Taking an open-source approach reduced the amount of labor required to complete the project, enabling HSC to finish more than nine months early and save $4.8 million in labor costs, according to Neal Kaderabek, CIO and vice president of financial services. HSC is a co-developer of the software with Lisle, Ill.-based Healthation, and it has the right to exclusive use of functionality that it developed -- it doesn't have to make it available as open source.
"We rarely check anything back in -- we just take it out, modify it and make it unique to our business," Kaderabek says, adding that HSC shares less than half of what it develops with the community. "Frankly, we think that sets us apart from our competitors, so why would we want to let the world share it?"
He acknowledges that Healthation was disappointed that HSC wasn't contributing to its open-source community. "Their view was that's what makes their product more attractive to the industry. But in this case, I just felt like it was our secret sauce," he says.
That's not often the case, industry-watchers say. Most open-source applications are essentially commodities, and the platform itself doesn't usually hold many trade secrets.
HSC processes $3.5 billion worth of insurance premiums annually and provides services to about 1.5 million retail insurance members.
The company chose Healthation because it was the only healthcare transaction software Kaderabek knew of that was available as open source. With Healthation, HSC could kick-start its IT transformation project because the majority of new core functions were already in place and the IT team had to customize only about one-third of the system.
"This [open source] out of the gate was leaps and bounds ahead of the design and architecture" of traditional software systems, Kaderabek says. "It was built on latest and greatest technology; it used Web services; it was .Net using SQL server -- which all met our standards. We got more done in a shorter period of time and didn't have to add extra resources," he says.
Kaderabek says that even when evaluating small or industry-specific open-source projects, IT shops should look for vendors that specialize in maintaining an open-source offering. "Make sure there's somebody out there who can say, 'I've done this for the last five years, and I know people who have done what you're doing,' in case you need help," he says.
When It's OK to Give It Away
Contributions to an open-source community don't have to be huge to be valuable. "If there's a low-level feature that's a more convenient way to do something -- that saves everybody time," says WibiData's Kimball. "Sometimes even small changes that may not take more than an afternoon to write will have an outsized benefit on usability."
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