just for the fun of programming, the Mosaic Browser was the first tool

which made the Internet easy accessible for everyone54. Netscape founder Jim Clark recognized the

potential of the mosaic browser and hired the original Mosaic crew to create the Netscape Browser.

50 Kenwood, C. A., A Business Case Study of Open Source Software, Mitre, 200151 The Apache web server has a worlwide market share of 64% according to netcraft statistics:

http://news.netcraft.com/archives/web_server_survey.html, accessed Aug. 28, 200352 Rosenberg, Donald K., Open Source: The Unauthorized White Papers, 2000, P.3253 For further information about Apache open source projects visit http://www.apache.org, accessed Aug. 28, 200354 Rosenberg, Donald K., Open Source: The Unauthorized White Papers, 2000, P.28

30

The codename of the project was Mozilla (a monster to destroy Mosaic). In the meantime Microsoft

also had done its homework. They licensed NCSA Mosaic Browser and studied its functionality and

eventually produced their own browser which they delivered together with their operating system.

The browser war between Netscape and Microsoft started and Microsoft won the battle. Netscape

market share dropped to 20%. After having won the browser war, Microsoft stopped improving

their browser technology. After being bought by AOL, Netscape also stopped to innovate their

browser technology. However they released the source code of their browser, and the project was

called Mozilla again (this time Microsoft was the enemy). Today the Mozilla browser offers

advanced features like tabbed browsing which are available for the Internet Explorer only as plugins

from third party vendors55. Only the future will show whether there will be a round two of the

browser war.

3.4 The Halloween documentsIn October 1998, a confidential memorandum on Microsoft's strategy against Linux and OSS in

general was leaked to Eric S. Raymond, a highly respected expert on OSS56. He annotated this

memorandum with explanation and commentary over the Halloween weekend and released it to the

national press. Microsoft was forced to acknowledge its authenticity. The memorandum, modified

with Raymond's annotations, received a lot of press coverage and has made OSS history as

“Halloween I”.

During the next years, Raymond used every official or unofficial Microsoft document, which was

attacking Linux or defending Microsoft vision of enhanced security with proprietary software, to

released to the press, after having added his annotations and a “Halloween” number to the

documents57.

The reason why Raymond released only annotated version of the Microsoft documents, was to

defense himself against possible a copyright-violation attacks from Microsoft. Making un-annotated

copies available would have placed Raymond at significant legal risk.

Up to August 2003, totally nine such “Halloween documents” have been released by Eric S.

Raymond. The documents reveal what Microsoft has been thinking in the past about Linux, how

they have been ignoring it and the FUD58 they spread about OSS in general.

55 For more information about the Mozilla web browser visit http://mozilla.org, accessed Aug. 28, 200356 Rosenberg, Donald K., Open Source: The Unauthorized White Papers, 2000, P.7957 All Halloween documents are available at http://opensource.org/halloween/halloween1.php, accessed Aug. 28,

200358 FUD: Fear, Uncertainty and Doubt

31

3.5 OpenOfficeIn the summer of 2000, SUN released the source code of their office suite StarOffice. Two years

later the project counts many hundred volunteers which contributed to the developments,

OpenOffice 1.0 was released and ten millions of users downloaded the software.

For long time there did not exist an open source alternative MS Office. This changed when Open

Office 1.0 was released59. Historically, Open Office is based on StarOffice, which has been written

by StarDivision, a company founded in Germany in the mid-1980s. It was acquired by Sun

Microsystems during the summer of 1999. One year later Sun donated the source code of StarOffice

to the community and this was the birth OpenOffice. 2002 the project had already hundreds of

volunteers. At that time, OpenOffice 1.0 was released and ten millions of users downloaded the

software. SUN continued to develop and distribute StarOffice, which is based on OpenOffice, but

contains some additional features.

3.6 JBoss Enterprise Application ServerAt the begin of enterprise computing, the client-server concept was the dominant technology. The

server usually was a mainframe. With the emerge of Internet technology and cheap Unix, Linux or

Windows servers, a market for middleware60 was created. Today the programming language Java is

the de-facto standard for developing enterprises applications. These applications are running on a

software which is called Java application server. There exists an industry standard for such server

software called J2EE61. The market for Java application server has been dominated for long time by

the expensive products from IBM (Websphere) and Bea Systems (Weblogic). But there exists a low

cost open source alternative: JBoss62, which is used more and more, not only for low cost solutions,

but also as replacement for Weblogic or Websphere deployments63.

The JBoss history starts in the year 2000, when Marc Fleury, at that time a SUN consultant, started

to work on his own implementation of an application server64. The project attracted some of the best

Java developers which contributed their ideas and code. The JBoss Group was founded, a company

which provides training, consulting and support services for the JBoss Application server. Today

59 For further information about the OpenOffice software visit http://www.openoffice.org, accessed: Aug. 28, 200360 Middleware is software which is located between end user applications and the operating system or the backend

system.61 J2EE stands for Java 2 Enterprise Edition, fro further information visit http://java.sun/j2ee, accessed: Aug. 28,

200362 For further information about JBoss visit http://www.jboss.org, accessed: Aug. 28, 200363 LaMonica, M., Java servers feel the open.source heat, Feb. 2003, Internet:

http://news.com.com/2100-1001-984476.html, accessed: Aug. 28, 200364 Fleury, M., Why I love Professional Open Source, JBoss Group LLC, 2003

32

JBoss is technically equal if not better than its proprietary competitors. The software has been

downloaded millions of time.

3.7 Eclipse Development PlatformIn November 2001, one of the major software donation in history of open source happened. IBM

donated $40 million of software to the open source community65. The Java-based open source

software, called Eclipse, enables developers to use software tools from multiple suppliers together,

and integrate them into one platform for developing applications and business solutions.

The community is managed by a multi-vendor organization and includes participation by companies

such as IBM, Merant, Rational, Red Hat, TogetherSoft, and others.

3.8 City of Munich decides for LinuxWhen the German city of Munich, Germany's third-largest city and a technology hub for Central

Europe was about to upgrade 14,000 desktop PCs to the latest versions of Windows and Office, they

decided to switch to Linux66.

The story started with Microsoft's initial $36.6 million proposal for upgrading the software. Suse

and IBM, which formed a powerful Linux partnership, offered a $35.7 million proposal. And

because Microsoft did not want to loose the deal to Linux, in spring 2003 Steve Ballmer visited

Mayor Christian Ude to assure him Microsoft would do what it takes to keep the city's business.

And Microsoft did a lot of efforts for not loosing an important key customer:

• Microsoft lowered its price down to $23.7 million — an overall 35% price cut.

• Microsoft agreed to let Munich go as long as six years, instead of the more normal three or four,

without another expensive upgrade, a concession that runs against its bread-and-butter software

upgrade strategy.

• Microsoft offered to let the city buy only Microsoft Word for some PCs and strip off other

applications. Such unbundling cuts against Microsoft's practice of selling PCs loaded with

software.

• Microsoft offered millions of dollars worth of training and support services free.

65 For further information about the OpenOffice software visit http://www.eclipse.org, accessed: Aug. 28, 200366 Acohido, B., Linux took on Microsoft, and won big in Munich, Feb. 2003, Internet:

http://www.usatoday.com/tech/news/2003-07-14-linux-tech_x.htm, accessed: Aug. 28, 2003

33

But Microsoft did not convince the city of Munich. On May 28, the city council approved the Suse /

IBM proposal. Among the reasons, why the city of Munich decided for Linux, are the unpredictable

long-run cost of Microsoft upgrades. With the switch to Linux, Munich will become the largest tech

user to deploy Linux for everyday use on desktop PCs.

What happened in Munich shows how profoundly tech buyers' mindsets have changed. Five years

ago, as Linux was just starting to appear on the tech landscape, companies routinely snapped up

expensive technology without evaluating properly the different options.

3.9 Microsoft's call-to-armsSelling desktop software is the money making machine for Microsoft, where there have no

competition except of early adapters of Linux for the Desktop. In other markets like enterprise

serverside computing, their .NET framework is competing with Java, and their software products

for mobile devices do not have any significant market share at all. The state of Munich decision for

Linux instead of Windows had some widely visible impact on Microsoft visions and strategies. In

June 2003, Steve Ballmer sent a call-to-arms memo to all 54,000 Micro softs employees67 . The

memo outlined free software as critical threat to Microsoft business. Before 2003, Microsoft was

trying to ignore Linux or just spreading FUD about OSS. But now Linux has been recognized as

competitive challenge.

In the memo, Ballmer said customers facing lean budgets are examining software such as Linux and

OpenOffice but Microsoft offers products that cost less for companies in the long term. "So-called

'free software' is the latest new thing," he wrote. "We will rise to this challenge, and we will

compete in a fair and responsible manner that puts our customers first. We will show that our

approach offers better value, better security and better opportunity."

The memo was well received among Advocates of OSS such as the OpenOffice suite were

heartened that Ballmer was at last taking their products seriously and mentioning them by name.

3.10 The SCO / IBM lawsuitA few years ago, Caldera Systems was competing with Redhat and Suse with its Caldera Linux

Distribution. Then Caldera merged with SCO, an Unix software company. But the Linux business

was not successful. Caldera Linux doesn't exist anymore. In March 2003 SCO sparked a major

67 Didley, B., Ballmer cites Linux, other threats, Jun. 2003, http://seattletimes.nwsource.com/html/businesstechnology/134908115_ballmer05.html, accessed: Aug. 28, 2003

34

controversy in the Linux world, when it sued IBM, saying the company had incorporated SCO's

Unix code into Linux and seeking $1 billion in damages68. The company alleged, among other

things, trade secret theft and breach of contract. SCO then updated its demands in June, saying IBM

owed it $3 billion. In the meantime, it sent letters to about 1,500 Linux customers, warning them

that their use of Linux could infringe on SCO's intellectual property.

In addition to the controversial lawsuit over Linux code, SCO announced in June 2003, that it plans

to offer licenses that will support run-time, binary use of Linux to all companies that use Linux

kernel versions 2.4 and later. Eric S. Raymond and Robert Landley from the Open Source Initiative

OSI responded with the OSI Position Paper on the SCO-vs.-IBM Complaint 69, where they collected

relevant information about the history of Unix and Linux and tried to show, that SCO is wrong with

its claims.

68 Associated Press, The whole SCO-IBM-Linux-Novell-MS mess explained, August 2003, Internet: http://www.usatoday.com/tech/techinvestor/2003-08-07-open-source-wars_x.htm, accessed: Aug. 28, 2003

69 Raymond, E. S.,Landley, R., OSI Position Paper on the SCO-vs.-IBM Complaint, August 2003, Internet: http://www.opensource.org/sco-vs-ibm.html, accessed: Aug. 28, 2003

35

4 Engaging with the Open Source CommunityA company which decides to use OSS has basically two options: Buying packaged OSS and related

services from a commercial OSS distributor ans service provider like Red Hat, Suse, IBM, JBoss

Group or they can get directly involved and interact with the open source community. The second

option includes a lot of different variants. This chapter explores all the different variants and its

advantages and disadvantages.

