Rsaccons Mba Thesis

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)........................................................................................ 18 2.4.2 Lesser General Public License LGPL............................................................................. 18 2.4.3 Mozilla Public License MPL.......................................................................................... 19 2.4.4 BSD License....................................................................................................................19 2.4.5 Apache Software License................................................................................................19 2.4.6 Public Domain.................................................................................................................19 2.4.7 OSS License Summary....................................................................................................20 2.4.8 Non-Open Source licenses.............................................................................................. 20 2.5 OSS and intellectual property................................................................................................. 21 2.6 The Open Source Community................................................................................................ 23 2.6.1 Development Model........................................................................................................25 2.6.2 The Source Code Repository...........................................................................................26 2.6.3 Software Quality............................................................................................................. 26 2.7 OSS and the Internet............................................................................................................... 27 2.7.1 The Internet as driving force behind OSS....................................................................... 27 2.8 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 i

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.......................................................................................................................... 40 5.1.2 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........................................................... 43 6.1.1 Components of a TCO calculation..................................................................................44 6.1.1.1 Acquisition costs..................................................................................................... 44 6.1.1.2 Quality components.................................................................................................44 6.1.1.3 Administration.........................................................................................................44 6.1.1.4 User involvement ................................................................................................... 44 6.1.2 TCO - Summary.............................................................................................................. 46 6.2 Return on Investment (ROI) and Business Value................................................................... 46 6.2.1 The decision.................................................................................................................... 49 6.3 Open source effect on value of software.................................................................................50 6.4 Devaluation of software..........................................................................................................52 6.4.1 Devaluation as a competitive advantage......................................................................... 52 6.4.1.1 Aggressive patent use.............................................................................................. 53 6.4.1.2 Monolithic Software ...............................................................................................53 6.4.1.3 Competition............................................................................................................. 54 6.4.2 The OSS based business model for software vendors.................................................... 55 6.4.2.1 OSS and the Apple Mac OS X................................................................................ 56 6.4.3 How does Microsoft deal with devaluation of its software.............................................56 7 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................................................................................................................62 8.1.1.1 Strength................................................................................................................... 62 8.1.1.2 Weaknesses:............................................................................................................ 63 8.1.1.3 Opportunities........................................................................................................... 63 8.1.1.4 Threats..................................................................................................................... 64 8.1.2 Linux Server summary and conclusion........................................................................... 64 8.2 J2EE Application Server: JBoss ............................................................................................ 65 8.2.1 SWOT analysis................................................................................................................65 8.2.1.1 Strengths.................................................................................................................. 65 8.2.1.2 Weaknesses ............................................................................................................ 66 8.2.1.3 Opportunities........................................................................................................... 67 ii

8.2.1.4 Threats..................................................................................................................... 67 8.2.2 JBoss summary and conclusion...................................................................................... 67 8.3 Office Suites: OpenOffice ......................................................................................................68 8.3.1 SWOT analysis:.............................................................................................................. 68 8.3.1.1 Strengths.................................................................................................................. 68 8.3.1.2 Weaknesses ............................................................................................................ 68 8.3.1.3 Opportunities........................................................................................................... 69 8.3.1.4 Threats..................................................................................................................... 69 8.3.2 OpenOffice summary...................................................................................................... 69 8.4 Web browser: Mozilla ........................................................................................................... 70 8.4.1 SWOT analysis:.............................................................................................................. 70 8.4.1.1 Strengths.................................................................................................................. 70 8.4.1.2 Weaknesses ............................................................................................................ 70 8.4.1.3 Opportunities........................................................................................................... 71 8.4.1.4 Threats..................................................................................................................... 71 8.4.2 Mozilla summary and conclusion................................................................................... 71 8.5 ERP/CRM Software: Compiere .............................................................................................72 8.5.1 SWOT analysis:.............................................................................................................. 72 8.5.1.1 Strengths.................................................................................................................. 72 8.5.1.2 Weaknesses ............................................................................................................ 72 8.5.1.3 Opportunities........................................................................................................... 73 8.5.1.4 Threats..................................................................................................................... 73 8.5.2 Compiere summary and conclusion................................................................................ 73 8.6 Content Management Software (CMS): ez Publish ...............................................................74 8.6.1 SWOT analysis:.............................................................................................................. 74 8.6.1.1 Strengths.................................................................................................................. 74 8.6.1.2 Weaknesses ............................................................................................................ 74 8.6.1.3 Opportunities........................................................................................................... 74 8.6.1.4 Threats..................................................................................................................... 74 8.6.2 Ez Publish summary and conclusion...............................................................................75 9 OSS survey in Switzerland ............................................................................................................ 76 9.1 Expert interviews.................................................................................................................... 76 9.2 General observations...............................................................................................................81 9.2.1 Small, privately owned companies .................................................................................81 9.2.2 Larger enterprises ........................................................................................................... 81 9.2.3 Internet service provider( ISP)........................................................................................ 82 9.2.4 Governmental organizations........................................................................................... 82 9.2.5 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......................................................................................... 85 10.3.2 Educational Institutions.................................................................................................85 10.3.3 ISP................................................................................................................................. 85 iii

