The hidden costs of open source

A million-dollar question is circulating in the IT community, the answer to which could lead to significant savings in hardware and software expenditures: Can an organization lower its TCO (total cost of ownership) if it uses the Linux operating system and other open-source software in place of Windows or Unix?

The answer may appear easy to calculate. After all, most open-source software can be acquired for free. For some organizations, including Wall Street firms Merrill Lynch and Credit Suisse First Boston, both of which have successfully ported large financial applications to Linux, replacing expensive Unix systems with open-source alternatives can save them money.

But for organizations that require a major shift in architecture -- sometimes coming from a Windows environment -- or those without the technical expertise to reap the benefits of open source, switching to Linux could end up costing more. "Before you can declare victory that one operating system is more expensive than the other, you are going to have to put some metrics around it," says Al Gillen, an analyst at IDC in Framingham, Mass.

Those measures of comparison would have to include everything from the price of hardware and software acquisitions, to the ongoing costs of securing and maintaining a system, to the resources necessary to port years of corporate data and applications to a new platform. Depending on an organization's current IT infrastructure, the cost of each of those aspects will vary.

A simple comparison of software acquisition costs won't do, Gillen says. Although Linux and other open-source software cost less to acquire than Microsoft's Windows operating systems because of the licensing fees that Microsoft charges, IDC says that software acquisitions only account for about 10 percent of the total costs spent over a five-year period on an IT system. It's in the other 90 percent where companies may find the biggest savings -- or hidden costs.

Advantages of open source

Alabanza, a Web-hosting company in Baltimore, Md., has benefited by using open-source products rather than proprietary software. The company runs a datacenter that hosts 200,000 small-business Web sites and built its entire IT infrastructure on Linux and other open-source software, says CEO Tom Cunningham.

In addition to customizing a version of Linux from Red Hat, the company has pieced together its datacenter with freely available software such as the Apache Web server; Sendmail, a popular e-mail server; SSH (Secure Shell) software, which allows a client computer to log on to a remote machine; and FTP software, used for moving files over the Internet.

"One of the main reasons for choosing open source is that we have access to the source code, and in our environment it's critical to have access to source code so we can customize and add security," Cunningham says.

Having the source code is key to Alabanza's ability to support its Red Hat installation, which is handled entirely by its own IT staff. After customizing the operating system for its specific needs, and poring over the operating system code, Alabanza said it has all the expertise it needs to maintain and debug its system.