4.1 Commercial OSS and ServicesAt this level of engagement a company purchase a commercial or “boxed” release of OSS. The

company which has packaged that software also provided security patches, consulting and support

services. This is the typical way how Linux distributions find its way into todays enterprise. With

this kind of engagement, an enterprise will experience the advantages of no license fees. The

company will not be directly working within the open source community and as such will not

benefit from the advantages of participation such as being able to influence the direction of the

software. On the other hand, at this level of involvement the enterprise's experience of the software

will be very similar to its experience of commercial software. This can be an appropriate initial

point of entry for an organization that has little or no experience with OSS. Typically, commercially

supported open source software will include simplified or single-step installers and technical

support options that look and feel very similar to those available for commercial software. But there

is less vendor lock in than with proprietary software. Participation at this level is characterized as

being limited to the open source software that is commercially supported, with little if any

interaction with the developing open source community.

4.2 Deploying OSS directly from online repositoriesAt this level of engagement, the enterprise might choose to install and configure an open source

software which is not supported by a commercial vendor, for example the Debian70 Linux

distribution. A typical example for this kind of OSS usage are frameworks used in software

development. Especially for open source friendly programming languages like Java it is very

common to use such frameworks for generic functionality. There are usually many versions at

different maturity levels for download at the OSS software repositories like www.freshmeat.com

www.sourceforge.net or www.apache.org. Open source communities associated with these

70 For further information about the Debian Linux visit http://www.debian.org, accessed: Aug. 28, 2003

36

applications make software available at completeness and quality levels ranging from immature pre-

alpha releases to stable, reliable and mature production releases. When choosing the maturity level

of a Linux distribution or software application, the enterprise is trading confidence of stability for

having the latest functionality. Obviously the more mature releases will be more reliable. However a

given enterprise may be willing to put up with a certain level of instability in order to gain access to

a highly attractive but relatively new functionality.

Almost all open source communities provide some form of technical support. In most cases this

support will be more formalized in those more mature projects that are associated with larger,

established communities. In some cases these communities even provide commercial technical

support, but at least email support from the developers in the community is usually available either

directly or via mail-lists, newsgroups or online forums.

At this level of engagement the enterprise will gain many of the advantages of using commercial

releases but will have substantially more choices available. By being conservative, an organization

can choose only those releases that are at a mature release level and enjoy a level of quality similar

to commercial software releases. The organization will also enjoy a significantly expanded range of

software choices. Using the advantage of being able to choose from the large number of applications

available, it is possible for an organization to build much of its IT application stack entirely with

Open Source software.

4.3 Active ParticipationThere are several levels of active participation in an open source community enterprises or

individuals can engage in. Helpful comments, feature requests, and problem or bug reports are

always welcome to the developers in any given open source community. Active testing of new

releases provides the next level of involvement. Source code contribution is the subsequent level.

The main advantage an enterprise can realize from engagement at this level is access and to the

latest functionality in a planned application release and influence on future releases.

Typically an enterprise actively participates by having one or more of its employees engaged with

the open source communities of the applications that the enterprise considers critical to its business.

These employees, typically software developers, would work directly with the source code that

provides the key functionality as well as the more general capabilities of the application. This active

participation has the additional advantage of enabling increased understanding of the key

applications by the enterprise's employees. Often IT employees have a merely superficial

37

understanding of important software provided by a commercial software vendor. Working directly

with the source code of an important application can give employees a much better understanding of

the software, which in turn enables them to provide much better support for that application within

the enterprise..

4.4 Active Participation with leading functionIf a given enterprise has an application or piece of software that is absolutely business critical, that

enterprise may choose to engage with the open source community in a leading or administrating

function. This assumes, that the application critical to the enterprise has relevancy to others outside

the company. In this case employees of the enterprise might fill roles directing the functioning of the

community. As long as the spirit of open source collaboration is maintained, and the desires of the

rest of the community are met, the enterprise will be able to build a robust and vibrant community

and direct or strongly influence development of the software. Of course care must be maintained so

that the needs of the enterprise do not overwhelm the needs of the rest of the open source

community otherwise it would be unlikely that others would continue to participate, leaving the

enterprise with a community of only its employees. Such a disintegration of an open source

community would sacrifice most of the real advantages to be gained by participating in that

community.

This kind of participation we can observe when member of an open source community found a

commercial support organization for OSS. Other examples :

• IBM has this kind of participation with their leading function with the Eclipse Java development

platform71.

• Sun has has recently intensified its involvement with open source software. The company has

opened the open source collaboration platform java.net72 which is mostly were everyone is

invited to participate.

• When SAP switched the default database for their enterprise standard software from the

proprietary database SAP DB73 to Oracle, they released the source code of SAP DB. However,

they continued to lead further development of SAP DB in an open community process.

71 More information about eclipse at chapter 3.772 For further information about the java.net visit http://www.java.net, accessed: Aug. 28, 200373 For further information about the SapDb visit http://www.sapdb.org, accessed: Aug. 28, 2003

38

4.5 OSS without communityThere are some typical scenarios for OSS projects without a community. In such a case, there is

little or no development, and a OSS project without community can be considered as dead. The

reasons for not having a community can be:

• the project has been initiated and managed by a single person. When this person leaves the

projects, there is nobody else to continue.

• The project belongs to a thesis or any other time-limited academic activity

• the project is the result of releasing the source of some unpopular closed source software.

Companies and individuals are not interested in bad or unpopular software, even if it is for free.

39

5 Global trends in OSS adaption

5.1 EuropeWith the decisions of the city of Munich to switch to Linux, Germany has recently earned a lot of

press coverage about its pioneer role for the adoption of Linux on the enterprise desktop. How does

this look in a European context ?

In the recently published paper "Linking up Europe: The importance of interoperability for e-

government services"74, the European Commission is placing open standards and open-source

software at the center of its efforts to promote inter operable e-government services. The

Commission, the executive arm of the European Union, argues in the report that open standards and

open source are crucial in making new e-government services work with each other and with

enterprise systems. The paper, which will be used as a reference point for policy and decision-

makers around Europe, is the latest document pushing forward the far-reaching European initiative

on e-government services. However, the document does not give exact directions to which extent

governments should encourage the use of open source and open standards.

5.1.1 GermanyAn analysis75 performed by SOREON Research in 2003 revealed the following trends76 and

predictions for the German IT market:

1. Long term cost reductions up to 30% are possible with OSS.

2. The market for OSS will raise from 131 million Euro in 2003 to 307 Million Euro in 2007, with

a yearly average growth rate of 24%.

3. The largest growth rate in OSS deployments is expected for governmental organizations.

4. Main reason for using of OSS is the reduction of IT costs, followed by increased stability of OSS

solutions. Main reason for not using OSS are interoperability problems with proprietary

solutions.

5. Large companies do better benefit form OSS, because they often have already inhouse OSS

74 Commission of the European Communities, Linking up Europe, the importance of interoperability for e-government services, July 2003

75 Soreon Research, The Market for Open Source Software in Germany, July 2003, Main results available at http://www.soreon.de, accessed: Aug. 28, 2003

76 Blau, J., Update: High growth rates for open source in Germany, July 2003, Internet: http://www.infoworld.com/article/03/07/02/HNgermanopen_1.html, accessed: Aug. 28, 2003

40

knowhow. The largest potential for cost savings are OSS office applications, databases and

Content management systems (CMS).

6. Many providers of proprietary software will change their business models and release the source

code of their software products.

5.1.2 SpainIn Spain, the government of Extremadura, a western region of Spain with 1.1 million inhabitants,

launched in April 2002 a campaign to convert all the area's computer systems, in government

offices, businesses and homes, from the Windows operating system to Linux77. More than 10,000

desktop machines were switched immediately, with 100,000 more currently being converted. The

regional government paid a local company $180,000 to assemble a set of freely available software,

including operating system, word processor, spreadsheet and other applications. The government

also invested in creating customized software for accounting, tracking hospital patients and crop-

yield management that the agency will distribute free to citizens. The European Economic

Commission is promoting it as a model for the rest of the world, and officials from governments as

far away as New Zealand and Peru have inquired about duplicating the region's efforts.

5.2 AsiaThere exists initiatives in Asia78 which try to advocate the use of OSS among the populations and

bring together academic research and industrial and governmental use of open source software.

When analyzing Asian sources about OSS, an interesting fact is that they talk about free software

and not about open source. On the one hand sometimes it might be a translation-into-English issue,

on the other hand, because of economic reasons, free availability in the sense of no license costs is

more important then source code availability.

• FSIJ (Free Software Initiative Japan) FSIJ was created in 2002. The Purpose of FSIJ is to

advocate the principle of free software, collaborate with free software groups from all over the

world and organize international symposiums, and facilitate the release of high quality free

software from Japan to the rest of the world. concrete step towards the international collaboration

Outside of Europe and North America, Linux is beginning to emerge as a serious desktop

alternative. Countries in Asia are adopting Open Source at high speed.

77 Ariana, E. C., Europe's Microsoft Alternative. Nov. 2002, Internet: http://www.washingtonpost.com/wp-dyn/articles/A59197-2002Nov2.html, accessed: Aug. 28, 2003

78 Noronha, F., Open Asia: Japan and Korea embrace Open Source. Jul. 2003, Internet: http://newsforge.com/newsforge/03/07/11/2056234.shtml, accessed: Aug. 28, 2003

41

In much of Asia, the only real competition to Linux-on-the-desktop comes from software piracy

with bootlegged Microsoft products.

Among the barriers which have prevented in past widespread adaption of Linux at the enterprise is

Microsoft's disinformation campaign about Open Source's reliability and consistency, which has

been particularly effective in discouraging early adoption by many Asian companies and

government agencies.

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6 OSS from economic point of viewThis chapters introduces economic definitions and presents models which can be used to analyze IT

costs. The influence of open source on devaluation of software is analyzed and business models

which allow independent software vendors to benefit from OSS are explored.

6.1 Total Cost Of Ownership TCOOSS reduces license costs, or even eliminates them, if the code is directly downloaded from Internet

repositories. Compared to the total cost of an IT project along its life cycle, the licensing costs

usually represent only a fraction of the total costs.

One of the major manager's tasks today is the reduction of the total cost of IT projects and solutions.

A good starting point for approaching that task is the cost analysis based on TCO.

IT terminology is dominated by my many abbreviations. Some quickly became common, TCO is a

typical example. There is a lot of hype about it, but many people talking about TCO do not really

know the meaning of this term. The following section will explain what TCO means and how this

concept can help to increase efficiency and to reduce costs in the IT environment.

