Not always 'open'
One of the reasons why costs can be higher than expected is because companies often opt to purchase a license for the software rather than using the free-of-charge community version. Some vendors operate on a "dual-license" business model, in which customers can buy a license to get access to the vendor's support team or to extra features and extensions for the core software, such as management tools.
According to Mark Driver, an analyst at Gartner Inc., the overwhelming majority of commercial open-source efforts today are based on a dual-license model. Customers should know, he says, that with this option, "the open-source-ness of the product comes into question." While open-source software licenses cost less than commercial software licenses, they include terms and conditions that restrict your use and lock you into a vendor. "We're seeing pushback from users who say, 'I went to open source to avoid these commitments,' as well as those who just want a piece of software that works well and is cheap," Driver says.
Lyman points out that larger enterprises often have the development resources to work with community versions of open-source applications, but even they might find reasons to purchase a license, such as a need for service-level agreements.
Not so for NPC International Inc., which operates more than 1,150 Pizza Hut restaurants worldwide. Five years ago, it used very little open-source software, whereas today it tries diligently to avoid commercially licensed software if there's an alternative, says Jon Brisbin, portal webmaster at NPC. The franchisee started migrating to open source when it converted its point-of-sale system from dBase to PostgreSQL; that deployment has grown to 10,000 installations.
On the other hand, says James Sims, CIO at Save Mart Supermarkets, buying an enterprise license from Ingres Corp. was a financially sound decision. Save Mart uses several open-source applications, including PostgreSQL, Apache Lucene, Red Hat Linux, MySQL and Xymon, and it runs its payroll and time-and-attendance systems on an Ingres- and SUSE Linux-based system. It started out using the public domain version of Ingres but experienced challenges that were related to the software's inability to effectively use a database for a company of Save Mart's size. Sims turned to Ingres for support, which led to a contractual agreement. While the costs are comparable to what he'd pay a commercial database company, "we get incredible support -- more than they should provide," he says.
Similarly, Bassim Hamadeh, founder of custom educational publishing firm University Readers Inc., purchased a license for SugarCRM three years ago, after using the community version for a couple of years. "Our IT manager read about Sugar 2.0, installed it, and within a week, we were using it," he says. At approximately $350 per user per year, he says the price is 20% to 25 per cent that of a system like Salesforce.com, and it enables the company to use additional features such as a robust reporting tool, a workflow system and automated triggers.
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