10.3.4 Software Vendors..........................................................................................................85 10.4 Limits for OSS...................................................................................................................... 85 10.4.1 Linux for the desktop.................................................................................................... 85 10.4.2 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........................................................................................................................20 Table 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

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1 Introduction Many 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

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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 Software Before 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 realities There 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 5 6 7 8 9

IBM donated the eclipse development platform to the OSS community. See chapter 3.7 SUN donated StartOffice to the OSS community, see chapter 3.5 Fleury, M., Why I love Professional Open Source, JBoss Group LLC, 2003 For further information about Caucho and its license strategy visit http://www.caucho.com Binaries: executable code, as result of compiling the source code during the software development process Nichols, D. M., Twidale, M.B., Usability and Open Source Software, University of Waikato, 2002, P.5

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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 FOSS Open 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 Definition There 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.36 12 The official website of the Open Source Initiative is available at http://www.opensource.org, accessed: Aug. 28, 2003 13 Sandred, J., Managing Open Source Projects, P.47 14 Open Source Definition, Version 1.9. Available at http://www.opensource.org/docs/definition.php, accessed: Aug. 28, 2003

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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.

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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 Licenses The 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, 2003 18 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, 2003 19 Fink, M., The Business and Economics of Linux and Open Source, P.41 20 GNU Lesser General Public License, available at http://www.gnu.org/licenses/lgpl.html, accessed: Aug. 28, 2003

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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 Domain If 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 3.6 22 Mozilla Public License Version 1.1 available at http://www.mozilla.org/MPL/MPL-1.1.html, accessed: Aug. 28, 2003 23 The template for the BSD License is available at http://www.opensource.org/licenses/bsd-license.php, accessed: Aug. 28, 2003 24 Apache license available at http://www.apache.org/licenses/LICENSE, accessed: Aug. 28, 2003 25 Sandred, J., Managing Open Source Projects, P.39

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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 Summary Table 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

Modifications can Can be re-licensed Contains special

with

be taken private

by anyone

non-free software and not returned

privileges for the original copyright

to original

holder over your

copyright holder.

modifications

GPL

no

no

no

no

LGPL

yes

no

no

no

BSD

yes

yes

no

no

MPL

yes

yes

no

no

Public 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 licenses There 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.50 27 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.

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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 property The 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, 2003 31 For further information about the Samba open source project visit http://www.samba.org, accessed: Aug. 28, 2003

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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

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2.6 The Open Source Community OSS 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.73 36 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

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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

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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 Model Because 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 Repository Open 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 Quality Open 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, 2003 40 Fink, M., The Business and Economics of Linux and Open Source, P.56 41 Raymond, E.S., The Cathedral and the Bazaar, O'Reilly, Sebastopol, CA, 1999

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2.7 OSS and the Internet The 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 OSS The 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 Media Free 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 43 44 45 46

For further information about BIND visit http://www.isc.org/products/BIND, accessed: Aug. 28, 2003 For further information about Sendmail visit http://www.sendmail.org, accessed: Aug. 28, 2003 For further information about the Apache Webserver see chapter 3.2 of this paper For further information about the Kaaza file sharing system visit: http://www.kaaza.com, accessed: Aug. 28, 2003 For further information about the Apple iTunes visit: http://www.apple.com/itunes, accessed: Aug. 28, 2003

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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.