6.1.1.1 Possibilities and limits of TCO calculations

There does not exist a general definition of the total cost of information technology. TCO basically

consists of79:

• Acquisition costs (hardware and software)

• Operational costs (infrastructure and support)

• Additional costs (hidden costs like down time)

For the calculation of the TCO value there does not exist a clear rule, the range of values is broad.

The TCO analysis does not include effects of service level agreements, availability requirements

and evaluation of the business case80.

TCO is dominated by costs which are given, and can't be changed. Therefore TCO can only be

considered as starting point for a cost analysis. The concept only describes a point in time and

reveals the current cost situation.

79 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 200380 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

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6.1.2 Components of a TCO calculationThe following sections describe all costs which need to be considered in TCO calculations81:

6.1.2.1 Acquisition costs

The cost calculation first considers all investment costs for hardware and software and maintenance

contracts. Additional service costs are calculated for defined functions based on full time employee

(FTE or Full Time Equivalent). Cost are also calculated for outsourced functions.

6.1.2.2 Quality components

The calculation also contains quality components like type of installed hardware, operating systems,

standard applications, quality of service (availability, unplanned down time) and the extent and

volume of performed activities (for example at IT support call centers: success rate of immediately

resolved problems).

Another integral part of the TCO view is the quality of service, which will be provided to the user. It

is a big difference, whether in a support contract a response time of two hours or four day has been

negotiated. Additionally all core applications (like ERP-Systems) and data storage (Storage Area

Networks, Tape Robots) and network infrastructure need to be considered, to reflect all those costs

in a per user base.

6.1.2.3 Administration

Another important point is staff. On the one hand there is IT staff responsible for the production

environment and providing support for the users, on the other hand, there are employees planning

the infrastructure and taking design decisions. This is an area where proper planning and usage of

system management tools can help to reduce the demand for human resources.

Well organized IT organizations with a standard compliant software environment, user support

embedded into the organizational work flow, and centralized operations with control functions and

software distribution allow significant costs reductions per user.

6.1.2.4 User involvement

The satisfaction of the user is a major factor for the success of business processes. If users are

perceiving IT staff as service provider, then acceptance and satisfaction with IT support is

improving. On the other hand, if users locally try to solve problems by themselves and the help of

others, instead of contacting the IT support, the working hours of the users are consumed to resolve 81 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

44

tasks which are supposed to be resolved by the IT support staff. The effect of this “hidden costs” or

productivity loss is the user involvement and needs to be considered and determined with the help

of interviews or questionnaires.

Integration cost Operational costs (fixed) Operational costs (variable)Recruiting costs for new employees

Depreciation, Disposal Productivity loss due to:

Hardware integration

Administration and Operating• User Management• Job Management• Performance Management• License Management• Data Management.:

• Availability• Security• Quality (Viruses)

• Down time / Disaster • Non existing Configuration

Management• Non existing support service• Non existing service delivery

processes• Non existing IT process cost

calculation• Non existing risk management• Follow-up trainings

Peripheral integration

Supplies

Infrastructure integration

Rental

Integration of central Components

Energy

Decentralized Hardware

Communication

Decentralized Software

Service Level Agreements, spare parts

Modification of building / rooms

IT support operational cost

Organizational and trainings costs as consequence of platform change

Human resources costs• Overhead• Accounting• others

Training• IT Support • User

Training costs • IT Support• Users

Table 2 TCO cost components82

82 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

45

6.1.3 TCO - SummaryThe TCO value shows a short sighted views of IT costs. It can only be used as an entry point for a

more profound analysis, which also covers longterm aspects.

However the TCO indicates, whether IT services should be externalized in the future. Such an

outsourcing provides cost reduction, because IT operations and application support are provided by

a professional organization and backed up by a Service Level Agreement (SLA).

6.2 Return on Investment (ROI) and Business ValueCompared to the TCO the calculation of the ROI is reflected by different rules. Basically it is just a

comparison between investment and return and it is driven by the requirement to present cost

reductions, efficiency improvements or potential market advantages in hard numbers.

The ROI is calculated by dividing net profits after taxes by invested capital. When applying ROI

calculations on Information Technology, the following points need to be considered83:

• The invested capital: includes costs of acquisition, installation, system integration and change

management.

• Profit : the profit is the sum of economized process costs and expected additional profits because

of the new implemented systems minus the operational costs and those costs which have been

caused by efficiency loss in the service sector.

The ROI calculation for one year is often too short sighted. Therefore people often use dynamic

methods of investment calculation. With this approach, capital flow of the observed resource over

its whole operational duration can be analyzed and results are getting more accurate.

The results often are represented in a yearly annuity, a so called internal rate of interest, or a real

monetary value calculated for a specific point in time. Important for these values are the following

points84:

1. The internal interest rate must be positive.

2. The monetary value of the investment must be positive.

3. The annuity or the duration of amortization must be in sync with the operational duration of the

observed resource.

83 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 200384 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

46

Compared to the TCO analysis the ROI analysis is based on a longer duration, which has a strong

impact on process costs. Therefore the two models do not deliver comparable results.

But real life has shown, that the problem is within the process costs. This kind of costs calculation is

not common yet at most companies and process costs can only be estimated.

Costs estimations for a longer term, are integral parts of the “business value”. The term belongs to

the same category like TCO and ROI, but has included aspects of TCO and ROI.

Figure 185 shows the total IT sourcing value as function of time. Figure 286 illustrates how the value can be divided into its different calculation components

85 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 200386 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

47

Figure 1 IT sourcing value Time

Value

Business Value

ROI

TCO

By taking a closer look at this calculation tree, one can see the cost components but also the value

components of future investment. It is also possible to work with time separated payment flows.

Problems might appear at the elements process cost reduction, risk costs and image value.

Process cost calculation requires to know the individual process costs. Unfortunately it is not

common yet at most companies to determine process costs87. The same can be said for risk costs.

First, awareness of risk costs requires a well established risk management at the company. Second,

it is impossible to calculate precisely long-term risk. Third, risk calculations rely on probabilities,

which need to be defined in the context of the calculation.

It is a calculation with estimated values, and therefore the result will also represent an estimated

value.

The reputation element also contains a strong estimation aspect. If we take the shareholder value,

investors honor platform migration or outsourcing deals with discount or raise of shares. These non

verifiable elements are important in reality, but can only be estimated.

With sourcing not everything can be calculated exactly. But just the consideration of the presented

schema gives some basic guidance.

87 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

48

Figure 2 Total sourcing value

process tuning cost

risk cost reduction

image value

process cost reduction

service value

product value

political value

purchse cost

risk cost

image cost

political cost

new coordination cost

sourcing value

sourcing cost

total sourcing value

6.2.1 The decisionAfter having prepared a cost analysis of the different options of an IT strategy, one of the

alternatives need to be selected ? Independent of how much has been invested into preparations, the

decision is what matters.

Beside of financial aspects there are usability and political aspect which have significant influence

on the decision.

A very simple question might help to simplify the whole problem88: “what is the purpose of the

acquisition ?”

IT decisions often follow the pattern to improve its transactions and the related cost situation. In

such a case it is justified, to focus on cost situation and ROI, beside of providing the required

functionality of course.

The following aspects need to be considered89:

• customer satisfaction

• user acceptance

• possible market advantages

• future revenue streams

• influence of technology in regard to company development.

A purely financial judgment of the investment based on TCO and ROI will not give precise results,

because the correct parameters required for such a calculation are extremely difficult to obtain.

Beside of political aspects the following advices should be followed90:

1. the final decision should be compatible with the overall company strategy.

2. The higher the importance of IT for the transaction, the more should be chosen the alternative

which requires the least expense in regard of implementation, maintenance and risk.

3. The higher the importance of IT the more should be considered aspects like business value,

flexibility, competitive advantage, synergies and value for the user.

Once the decision has been taken, a strategy needs to be developed for having control of

88 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 200389 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 200390 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

49

success/failure of the investment. This at least has a positive impact on the learning curve for

possible follow up investments.

6.3 Open source effect on value of softwareIn economic terms, open source is a nonrivalrous public good. Nonrivalrous means that when

someone uses it, that does not diminish its utility to anyone else. In general, the world benefits from

the creation of any nonrivalrous public good. However, while the world benefits in general, some

may suffer. Software vendors develop new software in the hope, that more value will be created

than the cost of developing the software. The more unique the value, the more pricing power the

vendor will have. The most important factors affecting pricing power are the value perceived by the

customer and the competitive pressure in the market. Open source attacks pricing power in new

ways and accelerates the devaluation of some technologies. A developer of commercial software

needs to accelerate his move up the value stack, or he risks seeing his value getting commoditized,

and he will be no longer in a position to generate enough revenues to recover his investment.

50

Figure 3 Open source effect on value of software as function of time

Martin Fink analyzes in91 the value of software as function of time by comparing the model with

the economic return model for prescription drugs. From this comparison he derives the model for

the open source effect on value of software as function of time. Fink's model is presented in figure

1, which shows the effect of open source on the value of software and the power of commercial

vendors to command a premium price for that value. Almost any commercial software has value.

Over the time, it is normal that the value of the software decreases, from the viewpoint of the

customer. The devaluation comes from competitive forces and the natural commodity effect. For

example, if we take a look at computer hardware, 10 years ago, a computer mouse was usually an

add-on, today, one would be surprised if a mouse would would not be included when buying a new

PC. Software vendors typically respond to the natural devaluation process by adding new features

and new capabilities, which are refreshing the value of the software on an ongoing basis. When it

91 Fink, M., The Business and Economics of Linux and Open Source, P.159-167

51

Rev

enue

Cos

ts

Research & Development Cycle

End-of-lifeCycle

Production, Marketing, Sales & Support

Operational Cycle

Revenue curvewithout open

source competitor

Revenue curve with open source competitor

GeneralProduct

availability

Time

Availabilityof open source

alternative Product

obsolescenceR

esea

rch

Test

ing

Dev

elop

men

t

comes to enterprise software, vendors can maintain value by being the only entity, to support the

software they developed. Another factor which protects enterprise software vendors is the barrier to

entry. Once a customer has committed to a particular software choice, as long as the ongoing cost

for maintenance are less than the cost of replacement, the vendor can continue to charge a premium

price.

Without open source software, Companies have been trying to protect their investments into

Research developing and testing with patents. And to maximize revenues, companies had to keep

the operational cycle as long as possible. With open source software, the situation looks different.

Development cost of OSS is significantly smaller, because OSS usually is built on top of other open

source frameworks or libraries. This is possible because open source communities give freely their

intellectual property away (and expect the same in return). As a result, if the software vendor want

to keep his position on the market, he needs to respond to the OSS attack with product innovation,

lower price or additional services which cannot be provided by the open source solution.

6.4 Devaluation of softwareOpen source software accelerates devaluation of software in a number of dimensions:

• It often takes takes less time to create a comparable solutions to a proprietary software, because

there a large number of developers involved.

