Although not limited to software, open source is dominated by this particular technology and by the open source software community. Open source software does not just mean access to the source code. The distribution terms of open-source software must comply with the following criteria:
There are many different variants of open source licenses (Apache, GPL, Lesser GPL, Eclipse, etc.) with some subtle and not so subtle differences between all of these variants.
Open source software is software that is freely licensed to use, copy, study, and change the software in any way, and the source code is openly shared so that people are encouraged to voluntarily improve the design of the software.
This is in contrast to proprietary software, where the software is under restrictive copyright and the source code is usually hidden.
This has made open source software very attractive to many companies.
Open source software is free, which is good. But is it really free?
Total cost ownership:
Total cost of ownership is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system. It is a management accounting concept that can be used in full cost accounting.
The average price of a new car in the USA tops $33,000, according to car-buying site Kelley Blue Book, so buying a vehicle is a major financial move. While many consumers may focus on the sticker price or the monthly payments, that overlooks many other costs. You have license fees, registration fees and taxes. You need to buy insurance, fill the gas /petrol tank, have regular maintenance, etc. And your car loses value from depreciation every day you own it. The total cost of ownership of a new car is not the same as the sticker price.
The same applies for a software product. The total cost of ownership is the purchase price of the software product plus all of the additional direct and indirect costs associated with taking the software product into use.
When choosing among alternatives in a purchasing decision, one should look not just at the software product’s short-term price, which is its purchase price, but also at its long-term price, which is its total cost of ownership.
The software product with the lower total cost of ownership is the better value in the long run.
The purchase price of the open source software product is zero, but what is its long-term price or total cost of ownership?
In order to calculate the long-term price or total cost of ownership of a software product, one needs to identify all of the different components associated with taking a software product into use.
I suggest that these include at least the following:
This list is not exhaustive and there may be other components to consider.
Costs associated with open source software risks:
Of course, total cost of ownership is an issue for both proprietary software products as well as open source software products.
However, some additional components may need to be consider when trying to calculate the total cost of ownership of an open source software product, namely the costs associated with managing the risks involved, which divide out into the following categories
(These additional components are explored in more detail in another paper already published).
The bottom line:
When you are comparing cars you like, you should go beyond sticker price. You should research the ongoing costs of driving and maintaining each model, so that you get a true understanding of affordability. A realistic estimate of a vehicle’s total cost of ownership is crucial in helping you choose a car that fits your budget. The same applies to purchasing a software product, regardless of whether it is an open source software product or a proprietary one.