Large orgs saving $3.3 million on average with open-source software, study shows

Open-source software has gone far beyond the Linux operating system. It is found in all parts of the technology infrastructures of most U.S. orgs (corporate and government), a research study led by systems integrator Optaros has found. Emboldened by cost savings and other benefits, these orgs expect to use more open-source software over the next 5 years, decreasing their use of commercial apps.

The study was conducted in August and September 2005 with responses from 512 U.S. companies, government agencies and other orgs. Sampled companies ranged in size from small organizations with revenue under $50 million to large organizations with revenue more than $1 billion. The study found 87 percent of orgs were using open-source apps. The most frequently used open-source software includes the Linux operating system, the Apache Web server, and Web browsers, used at some level by more than 70 percent of the companies represented by the survey participants. About half the respondents were using open-source database management systems and app servers in a single business function.

Open-source business apps such as portals and content management systems are gaining in popularity, according to the study. Some 42 percent of the survey participants had open-source portals and content management systems that supported a single function. Some 16 percent used open-source customer relationship management systems, a percentage that will double in the next 3 years.

The move to open-source software is in part explained by the cost savings companies are generating. Orgs with annual revenue of more than $1 billion saved an average $3.3 million in 2004 from their open-source software. Medium-sized companies (with revenue between $50 million and $1 billion) saved an average $1.1 million, and companies with less than $50 million saved about $500,000. Several survey respondents reported substantial savings: a technology company cut costs by $20 million, and 4 companies (3 of them telecommunications firms) each saved $10 million last year.

The study found that once organizations start using open-source software, their usage typically increases. However, the study also found that most companies were confronted by four primary barriers to achieving even greater benefits:

Uncertainties about open-source software that often relegate the software to the IT function
Lack of understanding of licensing and legal issues around open-source software
Software cost allocation policies that discourage business functions from reducing the cost of commercial software
The difficulty of identifying, evaluating, purchasing and maintaining open-source software

The survey was conducted with InformationWeek magazine.