• Additional features, which must be purchased in case of proprietary software (even if base

software is free or has a very low price) are included with OSS at no charge and no hassle to

purchase and activate a license.

• OSS will not eliminate the barrier to entry to the markets of proprietary software, but because

license costs are usually non-existent, that barrier will be significantly reduced. The size

remaining final barrier is tied to support services and depends on the end-user willingness to

engage with the open source community for further reduction of that barrier.

Another challenge for software vendors is predictability of market acceptance of OSS threatening

his product. If the vendor doesn't pay attention to community efforts currently underway, he can be

surprised by an open source version of his product. It is difficult to predict when an open source

product will reach the threshold of “good enough” in the majority of customer's mind.

6.4.1 Devaluation as a competitive advantageFor closed source software vendors, the key to benefit from open source, is to understand how to

52

take advantage of devaluation and the open source community rather than to react in a defensive

way. But to benefit from open source, it is not enough just to share the idea, it might be necessary to

change the traditional business model and such a structural change might be difficult to apply, or

does not fit into the general vision of a firm, therefore some companies prefer to react defensively to

open source.

According to Martin Fink92, closed software vendors have the following three technical possibilities

for defensive reactions to the threat from open source competition:

6.4.1.1 Aggressive patent use

Distributors of open source software and open source communities are exposed to the threat of

patent attacks from closed software vendors. But software patents are topic of controversial

discussions. Risto Sarvas researched the costs and benefits of software patents93 and came to the

conclusion, that the processes to grant patents are very slow , the granted patents are of low quality,

but in some case it is a appropriate way to protect a software business.

An example of a software patent is the compression algorithm used for GIF images, which has been

patent protected by Unisys94. The open source community responded by simply using different

graphic formats like JPEG or PNG. More complicated is the situation when the patent holder is

threatening without revealing what exactly has been infringed. This is the case with current lawsuit

SCO / IBM. As soon as the community gets to know, what part of the code has been affected by a

patent enforcement, developers substitute the code with some other code, which provides the same

functionality, but uses a different algorithm. A major risk for aggressively enforcing patents is the

uncertainty about existing prior art. Software engineering is very complex and it is extremely

difficult to verify that absolutely no prior art exists when awarding or enforcing a patent. Aggressive

patent use can only be recommended for companies which have nothing to loose.

6.4.1.2 Monolithic Software

Today most software is written in a modular way as collection of functional layers. This is the most

flexible way to architect software. But it in case of proprietary software, this method opens the door

for replacing a specific layer with OSS. Such a replacement process usually starts with the bottom

layer. And then, OSS replacement of the next layer will follow. By creating monolithic software,

vendors hope to prevent commoditization from the bottom of the software stack. However,

92 Fink, M., The Business and Economics of Linux and Open Source, P.167-16893 Sarvas, R., Costs and Benefits of Software Patents to Society, Helsinki University of Technology, 200294 More information about the Unisys GIF patent available at http://www.unisys.com/about__unisys/lzw/, accessed:

Aug. 28, 2003

53

monolithic architectures have several disadvantages like maintainability and scalability, and it is

very likely that the community creates better designed software solution and commoditizes the

monolithic software all at once.

Following two examples of OSS with modular architecture taking away significant market share

from monolithic closed source applications:

1. Java applications Servers – While open source JBoss95, which is based on a modular plugin-

architecture became more and popular, many other closed source monolithic solutions became

victims of the application server vendor concentration and disappeared from the market.

2. Integrated Development Environments : OSS Eclipse96 has such a modular architecture that it

is considered as a platform, not as an application. Eclipse is very well accepted in software

industry and it is integrated into commercial products from IBM and other vendors.

6.4.1.3 Competition

A common reaction is the attempt to compete with the open source community. But competing

against a community of first-rate developers who are not (or less) motivated by profit and not

constrained by time limits, is a difficult exercise, and it is common, that sooner or later, time and

resources will make such a move impossible to sustain.

The better option is to participate actively with the open source community and use devaluation to

one's own advantage. In most cases, Software vendors benefit from open source, if they engage with

the community and offer their customer open source software for the lower layers of the software

stack. With this approach, the software vendor does not need to apply resources on technology that

customers are considering base functionality and are not interested to pay for them. Figure 2

illustrates that software vendors can apply their resources on the upper layers of the software value

stack, where they generate more value and return to the company97.

However, Software vendors who intend to use OSS for the bottom layers of their software, should

keep in mind, that only by actively engaging with the community they have the chance to influence

the future direction of the bottom layer of their end product.

95 More information about JBoss at chapter 3.696 More information about JBoss at chapter 3.697 Fink, M., The Business and Economics of Linux and Open Source, P.168

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Figure 4 Resource allocation correlated to value delivery

6.4.2 The OSS based business model for software vendorsWhile for the user of software the availability of the source code is a major advantage, for software

vendors who have traditionally sticked to proprietary software, there are many aspects which need

to be considered before deciding to release source code and facilitate access to intellectual property

of the company. At the end it only matters whether releasing source code will lead to increased

revenues on the long term.

If OSS is used as part of a commercial product, development costs usually can drastically be

decreased. Of course this only works if the open source project has an active community outside the

company. On the other, if the company is operating in a competitive market, the OSS modules of

their commercial product is open for competitors also to be used. In such a case, it should be

analyzed whether the reduction of development costs are compensating the quantified competitive

disadvantage. Often there is no such a competitive disadvantage because OSS is playing a

significant role for product X of company Y but just because of the specific design of product X,

and not because OSS plays a significant role in the market the company is targeting. The software

vendor who plans to integrate OSS in his product, needs to think about licensing issues. Does the

license of the integrated OSS require to feed back changes made to the source code ? And if it is not

required, would it still have any benefit for the company to get engaged with the open source

community ?

For better illustration of the business model based on integration of OSS into commercial software,

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Resources

Val

ue Typical

software

solution

stack

Communityresources

Software vendorresources

an example will follow.

6.4.2.1 OSS and the Apple Mac OS X

The current Apple Mac Operating System OS X is based on Free BSD, a Unix derivate which is

distributed under the BSD license. Apple modified the BSD code to run on the special

Microprocessors inside the Apple Mac. Apple called the modified version Darwin and released the

source code98. The company decided to feed back the modifications to the Free BSD community, if

this modification leads to an improvement for the Free BSD code itself. The BSD license does

require that. However, doing so, they facilitate synchronization between the two OS X and Free

BSD. Improvements at Free BSD can easier be ported to Darwin if the two operating system are

similar. The Apple Mac OS X itself is built on top of Darwin, but is not open source anymore. One

could argue now, that Apple is facilitating others to become their competitor, because the core of

their operating system is open source. But there does not exist any competitor in this market.

Microsoft can not benefit from that, they have their own universe. Linux is not a competitor for the

Mac, even if the Linux operating systems is Unix-like. The market for the Apple Mac is the segment

of people looking for a computer with extraordinary design and easy to use. The market for Apple

Mac is based on the consumer lifestyle. Before Mac OS X, Apple had its own proprietary operating

system, but they realized they can better compete on the market by concentrating on their core

competency, by delivering well designed boxes and cut development cost by having their operating

system based on an existing, stable and mature OSS.

6.4.3 How does Microsoft deal with devaluation of its softwareMany of the open source projects mentioned or described in this paper help to devaluate proprietary

software form Microsoft. Opens source enthusiasts tend to see OSS as major threat for Microsoft.

The fact that Microsoft has only marginal market share at the promising and booming market for

smartphones99 and that Google is dominating the search engine market, could be seen as bad sign

for Microsoft's future.

In the past, Microsoft has ignored OSS100, at present Microsoft is considering OSS as competitive

challenge101. Before doing any predictions how Microsoft will deal with the OSS threat in the future,

it makes sense to take a look at how Microsoft has dealt in the past with devaluation of its software,

98 More information about Darwin can be found at http://developer.apple.com/darwin, accessed: Aug. 28, 200399 Vendor statistics available at http://www.theregister.co.uk/content/68/31880.html, accessed: Aug. 28, 2003

Authors note: Only smartphones from Orange are running on the Microsoft operating system, the smartphones from Nokia and Sony Ericsson are running on the Symbian operating system.

100 See Halloween documents, chapter 3.4101 See City of Munich decides for Linux, chapter 3.4

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how they moved into new markets and it will be clearly visible that Microsoft flexibility and power

should not be underestimated.

After 1995, the Internet started to attract the masses. The opinion was widespread, that Microsoft

was a huge, inefficient, PC-bound company that couldn't adapt to the brave new world of the

Internet. Around that time, MS started to hire developers for the Internet Explorer team to react to

the competitive threat created by Netscape102. Netscape seemed to have a competitive advantage

because of its first mover role. We have a similar situation today with Google and Symbian.

The browser war was not the first time Microsoft had demonstrated that it can fight back. The

previous ten years were littered with once-powerful companies that had been literally squashed:

Ashton-Tate (the makers of “dBASE”), Borland, WordPerfect. The difference with Netscape was

that it all happened so publicly and visibly. Software markets had started to operate differently. But

it didn't make much difference, not in the end, except for one thing: no one can say they haven't seen

that Microsoft won't give up easily, or that, having missed a trend, they can't adapt.

The following examples show how Microsoft moved successfully into new markets and occupied a

dominant position within short time.

• In only a few years they have carved out a decent portion of the server market, which has been

previously dominated by Unix servers.

• They have carved out another portion of the market for Internet applications.

• Another example is the PDA market. PocketPC-based handhelds have been steadily growing,

while Palm handhelds seem not to be popular anymore.

• In only a couple of years, the xbox went from being a bunch of marketing documents to the

second gaming platform of the planet.

• Office, which everyone just seems to ignore, is a monopoly that Microsoft did not control at all

in the last years, and it is currently the biggest source of revenue and profits for the company.

Microsoft is the biggest software company in the world. They have managed software projects

bigger than anyone else, with bigger deployments than anyone else, and pulled it off. They have

moved successfully into new markets, even as many of their attempts have failed. They have tens of

thousands of really smart engineers, they have excellent management and a good software

development processes. With their operating system Windows and their office suite, they have two

strong monopolies and a few weaker ones like Encarta Multimedia encyclopedia for example. They

102 Rosenberg, Donald K., Open Source: The Unauthorized White Papers, 2000, P.34-35

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have enough cash in the bank to underbid any proposal of their competitors.

History shows that only few companies managed to beat Microsoft on the long term. One of them is

Intuit103, they managed to become and to remain market leader for personal finance software with

their product “Quicken”.

There is one fundamental difference between the previous threats Microsoft managed to deal so

well with and the current threat from OSS. While previously competing companies had to make

profits with their proprietary product, OSS is not tied to company, is not a specific product, and

OSS as such does not generate profits. Only time will tell how Microsoft will deal with competition

from OSS, whether current market share will change in favor of OSS or Microsoft, and whether

Microsoft will get significant market share at new technologies like operating systems for

cellphones.

