Not always 'open'
One of the reasons why costs can be higher than expected is because companies often opt to purchase a license for the software rather than using the free-of-charge community version. Some vendors operate on a "dual-license" business model, in which customers can buy a license to get access to the vendor's support team or to extra features and extensions for the core software, such as management tools.
According to Mark Driver, an analyst at Gartner, the overwhelming majority of commercial open-source efforts today are based on a dual-license model. Customers should know, he says, that with this option, "the open-source-ness of the product comes into question." While open-source software licenses cost less than commercial software licenses, they include terms and conditions that restrict your use and lock you into a vendor. "We're seeing pushback from users who say, 'I went to open source to avoid these commitments,' as well as those who just want a piece of software that works well and is cheap," Driver says.
Lyman points out that larger enterprises often have the development resources to work with community versions of open-source applications, but even they might find reasons to purchase a license, such as a need for service-level agreements.
Not so for NPC International Inc., which operates more than 1,150 Pizza Hut restaurants worldwide. Five years ago, it used very little open-source software, whereas today it tries diligently to avoid commercially licensed software if there's an alternative, says Jon Brisbin, portal webmaster at NPC. The franchisee started migrating to open source when it converted its point-of-sale system from dBase to PostgreSQL; that deployment has grown to 10,000 installations.
On the other hand, says James Sims, CIO at Save Mart Supermarkets, buying an enterprise license from Ingres was a financially sound decision. Save Mart uses several open-source applications, including PostgreSQL, Apache Lucene, Red Hat Linux, MySQL, and Xymon, and it runs its payroll and time-and-attendance systems on an Ingres- and SUSE Linux-based system. It started out using the public domain version of Ingres but experienced challenges that were related to the software's inability to effectively use a database for a company of Save Mart's size. Sims turned to Ingres for support, which led to a contractual agreement. While the costs are comparable to what he'd pay a commercial database company, "we get incredible support -- more than they should provide," he says.
Similarly, Bassim Hamadeh, founder of custom educational publishing firm University Readers, purchased a license for SugarCRM three years ago, after using the community version for a couple of years. "Our IT manager read about Sugar 2.0, installed it, and within a week, we were using it," he says. At approximately $350 per user per year, he says the price is 20 percent to 25 percent that of a system like Salesforce.com, and it enables the company to use additional features such as a robust reporting tool, a workflow system and automated triggers.
Another hallmark of open source is the support available in community forums, particularly for the more mature or widely used systems. But choosing to rely on community support instead of signing a service contract can be risky.
"People can use Google for 90 percent of the problems they run into, but the last 10 percent may be killer if it's a mission-critical system," says Gartner's Driver.
It's important to understand the business impact of a catastrophic failure and have contingency plans in place to remediate the problems, he says. Reducing your risk might mean limiting your use of an application based on its maturity and the level of community support available, or choosing to pay for vendor or third-party support.