January 2011

Waste neither time nor money, but make the best use of both. Without industry and frugality, nothing will do, and with them everything.”

Benjamin Franklin

Abstract

The cost of information technology (IT) as a percentage of overall operating and capital expenditures is growing as companies modernize their operations and as IT becomes an increasingly indispensable part of company resources. The price tag associated with IT infrastructure is a heavy one, and, in today's economy, companies need to look for ways to reduce overhead while maintaining quality operations and staying current with technology. With its advancements in availability, usability, functionality, choice, and power, free/libre open source software (F/LOSS) provides a cost-effective means for the modern enterprise to streamline its operations. iXsystems wanted to quantify the benefits associated with the use of open source software at their company headquarters. This article is the outgrowth of our internal analysis of using open source software instead of commercial software in all aspects of company operations.

The Coming of Age of Open Source Software

Until recently, purchasing proprietary (closed source) software was considered to be the de facto industry standard. Organizations need applications that are robust, mature, and supported, and building long-term relationships with software vendors was simply the best way to achieve this. As long as proprietary software led the field in market share, performance, and reliability, enterprises could not afford to take the risk of using alternatives that had low adoption rates, lacked professional support, and provided inferior technology.

However, much has changed in the world of IT in the past few years. As seen in Table 1, F/LOSS is now widely used and accepted for both infrastructure services and desktop applications. The reasons for widespread adoption include an overall increase in product reliability and performance as well as superior security and cost. Enterprises have been integrating open source solutions into their IT infrastructure at an increasing rate and reaping many benefits.

Table 1. F/LOSS Market Share as of August, 2010

F/LOSS Software

Market Share

Apache web server1

55%

Sendmail, Exim, and Postfix Internet mail servers2

68%

BIND DNS server3

79%

Firefox web browser4

46%

OpenOffice office software suite5

>1.2M downloads/week

Reliability and Performance

Over the past several years, open source projects have matured as adoption rates have increased. As companies adopt and integrate F/LOSS into their core technologies, they have the opportunity to drive development through participation in the associated open source communities. This creates a self-perpetuating cycle whereby increased adoption brings about improvements in open source technologies which, in turn, brings about even further adoption. As the market matures, it has become more desirable for businesses to offer professional support and services for open source applications. In the current landscape, businesses can choose F/LOSS applications for their mission-critical operations because support infrastructures exist to provide commercial, enterprise-level support.

The very nature of F/LOSS development necessitates the use of solid development practices to manage the contributions of developers dispersed throughout the world. To give an example, the FreeBSD Project possesses a highly organized team of developers who direct code implementation. The Project manifests a conservative professional approach to software development, a vetted codebase that has been under constant development for decades, and a product release cycle that focuses on code stability and quality assurance. This allows FreeBSD to run in an optimized manner for reliability and stability and is a great example of how F/LOSS projects can provide superior, professional-level technology.

The reliability advantage extends beyond operating systems. According to the Coverity Scan Open Source Report, participating F/LOSS projects have reduced their static analysis defect density by 16% over the course of the last three years. The report has marked substantial increases in the number of projects that meet the qualifications of its three-rung system of evaluation. Also, open source projects tend to be more responsive to known software vulnerabilities. According to Veracode's State of Software Report, 36 days was the average turnaround time to fix a known defect in open source software, compared to 82 days for commercial software.

Not only has F/LOSS become more dependable, it is highly competitive against leading proprietary products in the area of performance. There have been many similar studies that demonstrate the performance advantages of open source distributions in head-to-head testing against proprietary distributions in a number of areas. These advantages extend beyond desktop applications. For example, nine of the top 10 most reliable Internet sites run an F/LOSS operating system, with four of the top five running FreeBSD.

Ready for the Desktop

Beyond operating systems and server applications, F/LOSS offers robust applications for personal and enterprise desktop operations. For example, OpenOffice offers nearly all of the features of Microsoft Office, along with ease of use and the ability to handle complex operations. OpenOffice can open any Microsoft Office document, operate with a similar interface, and use the same syntax for spreadsheet and database operations. In terms of usability, OpenOffice offers an interface that is as polished and intuitive as Microsoft Office, and even superior in some aspects. It offers comparable performance to its proprietary counterpart, support for all major operating systems, superior localization, and better support for Visual Basic macros.

Open source email clients such as Mozilla Thunderbird and Zimbra offer all the functionality of Microsoft Outlook with the added benefit of built-in security and privacy measures. Thunderbird is well noted for its speed of operation and supports hundreds of add-ons1 to customize the email experience. Zimbra extends its email features with a collaborative documentation management suite.

In the area of graphics, the imaging software GIMPshop offers a powerful alternative to Adobe Photoshop. Scribus is a Desktop Publishing utility with functionality similar to Adobe InDesign. These open source applications provide a graphical design team with all the core tools necessary to put together quality, professional publications.

Open source web browsers, such as Mozilla Firefox, often outperform their proprietary counterparts in speed and performance benchmarks. Google's Chrome browser is based on the open source Chromium project.

There are many mature enterprise-oriented F/LOSS applications that can handle virtually every business-related function. PostgreSQL is a trusted and widely used database program. Samba and Apache are popular server applications that are used in enterprise as well as small and medium business environments. There are several customer relationship management (CRM) and enterprise resource planning (ERP) software offerings, such as SugarCRM and Support Suite, which offer a wide array of operational management capabilities and support packages.