103 More information about Intuit and Quicken can be found at http://www.intuit.com, accessed: Aug. 28, 2003

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7 OSS and usabilityOSS has gained a reputation for stability, security, reliability, efficiency and functionality that has

surprised many people in the IT world. But most of this software has been used by highly skilled IT

experts. What is most criticized by average users, when they makes their first experience with OSS,

is the poor usability.

Usability is typically described in terms of five characteristics: ease of learning, efficiency of use,

memorability, error frequency and severity, and subjective satisfaction.104 Usability is separate from

the functionality of software and from other characteristics such as reliability and cost. That there

are usability problems with open source software is not significant by itself; all interactive software

has problems. To understand the usability of OSS we need to consider the following points of the

open source development process:

• Developers are not users - This has been pointed out by Nielsen105. For some advanced OSS

products targeted to expert users, developers are indeed users, and these software products often

come with user interfaces that would be unusable by a less technically skilled group of users are,

perfectly adequate for their intended elite audience. However when designing products for less

technical users, all the traditional usability problems arise.

Nichols and Twidale analyzed usability problems of OSS in 106. They compared open source

development with commercial systems development in the early years of computing, when

software was designed by computing experts for other computing experts, but over time an

increasing proportion of systems development was aimed at non-experts and usability problems

emerged. Nichols and Twidale claim, that the transition to non-expert applications in OSS

products is following a similar trajectory, just some years later.

• OSS developers are more motivated to improve functionality than usability – voluntary

developers work on the topics that interest them and this usually does not include features for

novice users. Adding functionality or optimizing code provides opportunities for showing off

one’s talents as a hacker to other hackers. If OSS participants perceive improvements to usability

as less high status, less challenging or just less interesting, then they are less likely to choose to

work on this area.

104 Nielsen, J., Usability Engineering, Academic Press, 1993105 Nielsen, J., Usability Engineering, Academic Press, 1993106 Nichols, D. M., Twidale, M.B., Usability and Open Source Software, University of Waikato, 2002, P.4

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• Usability experts do not get involved in OSS projects – OSS draws its origins from a culture

which is extremely welcoming to other computer freaks, comfortably spanning nations,

organizations and time zones via the Internet, but less welcoming to people with intellectual

cultures focused on topics as graphic design, ergonomics, psychology and sociology107. But this

interests and skills are required to improve usability. To sum up: on the one hand, usability

experts are not interested to participate in OSS projects, on the other hand ,OSS projects do not

have the financial means to hire in missing skill sets to ensure that user-centered design expertise

is present in the development team.

• Solving usability problems does not fit well into the open source development model - open

source developers have skills and tools to solve functional problems. And they have

communication and collaboration tools to to benefit from the network. But the common OSS

collaboration tools do not offer any help for improving usability in a collaborative manner.

7.1 Approaches for better OSS usabilityThere are factors that should contribute to better usability, although they may currently be

outweighed by the negative factors in many current projects. The following list summarizes some

existing approaches for improving usability of OSS.

• Encouraging end user involvement – the possibility for end users to test, report bugs and

requesting new features at any point of the development cycle should be facilitated. Just the

availability of the source code does not help end users to install and test the software. Early

versions of new software releases should come as easy installable package and documentation

targeted to end users should be included. In the lifecycle of commercial software there exists

often a public beta phase. Everybody knows that a beta release of a software contains bugs, but

the release comes with documentation and can be installed comparable to the the final version.

Alpha and Beta releases of new OSS should ship with an integrated, Internet based bug reporting

tool. Such tools encourage end users to report bugs and usability problems. Most OSS which ship

with such a bug reporting tool, like the beta releases of the Mozilla web browser with talkback108

option enabled, focus only on functional problems and reporting of software crashes, but not on

usability problems.

• Commercial approaches - there exist a lot of software products, which use OSS for providing

107 Nichols, D. M., Twidale, M.B., Usability and Open Source Software, University of Waikato, 2002, P.5108 For more information about the Mozilla web browser and talkback enabled installers for Mozilla beta releases

visit http://www.mozilla.org, accessed: Aug. 28, 2003

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the core functionality and have wrapped a commercial layer on top of the OSS framework to

provide a graphical user interface (GUI). With this, approach the end user software is not open

source anymore, but if the software vendor actively participates at the development of the OSS

core layers, the final software product benefits form the best of both worlds. Apple Mac OS X109

serves as a prime example, the core is an open source project maintained by Apple and derived

from BSD, an open source Unix variant, which provides security, stability, performance and

scalability, the top layer is the Apple GUI, designed by world class graphical artists, and famous

for being easy to use.

109 Chapter 6.4.2.1 describes the open source relation of the Apple Mac OS X

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8 OSS examples and case studies

8.1 Server Operating System: Linux According to Gartner Research Director Phil Sargeant, Linux on the Desktop Linux will be

deployed on no more than five percent of desktops over the few years because of a lack of viable

applications110. The situation looks very different at the server side. According to IDC111, in the

second quarter of 2003 sales of servers using the Linux operating system increased 40 percent to

$650 million, with HP holding 28.9 percent of that market, Dell at 20.5 percent and IBM at 19.4

percent..

Linux servers are dominating the racks at ISPs and Linux servers have found their way into

enterprises as Intranet web servers, mail servers, database servers file servers and print servers.

8.1.1 SWOT analysisThe following analysis explores possibilities and limits of the Linux operating system.

8.1.1.1 Strength

• Reduced license cost – If downloaded form Internet repositories, then there is no license cost at

all. This definitely is a point where Linux can't be beaten by MS Windows.

• Security - Because of its open source nature, there are more “eyes” watching for security

problems. Linux is based on a strong security design and concept.

• Stability – The Linux Kernel has been designed for high stability. Properly configured Linux

servers never need to be rebooted, expect for hardware upgrades.

• Manageability - Linux server can run headless,112 this makes remote administration of server

farms very easy.

• Possibilities to customize - There are unlimited possibilities to customize and optimize a Linux

server to fulfill specific customer requirements.

• No vendor-lock-in - There are many different suppliers for Linux based technology and services

110 Gartner, Linux poised for the Desktop failure, http://www.zdnet.com.au/newstech/os/story/0,2000048630,20269971,00.htm, Nov. 2002, accessed: Aug. 28, 2003

111 Summary of the IDC server market share study available at: http://news.com.com/2100-1010-5069581.html, Aug. 2003, accessed: Aug. 28, 2003

112 “headless” means that there exists no requirement to attach a monitor and a keyboard to the server, administration of the server can be done remotely from another computer.

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(Redhat, Suse, IBM, HP and many smaller companies)

• Quick release rate - Fixes and patches are released quickly, an order of magnitude faster than

commercial software. This is extremely useful for security patches. A consumer does not need to

wait until a particular vendor has released a patch. The Linux community, which has hundred

thousands of developers, usually provides security fixes only hours after the detection of a

security whole.

• Long term accessibility for upgrades - While Windows NT is a product and now has reached

end-of-life and Microsoft does not provide support and security patches anymore, Linux is more

a platform and can gradually be upgraded to newer releases if desired. There is no vendor

dictating when the servers needs to be upgraded to a new release.

8.1.1.2 Weaknesses:

• Usability - Linux, and open source software in general, are usually focused on providing

functionality, and their developers often do not pay much attention to usability aspects. Graphical

user interfaces (if they exist at all) are poorly designed, and less intuitive to use, compared to

Microsoft's offerings.

• Documentation - While Windows offers easy built-in access to user documentation, at Linux the

huge amounts of documentation are available, but the documentation is not structured in a way

for easy centralized access.

• Support Staff - Linux experts, which often have a Unix background, are more expensive and

more difficult to find. The selection of the right people is also more difficult, because

certifications comparable to Microsoft Certified System Engineer (MCSE) are not common and

only available for specific Linux Implementation from Red Hat, IBM or other vendors.

• Lack of Ownership - Users want accountability and want to make someone responsible for

possible problems with their operating system.

8.1.1.3 Opportunities

• General business trends - The recent adaption of Linux by big companies like IBM, Oracle and

HP has significantly increased the credibility and acceptance of an operating system which

started a decade ago as spare time activity of a student from Finland.

• Many distributors - While Windows is coming from a single vendor, there are hundreds of

Linux distributors, each one targeting different customer needs, different hardware platforms or

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different niche markets. The high diversification of distributors might be confusing for some

users.

8.1.1.4 Threats

• Risk of fragmentation - So far, there exists only one Linux kernel. But code fragmentation

happens very often in OSS. Typical reasons are project administrator doing a poor job or

personal conflicts between developers. This often results in a code fork and project split. A

typical example are the different open source BSD Unix versions: Open BSD, Net BSD, Free

BSD, and others.

• Microsoft's marketing machinery - Linux companies have very limited marketing possibilities.

Microsoft however has financially nearly unlimited possibilities for any kind of sponsorship

which can be interpreted as purchase of mind share and political power. This is a threat for

Linux, especially when Microsoft is sponsoring research institutes. The results those sponsored

research institutes present, are not independent anymore. The same applies to Microsoft

sponsoring of educational institutions.

• Microsoft's monopolistic power - Microsoft has enough financial resources for lowering the

price of its services and products for specific projects just to underbid any Linux based offering.

8.1.2 Linux Server summary and conclusionThe typical Linux disadvantages like interoperability problems with Microsoft software or lack of a

user interface targeted to novice users are not relevant for a server operating system. One of the

major problem is an organizational problem: support staff.

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8.2 J2EE Application Server: JBoss The market for Java based Enterprise Application servers is dominated by Websphere from IBM

and Weblogic from Bea Systems. Only for simple application, which only use a small part of the

J2EE specification, OSS like Tomcat has been used on large scale. In the upper league, for a long

time, Open Source application servers did not even play a marginal role. Recently the Bea Systems /

IBM equilibrium of power has been attacked by JBoss, a J2EE compliant OSS application server

with one of the most professional OSS organizations behind it. The market share of JBoss is

difficult to estimate, because there is no licensing involved, which could reveal the number of

production sites running JBoss. And because enterprise applications usually are running inside

company intranets, netcraft113 server statistics are not representative as for web servers. However,

JBoss has been downloaded over two millions of times in 2002 and it is very popular among

software developers, because it is easy to use and has some technical features which not even its

commercial commercial competitors have.

JBoss is OSS project with LGPL license. The core developers of JBoss are all employed at JBoss

Group, a service company founded by JBoss creator Marc Fleruy.

