Realising the Benefits of Open Source

Recently the State Services Commission released a Request for Proposal that specified that the solution should be open source. As a result there was some concern expressed. The NZOSS believes this approach will encourage a level playing field when it comes to offering software development and implementation services by ensuring that many companies will be available to offer software development and implementation services, rather than being locked into a single vendor.

Business and Government organisations are starting to understand the commercial opportunities that open source can provide that proprietary solutions cannot. Traditionally procurement has involved either buying or building a solution. In buying software an organisation reduces it's exposure to risk as the software is already complete and able to be evaluated. Because it is sold to many users the cost of development is shared and thus far lower than building the same solution. The downside of purchased software is that customers are at the mercy of the vendors when it comes to making modifications to the software, and being forced to upgrade at a time determined by the vendor.

The build approach by comparison gives an organisation full control of the software, allowing it to tailor the software to the needs rather than making internal changes to suit the software. This approach eliminates licensing and compliance costs. The downside to developing a solution from scratch is it requires that an organisation take on the enormous risk and cost of developing a whole solution in order to get the small amount of functionality that is specific to the organisation.

Until the advent of open source software there was no way to gain the benefits of both the buy and build approaches without the associated downsides.

With open source software, like proprietary software, we can easily obtain software that does much of what is needed. Many software packages will meet an organisations needs without any modification. In those cases one can simply install and use the software. The advantage over purchased software in this case is two fold. First organisations will have no up front license costs. Also, on an ongoing basis there are also no hidden compliance costs such as software license auditing.

Substantial benefits begin to accrue when users need to modify the software to meet business needs. Rather than starting from scratch they can make use of existing open source software that meets a majority of their requirements. From there they can either hire developers or contract development to a open source development company to complete the remaining functionality the organisation requires.

Under this model it is possible to massively reduce risks, adding to an existing system that is established and well tested, rather than developing all the functionality up front. As a result they also gain massive cost savings, funding development of only the additional functionality. They are also free to contract any one of literally hundreds of development firms who have equal access to the source code, and are thus able to conduct a truly competitive tender for development services.

It is clear that the open source approach by its nature provides benefits that are simply not available to proprietary competitors. It is perfectly reasonable for organisations to make a decision to leverage this advantage when making procurement decisions. We therefore support the decision of the SSC to include this as a requirement in order to ensure that it has maximum flexibility and provides value for our tax dollars.