Putting Open Source Into Play: A Case Study of iXsystems

As an outgrowth of BSDi, iXsystems owes its very existence to F/LOSS. Since its inception in 2002, iXsystems has run all aspects of its operations exclusively on F/LOSS. Today, iXsystems has approximately 45 employees and runs 30 production servers as well as 40 to 80 testing servers. All of iXsystems' equipment runs either the FreeBSD server or PC-BSD desktop operating system, as well as a variety of open source applications for day-to-day operations. This has led to significant cost reductions in all areas of operation.

If iXsystems were to operate at its current level with proprietary software, it would have to purchase operating system and desktop application licenses for 45 desktop machines, 20 laptops, and 30 servers. In addition to licensing costs, there would be the costs of administration, support, maintenance, and periodic upgrades.

The first and most obvious measure of cost is the initial price to obtain all the applications necessary to operate. If iXsystems were to purchase all proprietary software, these expenses would quickly add up into the hundreds of thousands of US dollars. The initial costs would be over $10,000 for desktop operating systems, $34,000 for office suite applications, nearly $140,000 for media and development software, $1,800,000 for server software, $23,000 for mail server software, $69,000 for CRM and ERP applications, and $180,000 for data archiving. As shown in Figure 1, these costs add up to a grand total of over $2 million in initial software licensing and support package costs. This is in stark contrast to the total payout of $500 for all of the open source applications iXsystems uses in its daily operations. This allows for a significant reduction in the operational bottom line, which is certainly desirable for any organization, especially those just getting off the ground.

Figure 1. Comparison of Initial Software Costs

Image:january11_vonfange1.png

Beyond the initial cost of purchasing enterprise applications, companies must maintain and support their daily operations. This includes application support as well as administrative support costs. If iXsystems were to run on proprietary software, yearly external software support would run upwards of $350,000. While iXsystems handles all of its own support internally, any company could obtain similar support for its open source applications for less than $50,000 annually plus administrative costs.

At first glance, systems administration costs seem to favour the hiring of Windows administrators. In Silicon Valley, where iXsystems' base of operations is located, the median salary for a Unix administrator is $104,000 versus $85,000 for a Windows systems administrator. However, Unix system administrators are generally highly experienced and have a diverse skill set. A competent Unix administrator can support upwards of hundreds of desktop, server, and database systems. This is partly a result of the integrated design of Unix operating systems; once the base system is configured, the administrator can script many maintenance and administrative tasks. iXsystems manages to run a mail server, over 40 desktops, around 20 laptops, over 30 production servers, as well as many test servers with one experienced Unix administrator.

In a Windows environment, specific services are provided by different products, with each product requiring a discrete skill set. Due to the complexity of configuring and maintaining these products, it is rare outside of a very small network to find one administrator who is skilled in all of the products required in a typical business environment, for example, MS Exchange, SQL server, IIS, Sharepoint, domain controllers, print servers, and desktop support.

Due to these considerations, iXsystems determined that, if it were to run in a proprietary environment, it would need a dedicated database administrator, an MS Exchange administrator, a desktop support technician, and up to two general systems administrators. This would bring administrative support costs closer to $400,000 for proprietary software versus a little over $100,000 for open source. This gives a cost advantage of around $300,000 per year to iXsystems for administrative support, freeing up further valuable resources for the core aspects of the business and lowering the bottom line.

The next consideration when evaluating software costs is the life cycle of the software. For most enterprise applications, a company will upgrade their software at least every five years, and some applications will have even shorter upgrade cycles. In our example, proprietary software would carry a cost of $1.3 million every five years for software upgrades. With F/LOSS, the cost of upgrading software to the most recent versions is negligible and can be considered part of the salary costs of the Unix system administrator. Using open source also carries the hidden advantage of being able to keep up with the latest improvements in software as they are released, rather than waiting until budgetary constraints allow. The end result is increased and improved application features sooner rather than later, without the increased costs.

With F/LOSS, the costs over the course of five years are around $733,750 for a company with a setup comparable to iXsystems' current operations. If a similar company wanted to opt for proprietary software, they would have to spend approximately $5.2 million over the same time period. That is five times the cost for the first five years of operation. Over the course of 10 years, a company comparable to iXsystems could save over $8.7 million in software-related costs (Figure 2). This means that, in the short-run as well as the long-run, companies can save considerable amounts of money by utilizing F/LOSS.

Figure 2. Cumulative Yearly Savings Using F/LOSS

Image:january11_vonfange2.png

Conclusion

Running operations utilizing open source applications has greatly contributed to the success of iXsystems as a business. The alternative costs to run licensed proprietary applications are simply too great to justify without substantial increases in quality and productivity. While in the past, proprietary software may have provided significant advantages in the areas of stability and support, those advantages can no longer be claimed in the current IT marketplace. Since open source solutions are competitive and mature in all areas of enterprise applications, iXsystems cannot justify such a substantial increase in company expenditures. As demonstrated by iXsystems' experience, open source solutions are now preferable to their proprietary counterparts.

This article is based on the whitepaper "IT Cost Optimization Through Open Source."

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