According to JBoss creator Marc Fleurys, the visions of JBoss are highly profit oriented and very

differentiated in comparison to Linux114: “The difference is that Linux is not really structured

commercially, meaning (Linux creator) Linus Torvalds is off doing something else. And there is

Red Hat as a third-party packager. Whereas we are very much for profit. There is a lot of services

in middleware, as compared to Linux, where you do not have so much that you do and consult

around. Middleware is very consulting intensive. We have a profitable consulting operation that

has all the developers in it. We are borne from inside the group, and the company grows from

inside the group, which is a different model. We're highly structured and commercially focused. We

just use open source as R&D and recruitment if you will”

8.2.1 SWOT analysisThe following analysis explores possibilities and limits of the JBoss application server.

8.2.1.1 Strengths

• No license cost - Depending on the configuration, application servers from Bea Systems and

113 Netcraft web server statistics show on what operating system Internet web servers are running, For more information visit http://www.netcraft.com, accessed: Aug. 28, 2003

114 LaMonica, M., Behind the story at JBoss, Internet: http://news.com.com/2008-1082_3-994819.html, accessed: Aug. 28, 2003

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IBM have been around 10,000 U$ per CPU. For a clustered server farm, which consist of several

or even dozens or hundreds of single computers, a lot of money can be saved. And there is

another issue involved with licenses. While activating a license technically usually straight

forward and done within minutes, at large companies the work flow to obtain license involves

many steps, and developers don't like to loose their time with such time consuming tasks.

• Customization options - The purpose of the J2EE standard is to provide a platform, where the

components of the platform should be vendor-independent and interchangeable. J2EE propagates

best of breed approaches. JBoss goes even a step beyond, because of its modular structure, it

allows to use only the required parts. And if even more customization is required, than every

module of JBoss can be modified independently of the others.

• Ease of use – This is one of the main reasons why JBoss is so popular among software

developers.

• Professional Support and Training - JBoss Group provides globally and for competitive

conditions consulting, support and training. All members of JBoss Group are core developers of

the JBoss software.

8.2.1.2 Weaknesses

• Usability - OSS developers usually concentrate on the core functionality. This is valid for JBoss.

The administration console is very simple and limited, compared to the products from Bea

Systems and IBM.

• Not officially J2EE certified - SUN is the authority which licenses the J2EE certification kit to

interested parties. All major closed source J2EE vendors have their products J2EE certified.

Theoretically, JBoss Group, the professional services company which is staffed with the JBoss

core developers the could also license the certification kit, and if the JBoss server passes the

J2EE test, they could call their server J2EE certified. However, this has not happened so far,

because of the following reasons:

• the J2EE certification is expensive

• the J2EE certification kit is closed source and an NDA must be signed to use is, and this

doesn't fit into the distributed, collaborative JBoss approach of Software development.

• P roject too much under control of one commercial company – Marc Fleury and his JBoss

Group company decide which contributions will be accepted for inclusion into the main software

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releases. In case there are conflicts of interests, they will decide for the benefit of JBoss Group.

8.2.1.3 Opportunities

• General trend for higher acceptance of OSS in the enterprise.

• Current economic situation, where IT investments with high license costs are difficult to get

approved.

8.2.1.4 Threats

• IBM and Bea Systems have been reducing the price of their licenses over the last years.

Therefore the argument of reduced license cost, which often only play a marginal role at large IT

integration projects, is loosing even more of its importance.

8.2.2 JBoss summary and conclusionBasically there are no technical reasons for not using JBoss. Only for high end systems with very

special requirements, the solutions form IBM and BEA Systems might be better adequate.

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8.3 Office Suites: OpenOffice OpenOffice offers all the basic and most of the advanced features that Microsoft Office has, but for

free. Solveig Haugland, author of several books dedicated to OpenOffice beliefs that the future

looks bright for OpenOffice: “... use will continue to grow, perhaps not from commercial centers

first, but from the public sectors, school and home use. But, eventually, because students will have

used it in high school and college, or because governments require an open-source file format,

OpenOffice.org and StarOffice will become as widely used or more so than Microsoft Office is

now.”115

8.3.1 SWOT analysis:The following analysis explores possibilities and limits of OpenOffice.

8.3.1.1 Strengths

• Zero license cost - While this point is less relevant at most typical Open Source areas like server

software and frameworks for software development, OpenOffice actually is a end user product

for desktop., an area where license costs have a strong impact on the total cost if many licenses

are required. The license issue is also important for home users. Whether they have to pay several

hundred dollars for the legal use of an office suite or not, is a big difference.

• File Format Compatibility - Beside of reading all important Microsoft File formats, OpenOffice

has also support for direct output to PDF or SWF. PDF is the most important format for viewing

text documents on the Internet. SWF is the vector file format of the Macromedia flashplayer,

which is currently installed on 98% of all web browsers worldwide. SWF output allows to view

presentations created with OpenOffice (or Microsoft PowerPoint and then imported into Open

Office) on any web browser.

• Cross platform compatibility - While MS Office is only available for MS Windows and for

The Mac, Open office is also available for Linux and Solaris. And beside of English, 27 other

languages are supported.

8.3.1.2 Weaknesses

• Performance - MS Office is faster. Not much but enough for a user to recognize the difference.

115 Interview with Solveig haufland avalibale at: http://searchenterpriselinux.techtarget.com/qna/0,289202,sid39_gci888081,00.html, accessed: Aug. 28, 2003

68

• Help System - OpenOffice doesn't have popup wizards (“agents”) which help the unexperienced

user to perform actions.

• No Visual Basic – Many companies and organizations have developed with MS Visual Basic

applications and integrated them into MS Office. These application cannot be migrated to

OpenOffice.

• Support - There is no globally organized, professional support for Open Office. Only for

StarOffice, the commercial distribution of OpenOffice, SUN provides support.

8.3.1.3 Opportunities

• Microsoft has announced to release new versions of the Internet Explorer only bundled with the

Windows operating system and anymore and not to release anymore any new IE Web browser for

the Apple Operating system. Whether this also will happen to the MS office suite for the Apple

Mac, purely depends on Microsoft and its business strategies, which are directed to push users

from upgrading their system to the newest Microsoft Windows operating system, otherwise they

not receive any support and software updates like security fixes anymore. This threat is a good

opportunity to get the mind share of the Apple users. If they want to stay on the safe side for the

future, they will stick to Open Office.

8.3.1.4 Threats

• MS Office popularity - Everybody knows to some extent MS Office. And if somebody does

not, it is easy to find somebody who has basic or even profound knowledge of MS office. At

workplace, just asking the guy next to you, is enough to resolve basic MS office user problems.

The situation is different with Open Office. The typical Linux user, which uses Open Office

sporadically to create and print out some paperwork is more technically interested and is usually

not the corporate user which works with Open Office or MS Office on a daily base.

8.3.2 OpenOffice summary• Migrating a corporate Windows desktop to Linux and substitute MS Office with OpenOffice will

not gain much user acceptance today. But for the home office, running on Windows, even for the

novice user, OpenOffice can be recommended. Whether productivity from users at corporate

desktops will suffer, after migrating from MS Office to OpenOffice, depends on many factors

and cannot be answered in general.

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8.4 Web browser: Mozilla When Netscape released the sources of their browser, they called the browser project Mozilla. After

having lost the browser war against Microsoft, Netscape was bought by AOL. Mozilla continued to

be the code base for the Netscape Browser, which was the AOL default browser. Then AOL made a

deal with Microsoft and used Internet Explorer (IE ) as the default browser browser for their

customers. In July 2003, AOL stopped their engagement with the Mozilla community 116, after

having pledge two million dollar into a new independent organization called Mozilla Foundation, .

Mitch Kapor, the creator of Lotus 1-2-3, one of the first killer-applications for PCs, is Chairman of

the Mozilla foundation. The separation from AOL has been well received at the Mozillla

community, and with the new independent organization, the future looks bright for Mozilla.

8.4.1 SWOT analysis:The following analysis explores possibilities and limits of the Mozilla web browser.

8.4.1.1 Strengths

• Zero license cost - One could argue, that IE also can be downloaded for free. This is true for the

moment, but it is likely that Microsoft will charge for the browser in the future, because

Microsoft only offered IE for free to win the browser war against Netscape. It does not make

economical sense for Microsoft to offer a product for free, if they have the monopoly on that

market.

• Innovation - Mozilla offers a lot of advanced features like tabbed browsing117, integrated

Google-access, e-mail client with Spam filtering and much more.

8.4.1.2 Weaknesses

• Many websites only optimized for IE - While simple HTML content looks identical on Internet

Explorer and Mozilla, websites which are using Cascading Stylesheets CSS118, Javascript119 and

other advanced features might look different on different Browsers, because some of those

features haven't been properly standardized or the browser developers did not implement those

features properly. And because IE has about 90 % market share, Website developers often

optimize their content only for Internet Explorer.

116 More information about Mozilla foundation is available at: http://www.mozilla.org/press/mozilla-foundation.html, accessed: Aug. 28, 2003117 Tabbed browsing means that the user can open a new browser window inside of the current browser. 118 CSS is used for separation of content and layout / style of a web page119 Javascript is a programming language used to give web pages a dynamic behavior

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• Too many features - Mozilla is more than just a browser, it is a suite including e-mail client

and web page development tools. The download installation file is more than 10 MB large. Most

people just want a good browser and don't want to download additional tool they never use.

• Slower than IE – IE is tight integrated with Windows and therefore slightly faster to start up and

to render web pages.

8.4.1.3 Opportunities

• No more free stand alone version of IE - Microsoft announced in June 2003 to deliver the next

version of the Internet Explorer only bundled with the Windows operating system and not to

offer free downloads anymore. If this plan will turn into reality, it is likely that not everyone will

agree to buy a new operating system just for having a new browser application and might switch

to Mozilla.

8.4.1.4 Threats

• IE Integrated into Windows - Internet Explorer is bundled with Window, this is a very big

competitive advantage fro Microsoft. If a new version IE, which is planned to be shipped with

“Longhorn”, the next Windows Operating system in 2005, will be significantly quality improved,

there is no reason for Windows users to download and install another browser application.

8.4.2 Mozilla summary and conclusionMozilla has some advanced features like tabbed browsing, which are very useful for Internet users.

But Mozillas market share is not significant yet, because IE is already installed on all new PCs and

works relatively well.

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8.5 ERP/CRM Software: Compiere Compiere120 is an open source ERP software with integrated CRM solution for streamline order

processes on the web and customer centric point-of-sales (POS), for inventory management,

automated accounting, customer service and more. Compiere is targeted to small to medium sized

businesses in distribution and service, and is designed for the global marketplace. There is a

worldwide partner network providing support for Compiere in more than 20 countries.

Compiere is based around standard business processes, the software is written in Java and requires

an Oracle database. Jörg Janke, the project founder, lead developer and owner of a company which

provides services for Compiere, has been working as an Oracle consultant before, and this is the

reason, why Compiere is tightly integrated with proprietary functions of the oracle database. This

makes Compiere less attractive for small companies which do not want to deal with the complexity

of administrating an Oracle database. But there is hope for database independence and support of

open source databases for the next major release, scheduled for the end of 2003.