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3 History of OSS In 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 System While 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: [email protected] (Linus Benedict Torvalds) Newsgroups: comp.os.minix Subject: What would you like to see most in minix? Summary: small poll for my new operating system Message-ID: <[email protected]> Date: 25 Aug 91 20:57:08 GMT Organization: University of Helsinki Hello everybody out there using minix I'm doing a (free) operating system (just a hobby, won't be big and professional like gnu) for 386(486) AT clones. This has been brewing 47 Sandred, J., “Managing Open Source Projects”, P.6-14 48 Rosenberg, Donald K., Open Source: The Unauthorized White Papers, 2000, P.12 49 Free Software Foundation, Internet: http://www.fsf.org, accessed: Aug. 28, 2003

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since april, and is starting to get ready. I'd like any feedback on things 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, and I'd like to know what features most people would want. Any suggestions are welcome, but I won't promise I'll implement them :-) Linus ([email protected]) 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 never will 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 Webserver The 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 Browser Developed 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, 2001 51 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, 2003 52 Rosenberg, Donald K., Open Source: The Unauthorized White Papers, 2000, P.32 53 For further information about Apache open source projects visit http://www.apache.org, accessed Aug. 28, 2003 54 Rosenberg, Donald K., Open Source: The Unauthorized White Papers, 2000, P.28

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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 documents In 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, 2003 56 Rosenberg, Donald K., Open Source: The Unauthorized White Papers, 2000, P.79 57 All Halloween documents are available at http://opensource.org/halloween/halloween1.php, accessed Aug. 28, 2003 58 FUD: Fear, Uncertainty and Doubt

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3.5 OpenOffice In 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 Server At 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, 2003 60 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, 2003 62 For further information about JBoss visit http://www.jboss.org, accessed: Aug. 28, 2003 63 LaMonica, M., Java servers feel the open.source heat, Feb. 2003, Internet: http://news.com.com/2100-1001-984476.html, accessed: Aug. 28, 2003 64 Fleury, M., Why I love Professional Open Source, JBoss Group LLC, 2003

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

3.7 Eclipse Development Platform In 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 Linux When 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, 2003 66 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

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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-arms Selling 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 lawsuit A 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

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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

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4 Engaging with the Open Source Community A 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 Services At 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 repositories At 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

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applications make software available at completeness and quality levels ranging from immature prealpha 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 Participation There 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

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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 function If 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 3.7 72 For further information about the java.net visit http://www.java.net, accessed: Aug. 28, 2003 73 For further information about the SapDb visit http://www.sapdb.org, accessed: Aug. 28, 2003

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4.5 OSS without community There 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.

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5 Global trends in OSS adaption 5.1 Europe With 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 egovernment 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 decisionmakers 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 Germany An 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 egovernment 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

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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 Spain In 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 cropyield 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 Asia There 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

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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 view This 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 TCO OSS 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, 2003 80 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

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6.1.2 Components of a TCO calculation The 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

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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 Depreciation, Disposal new employees Hardware integration

Productivity loss due to:

Administration and Operating • User Management • Job Management • Performance Management • License Management • Data Management.: • Availability • Security • Quality (Viruses)

Peripheral integration

Supplies

Infrastructure integration

Rental

Integration of Energy central Components 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

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• • • • • • •

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

6.1.3 TCO - Summary The 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 Value Compared 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, 2003 84 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

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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.

Value Busines s Value ROI TCO

Time Figure 1 IT sourcing value

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, 2003 86 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

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political value image value risk cost reduction process cost reduction

sourcing value

service value product value total sourcing value purchse cost new coordination cost process tuning cost risk cost

sourcing cost

image cost political cost Figure 2 Total sourcing value 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

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6.2.1 The decision After 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, 2003 89 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003 90 Steigele, H., IT-Sourcing Step by Step (Draft), Cascade IT, 2003

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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 software In 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.