8.5.1 SWOT analysis:The following analysis explores possibilities and limits of the Compiere ERP/CRM software.

8.5.1.1 Strengths

• Zero license cost - While there is a general trend today away form orbitant prices for licenses,

ERP / SCM systems are the exception. The Microsoft Business solution121, derived form the

acquisition of Great Plain and Navision, which is targeting the same market as Compiere, comes

with license cost higher than 100,000 U$, depending on the selected functionality, features and

number of users.

8.5.1.2 Weaknesses

• No vertical modules - There do not exist different versions of Compiere modules targeting

different industries.

• No local support - Implementing and supporting ERP/ SCM solutions requires a lot of

knowhow and it is very unlikely that the next local IT services company is a Compiere expert.

120 More information about Compiere is available at http://compiere.org, accessed: Aug. 28, 2003121 More information about Microsoft Business Solutions is available at

http://www.microsoft.com/BusinessSolutions/default.mspx, accessed: Aug. 28, 2003

72

8.5.1.3 Opportunities

• Concentration of ERP/CRM vendors - The recent acquisition (or elimination) of JD Edwards

by PeopleSoft and Oracles bid for Peoplesoft showed the trend for concentration of ERP/CRM

vendors in the next years. As in the past, "merged" products will be discontinued - sooner or

later. For Compiere, the threat of being bought and eliminated by another company does not

exist.

• Open standards reduce integration costs - ERP / CRM always needs to be integrated into an

existing environment. While integration of closed source software usually is getting very

expensive, because support is only available from the vendor (vendor-lock-in) and often the

closed source software is not supporting open standards. Compiere is fully based on open

standards.

8.5.1.4 Threats

• No OSS history in ERP - OSS has been used successfully in software development and for any

kind of Internet software. ERP is related to neither of them. Therefore the barriers are higher to

convince management for selecting a relatively unknown product for a business critical

application. Outside the world of open source enthusiasts, not many people have ever heard of

Compiere.

8.5.2 Compiere summary and conclusionFor an e-commerce startup company, which does not have yet a ERP/CRM System, Compiere

might be an interesting option. Traditional companies should evaluate first vertical solutions.

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8.6 Content Management Software (CMS): ez Publish Norwegian independent software vendor ez Systems122 is successfully running a service business

around their highly popular open source and PHP-based content management system ez Publish.

With advanced functionality like integrated workflow engine, role based access control, discussion

forums, content versioning, multi language possibilities, search engine, template engine and more,

this software is competing against expensive proprietary CMS software.

8.6.1 SWOT analysis:The following analysis explores possibilities and limits of the ezPublish content management

system..

8.6.1.1 Strengths

• Zero license cost – Proprietary CMS licenses with functionality comparable to ez Publish, are

usually very expensive (> 10K $)

• Fully Integrated OSS Stack - ez Publish uses the Apache Webserver, the MySql database and

the PHP script language as its core engine. Installation packages for Windows and Linux are

available, which contain everything to run the content management system.

8.6.1.2 Weaknesses

• Poor Documentation - Like many other OSS projects, even the ones supported by commercial

organizations, ez Publish does not offer much documentation for the novice user. While getting

up and running the preconfigured examples is very simple, any more

• No local support – There does not exist exist a globally organized partner network of companies

which provide support for ez Publish.

8.6.1.3 Opportunities

• Only few OSS CMS competitors – Today users can choose between more than 50 OSS content

management systems which are actively developed. But most of them are not comparable in

terms of features and workflow integration with ez Publish.

8.6.1.4 Threats

• Prices of proprietary CMS are dropping – As side effect of a market consolidation of CMS

122 More information about ez Systems and ez Publish is available at http://ez.no, accessed: Aug. 28, 2003

74

vendors, the consumer gets more features and a better product for less money than lets say a year

before. Compared to OSS, the commercial CMS vendors are developing their products faster and

better than the majority of the CMS OSS communities. Ez Publish has not reached yet the critical

mass to play a dominant role on the global CMS market.

8.6.2 Ez Publish summary and conclusionIt is very easy to install ez System and to set up a simple website. For most small and medium sized

companies and organizations, ez Publish provides enough features. When evaluating content

management systems, ez Systems should be considered.

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9 OSS survey in Switzerland To find out, to which extent companies and governmental organizations in Switzerland are already

using OSS, whether their IT strategies consider Integration of or Migration to OSS, how cost

analysis are performed and whether the cost of OSS solutions are taken properly into consideration,

more than 20 IT decision makers of small companies, large corporations and governmental

organizations have been interviewed.

9.1 Expert interviewsThe following results show that Switzerland fits well into the global picture of increased acceptance

of OSS in the enterprise and governmental organizations.

The business approaches of OSS integration / migration among the interviewed parties was very

diversified. The interviews have been realized by phone, and the duration of one interview varied

between 10 minutes and 30 minutes. The results only show trends.

At first sight, the popularity of OSS seems to be surprisingly high. However, the companies using

only OSS are all ISPs, with Linux powered web servers.

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Figure 5 OSS popularity in Switzerland

Yes, for some systems / ap-plications

No Yes, for most systems /ap-plications

Yes, but only to collect experiences

No, but we have plans for OSS

0

5

10

15

20

25

30

35

40

45

Is OSS used at your company / organization ?

%

OSS is most used for Internet related services, systems and applications. Mailservers are the

preferred pilot projects to gain experiences with OSS.

Most of the interviewees who selected license costs savings as main advantage of OSS did not do an

IT cost analysis based on a model.

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Webserver Mailserver DNS Server

Software develop-ment tools

Linux Thin Clients

0

5

10

15

20

25

30

35

40

For which sytems / applications is OSS used ?

%

Figure 6 OSS at Swiss companies and organizations

Figure 7 OSS advantages

No li-cense cost

Higher stability

Better security

No licens-ing pa-perwork

Ideology behind OSS

0

5

10

15

20

25

30

35

40

45

50

Main advantage of OSS

%

Figure 8 OSS disadvantages

One interviewee was disappointed about the expected cost savings of only five percent, for planned

Linux migration. He had expected much more.

Figure 9 OSS trends

Some interviewees claimed to have only migrated to OSS, because they were unsatisfied with

licensing and upgrade issues of proprietary software. Nobody regretted the move to OSS or to have

gained experiences with a OSS pilot project.

78

No inhouse OSS knowhow

Bad interoperabili-ty with MS prod-ucts

Only little or no cost savings

0

10

20

30

40

50

60

70

Main disadvantage of OSS

%

More Equal Less0

10

20

30

40

50

60

70

Is OSS planned to be used more, less or equal in the future ?

%

No Yes Linux Thin Clients already in use

0

10

20

30

40

50

60

70

80

90

Are Linux clients planned for the dektop ?

%

Figure 10 Linux on the desktop

Linux on the desktop as client operating system seems to be far away. However, thin clients123 are a

viable option for some governmental organizations.

No strategy yet Internal training Self study External train-ing

0

5

10

15

20

25

30

35

40

How does IT stuff acquire OSS knowhow ?

%

Figure 11 OSS knowhow

Smaller IT companies had wrong expectations about the required skill level to administrate Linux

servers. They made the experience that Windows NT knowledge does not help much to administrate

123 With thin clients, applications run on the server and display is redirected to client computers

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a Linux Server.

Most of the interviewees, who claimed that the costs savings of the migrated systems were only

marginal (smaller 10%) had unrealistic expectations.

80

No influence Influence0

10

20

30

40

50

60

70

80

90

100

Influence of the SCO / IBMlawsuit on OSS strategy

%

Figure 12 SCO / IBM lawsuit

Only marginal costs savings

Significant costs savings

No costs savings0

5

10

15

20

25

30

35

40

45

How much does OSS help to reduce IT costs ?

%

Figure 13 OSS and IT costs savings

9.2 General observationsThe next sections present a summary of observations and notes taken while doing the expert

interviews.

9.2.1 Small, privately owned companies They usually do not perform IT cost analysis. Often the only costs criteria are the hardware and the

software licenses. This gives the wrong impression, how small and medium sized enterprises can

benefit form OSS and results in wrong expectations and at the end, equal or even higher costs of

solutions based on OSS. This problem is not related to OSS, it applies to any kind of investment in

IT hardware, software or knowledge. If decisions are just based on recommendation of a single

vendor, as single source of information or just one cost criterion, like the license cost, it is difficult

to make decisions which bring the best longterm cost saving benefits. On then other hand, small and

medium sized companies do not have specialized resources to analyze IT costs.

9.2.2 Larger enterprises If IT is not the core business, than those companies try to avoid to much involvement with IT

problems, even if there might be longterm cost saving benefits. Larger companies often have

expensive software for Enterprise Resource Planning (ERP) like SAP, which cannot be replaced by

OSS, because of many practical reasons. First, those enterprise software like ERP are absolutely

business critical, and once those systems are set up and running, IT manager try to avoid any risks

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Only Hard-ware and li-cence-costs

No cost analaysis

Purely based on experi-ences

Inhouse developed model

Simplified Gartner TCO analysis

02.5

57.510

12.515

17.520

22.525

27.530

How are IT costs analyzed, which costs are considered ?

%

Figure 14 IT cost analysis

involved with migrant ions and changes. And a migration to OSS never is straight forward for

complex systems. Second, there are no real OSS alternatives for enterprise software like ERP,

expect of Compiere124 , which provide partial functionality of SAP, but which is more or less

unknown in the commercial wold expect of some special interest groups.

Because license and support cost for operating system an other basic software is only marginal

compared to cost of the enterprise software, many large enterprises are not considering migration to

OSS worth the effort in regard to cost savings.

However, OSS is moving into large corporations, but it is less visible, sometimes not even to the

CIO. And if large enterprises are moving to OSS, they often do not make this information public.,

this is particularly true for financial institutes. Beside of the visible move to OSS, which is very rare

yet at large companies in Switzerland, there exists something like a quite revolution. On the one

hand, more and more department intranet servers are running o Linux, on the other hand, Linux is

more and more embedded into devices like hardware for any kind of automatize or network and

communication equipment.

Another area where OSS has a strong position in Switzerland, is enterprise software development,

especially if the programming language is Java. There are man tools or frameworks which highly

popular among developers not only because of their excellent quality, but also because there is no

paperwork needed for ordering, budget and licensing issues.

9.2.3 Internet service provider( ISP)These companies offer Internet access, web hosting and related services. They belong to one of the

category of small, privately owned companies, but the play a special role in regard to OSS. With a

few exceptions, their business often is based on Linux web servers. And if not particularly requested

by their customers, they use OSS based solutions for their hosting business. They represent the first

wave of companies which have built their business on top of OSS.

9.2.4 Governmental organizationsThey are forced by the public to decrease costs. They have large and well organized IT departments.

These two points are very helpful for OSS to gain acceptance among governmental organizations. In

fact, many states in Switzerland are intensively investigating and analyzing opportunities for OSS.

Some are already at very advanced stage. For example the state of Solothurn125. Since 2000, they

have their IT strategy fully based on OSS. Servers are running on Linux, thin clients, which have 124 For more information on Compiere: Chapter 8.5125 State of Solothurn, IT management, Telephone interview, Aug. 18, 2003

82

Linux as operating system, but for the benefit of the user, this desktop clients are running a Citrix126

powered MS Windows desktop. There was never such a media hype involved, comparable to the

city of Munich move to Linux, but Switzerland has governmental organizations, with years of

experience in running large part of their systems on Linux.

The next big visible wave of OSS replacing proprietary software might be represented by

governmental organizations migrating to Linux.

9.2.5 Educational institutionsIn those cases were proper cost analysis are performed, only TCO cost are considered. ROI

calculations do not make sense in the context of educational purpose. On the other hand, long term

effects which are not measurable in financial terms are very important. Each public educational

institution is based on the idea of free information exchange. Open Source supports this ideas and

with its model of Internet based collaboration, it inspires teachers and other people involved on

education to apply those models of collaboration to educational activities, which usually only have

in common with software development the requirement for its participants, to demonstrate creativity

and engagement for collaboration within a team for successful participation.

126 Windows is installed on the CITRIX server, and just the display is redirected to the end user

83

10 ConclusionsThe objective of this thesis was to identify possibilities and limits of OSS. The current trend is an

increase of the possibilities and a reduction of the limits. However, the limits will never be

eliminated, because proprietary software is better suited for niches, and a healthy software

ecosystem, where innovation is driven by competition, requires open source and proprietary

software.

10.1 Summary of advantages of OSS• Simpler license management

• reduced or no vendor-lock-in

• reduced or no license costs

• more flexibility

• increased security

• better stability

• no vendor-dictated upgrade path

• usually better compliant to open standards

• more possibilities to influence the future of an open source software

10.2 Summary of disadvantages of OSS• Often slower than proprietary software

• interoperability problems with proprietary software

• usability: user interfaces and documentation often only targeted to expert users

• more difficult and more expensive to find staff

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10.3 Possibilities for OSS

10.3.1 Governmental organizationsA drastic increase of OSS at governmental organizations can be expected for the next years.

Governmental organizations usually have the necessary size and resources to implement streamlined

and cost-optimized IT processes, which benefit on the long term from open source, therefore OSS

for governmental organizations can only be recommended.

10.3.2 Educational InstitutionsIf governmental organizations have a long term strategy to push OSS, then education institutions are

the best point to start. More important than cost savings is the fact that OSS is based on the idea of

free exchange of information.

10.3.3 ISPFor ISPs and other companies with strong relation to the Internet the use of Linux and other OSS is

recommended without any restrictions.

10.3.4 Software VendorsSoftware vendors can benefit form open source and reduce development costs by using OSS for the

bottom layer on the software stack of their products. With this approach they combine in their

product the advantages of Open and proprietary software:

• Leading edge technology, functionality and stability from open source

• Customer specific user interface, high quality documentation and commercial support from

traditional software engineering

10.4 Limits for OSSIn general, migrations to Linux should be avoided or postponed, if a company does not have a

proper model for analyzing its IT costs. In such a case, any kind hardware, software or processes

change is accompanied by a high risk of unpredictable hidden costs.

Smaller companies often do not have the same possibilities for analyzing their costs. Their IT

processes are not streamlined, and everything related to IT depends on single person. Switching to

Linux just to save licensing costs does usually not make sense for small companies.

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10.4.1 Linux for the desktopIn general, Linux on the desktop for the corporate user should be avoided, only if a company has

already several years of Linux experience or in other special cases, where user acceptance will not

be a problem, Linux for the desktop is recommended.

10.4.2 OSS for nichesOnly if the open source community of a project reaches a critical mass, the project looses its

dependency from a single person or a limited group of persons. There exist a lot of open source

niche applications, but their communities often consist of only few members. This represents a high

risk for the continuity of the project, and such open source software should not be used for business

critical applications.

86

10.5 First Steps for migrating to OSSThe process of deciding whether or not to deploy OSS, then possibly planning for and adopting it

follows these high-level milestones:

Planning, cost analysis

1. Review enterprise IT objectives, resources, constraints and enabling factors.

2. Assess existing IT systems and functions to see where they meet objectives and where gaps exist.

3. Identify areas of business process complexity or high IT costs out of proportion to enterprise

value.

4. Look for appropriate opportunities for Open Source software and methodologies to help meet

enterprise IT objectives.

5. Estimate costs and projected returns of migrating specific platforms and functions to Open

Source.

6. Perform initial financial Total Cost of Ownership (TCO), Return On Investment (ROI) and

Business Value analysis to evaluate the feasibility and financial impact on enterprise IT budgets

from Open Source migrations.

7. Obtain executive management approval and sponsorship for planning Open Source initiatives.

8. Create an Open Source Steering Committee ideally composed of executives, IT stuff and

business representatives.

9. Identify key executives and technologists to lead open source efforts, and obtain training for

them in open source concepts, resources and methods.

Pilot projects

10.Plan a series of projects to integrate Open Source software and methods into the IT

infrastructure.

11.Initiate research and communication with the open source community.

12.Develop an Open Source Engagement Plan including guidelines for using Open Source software

and engaging with the community.

87

13.Refine and confirm the preliminary TCO, ROI and Business Values analysis of financial returns

from OSS

14.Gain executive approval and sponsorship for conducting one or more OSS migrations.

Production projects

15.Execute OSS migrations and review the results in a progressive sequence of project cycles.

16.Ideally, this process will be followed sequentially.

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11 Bibliography• Rosenberg, Donald K., Open Source: The Unauthorized White Papers. John Wiley & Sons,

2000. ISBN 0-7645-4660-0

• Sandred, Jan, Managing Open Source Projects: A Wiley Tech Brief. John Wiley & Sons, 2001.

ISBN 0- 471-40396-2

• Fink, Martin, The Business and Economics of Linux and Open Source. Prentice Hall PTR, 2002.

ISBN 0-13-04-7677-3

• Hahn, Robert William (Editor), Government Policy Toward Open Source Software. The

Brookings Institution, 2003. ISBN 0-8157-3393-3

• Afuah, Allan, Internet Business Models and Strategies. McGraw Hill, 2003.

ISBN 0-07-251166-4

• Raymond, Eric S., The Cathedral and the Bazaar, O'Reilly, Sebastopol, CA, 1999,

ISBN: 0596001088

• Nielsen, Jakob Usability Engineering. Boston, MA: Academic Press, 1993, ISBN: 0125184069

11.1 Working papers• Dalle, Jean-Michel; David, Paul M., The Allocation of Software Development Resources in

‘Open Source’ Production Mode, SIEPR Discussion Paper No. 02-27, Stanford Institute for

Economic Policy Research, March 2003.

• Hawkins, Richard E, The Economics of Open Source Software for a Competitive Firm,

Pennsylvania State University, Dubois, November 2002.

• Lee, Samuel; Moisa, Nina; Weiss, Marco, Open Source as a Signalling Device - An Economic

Analysis, JEL Classification: D82, L14, L86, O3, Goethe-University, Frankfurt/Main, March

2003.

• Nichols, David M; Twidale, Michael B, Usability and Open Source Software, Working Paper

Series ISSN 1170-487X, The University of Waikato, December 2002.

• Bonaccorsi, Andrea; Rossia, Cristina, Why Open Source software can succeed, Laboratory of

Economics and Management, Sant’Anna School of Advanced Studies, Pisa, Italy, 2003.

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• Commission of the European Communities, Linking up Europe, the importance of

interoperability for e-government services. Brussels, July 2003

• Tzouris, Menelaos, Software Freedom, Open Software and Participant's Motivations,

The London School of Economics and Political Science, 2002

• West, Joel, How Open is Open enough ? Melding Proprietary and Open Source Platform

Strategies, San Jose State University, 2002

• Fleury, Marc, Why I love Professional Open Source, JBoss Group LLC, 2003

• Steigele, Helmut, IT-Sourcing Step by Step (Draft), Cascade IT, 2003.

11.2 White papers• Kenwood, Carolyn, A., A Business Case Study of Open Source Software, Mitre Coorporation,

July 2001

11.3 Internet resources: • http://www.usatoday.com/tech/news/2003-07-14-linux-tech_x.htm

(Byron Acohido: Linux took on Microsoft, and won big in Munich. Feb. 14, 2003)

• http://newsforge.com/newsforge/03/07/11/2056234.shtml

(Frederick Noronha: Open Asia: Japan and Korea embrace Open Source. Jul. 11, 2003)

• http://www.washingtonpost.com/wp-dyn/articles/A59197-2002Nov2.html

(Ariana Eunjung Cha: Europe's Microsoft Alternative. Nov. 2, 2002)

• http://seattletimes.nwsource.com/html/businesstechnology/134908115_ballmer05.html

(Brier Didley: Ballmer cites Linux, other threats. Jun. 5, 2003)

• http://news.com.com/2008-1082-994819.html

(Martin LaMonica: Behind the story at JBoss. Mar. 31, 2003)

• http://www.opengroup.org/tech/open-source/opengroup-os-strategy.htm

(An Open Source Strategy for the Open Group)

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11.3.1 Expert Interviews:IT managers from the following companies or organizations shared their experiences and opinions:

NewMedia AG (Newspaper) Telephone Interview, Aug. 11, 03

Bundesamt für Informatik (Governmental institution) Telephone Interview, Aug. 13, 03

Informatikplanung Stadt Zürich (Governmental institution) Telephone Interview, Aug. 12, 03

Kanton Solothurn (Governmental institution) Telephone Interview, Aug. 18, 03

Kanton Zug (Governmental institution) Telephone Interview, Aug. 14, 03

Kanton Luzern (Governmental institution) Telephone Interview, Aug. 11, 03

Kanton Basel (Governmental institution) Telephone Interview, Aug. 12, 03

Kanton Thurgau (Governmental institution) Telephone Interview, Aug. 18, 03

Kanton Appenzell (Governmental institution) Telephone Interview, Aug. 11, 03

Migros (Supermarket) Telephone Interview, Aug. 13, 03

Denner (Supermarket) Telephone Interview, Aug. 17, 03

Green.ch AG (ISP) Telephone Interview, Aug. 14, 03

I.P.S (ISP) Telephone Interview, Aug. 11, 03

Inet Consult (ISP) Telephone Interview, Aug. 14, 03

Swiss Webgroup (ISP) Telephone Interview, Aug. 12, 03

Top Vision (ISP) Telephone Interview, Aug. 11, 03

Harvey Nash (Recruitment) Telephone Interview, Aug. 14, 03

Credit Suisse (Financial services) Telephone Interview, Aug. 13, 03

First Boston (Financial services) Telephone Interview, Aug. 15, 03

Zürcher Kantonalbank (Financial services) Telephone Interview, Aug. 15, 03

Danzas (Logistics) Telephone Interview, Aug. 11, 03

91