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General Product availability

Availability of open source alternative

Product obsolescence

Revenue

Revenue curve without open source competitor

Revenue curve with open source competitor

Testing

Development

Research

Costs

Time

Research & Development Cycle

Production, Marketing, Sales & Support

Operational Cycle

End-of-life Cycle

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

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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 software Open 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 advantage For 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.167-168 93 Sarvas, R., Costs and Benefits of Software Patents to Society, Helsinki University of Technology, 2002 94 More information about the Unisys GIF patent available at http://www.unisys.com/about__unisys/lzw/, accessed: Aug. 28, 2003

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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 pluginarchitecture 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 3.6 96 More information about JBoss at chapter 3.6 97 Fink, M., The Business and Economics of Linux and Open Source, P.168

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Community resources

Software vendor resources

Value

Typical software solution stack

Resources Figure 4 Resource allocation correlated to value delivery

6.4.2 The OSS based business model for software vendors While 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, 55

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 software Many 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, 2003 99 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 3.4 101 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 usability OSS 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, 1993 105 Nielsen, J., Usability Engineering, Academic Press, 1993 106 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 usability There 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.5 108 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 analysis The 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 63

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 conclusion The 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 analysis The 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.

•

Project 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 conclusion Basically 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

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•

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, 2003 117 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 page 119 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 conclusion Mozilla 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, 2003 121 More information about Microsoft Business Solutions is available at http://www.microsoft.com/BusinessSolutions/default.mspx, accessed: Aug. 28, 2003

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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 conclusion For 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

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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 conclusion It 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 interviews The 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.

Is OSS used at your company / organization ? 45 40 35 30

%

25 20 15 10 5 0

Yes, for some systems / applications

No

Yes, for most systems /applications

Yes, but only to collect experiences

No, but we have plans for OSS

Figure 5 OSS popularity in Switzerland

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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For which sytems / applications is OSS used ? 40 35 30 25

% 20 15 10 5 0

Webserver

Mailserver

DNS Server

Software development tools

Linux Thin Clients

Figure 6 OSS at Swiss companies and organizations

OSS is most used for Internet related services, systems and applications. Mailservers are the preferred pilot projects to gain experiences with OSS.

Main advantage of OSS 50 45 40 35 30

%

25 20 15 10 5 0

No license cost

Higher stability

Better security

No licensing paperwork

Ideology behind OSS

Figure 7 OSS advantages

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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Main disadvantage of OSS 70 60 50

%

40 30 20 10 0

No inhouse OSS knowhow

Bad interoperability with MS products

Only little or no cost savings

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.

Is OSS planned to be used more, less or equal in the future ? 70 60 50 %

40 30 20 10 0 More

Equal

Less

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

Are Linux clients planned for the dektop ? 90 80 70 60

%

50 40 30 20 10 0

No

Yes

Linux Thin Clients already in use

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.

How does IT stuff acquire OSS knowhow ? 40 35 30 25

% 20 15 10 5 0

No strategy yet

Internal training

Self study

External training

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.

Influence of the SCO / IBM lawsuit on OSS strategy 100 90 80 70 60

%

50 40 30 20 10 0

No influence

Influence

Figure 12 SCO / IBM lawsuit

How much does OSS help to reduce IT costs ? 45 40 35 30

%

25 20 15 10 5 0

Only marginal costs savings

Significant costs savings

No costs savings

Figure 13 OSS and IT costs savings

Most of the interviewees, who claimed that the costs savings of the migrated systems were only marginal (smaller 10%) had unrealistic expectations.

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How are IT costs analyzed, which costs are considered ? 30 27.5 25 22.5 20 17.5

%

15 12.5 10 7.5 5 2.5 0

Only Hardware and licence-costs

No cost analaysis

Purely based on experiences

Inhouse developed model

Simplified Gartner TCO analysis

Figure 14 IT cost analysis

9.2 General observations The 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 81

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 organizations They 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 8.5 125 State of Solothurn, IT management, Telephone interview, Aug. 18, 2003

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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 institutions In 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

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10 Conclusions The 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 organizations A 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 Institutions If 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 ISP For 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 Vendors Software 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 OSS In 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. 85

10.4.1 Linux for the desktop In 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 niches Only 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.

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10.5 First Steps for migrating to OSS The 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.

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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. 89

•

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

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