Businessonopen2012

Il valore economico del
Software Open Source

Carlo Daffara
European Working Group on Libre Software
CloudWeavers

Business on Open - 2012

Il valore economico del
Software Open Source
(per l'Europa)

Carlo Daffara
European Working Group on Libre Software
Conecta Research


“The GPL effectively prevents profit-
making firms from using any of the
code since all derivative products must also be
distributed under the GPL license” (Evans, D.,
in “Government policy toward open source
software”, R.W.Hahn, editor, AEI-Brookings
JCRS)


“[..] the aim of free software is not to enable a
healthy business on software but rather to
make it even impossible to make any
income on software as a commercial
produc t.” (Thomas Lutz, Microsoft
representative at Tunis WSIS, 2005)


“Open-source software is deliberately
developed outside of market mechanisms... the
nonmarket coordination mechanism fails to
contribute to the creation of value in
development, as opposed to the commercial
software market. [It] does not generate profit,
income, jobs or taxes … In the end, the
developed software cannot be used to
generate profit.” (Kooths S., Lagenfurth M.
“Open Source-Software: An Economic
Assessment” University of Muenster, Muenster
Institute for Computational Economics)

“[Open Source] ... suppresses quality
competition between OS firms and restricts
their output much as an agreement to suppress
competition on quality would. .. We find that
the first-best solution in our model is to tax
OS firms and grant tax breaks to
[proprietar y sw] firms .” (Engelhardt,
Maurer, 2010 Goldman School of Public
Policy)


“Rail travel at high speed is not
possible because passengers, unable to
breathe, would die of asphyxia.” Dr. Dionysus
Lardner (1793-1859), Professor of Natural
Philosophy and Astronomy at University
College, London.

“Heavier-than-air flying machines are
impossible.” Lord Kelvin (1824-1907), ca.
1895, British mathematician and physicist


“...First we listed the major open source
products. Then we looked at the commercial
equivalents. Next we looked at the average cost
of both the open source products and the
commercial products, giving us a net
commercial cost. We then multiplied the net
cost of the commercial product by our open
source shipping estimates.” (Jim Johnson,
Standish group)


● Pierre Audoin Consultants: mercato
complessivo OSS di 8B€ nel 2008
● HP: 2.5B$ in Linux-related consulting in 2003

● IBM: 4.5B$ in OSS-related revenues in 2005

● ...OSS PBX market: 1.2B$

● La maggior parte delle revenues da OSS non
viene da aziende OSS
● Il mercato stesso e' difficile da misurare


● Overall IT spending estimate for Europe: 492B€

● 24% hardware

● software and services market: 374B€

● software market alone: 244B€


Quanto OSS c'e' nel codice?


● “On average, 30% of implemented
functionalities is based on reused OSS code”
(Sojer M., Henkel J. Code reuse in Open
Source Software Development)
● Gartner: 26% del codice installato e' OSS

● Koders survey, 2010: 44% del codice e' Open

Source


● Black Duck, analisi di codici proprietari di
grandi dimensioni (media di 700MB codice):
22% e' OSS, fino a 80% dei nuovi sviluppi
evitati tramite OSS
● “sampling continues to find that between 30%

and 70% of code submitted is .. in the form of
OSS components and commercial libraries”
(Veracode, “State of Software Security Report
volume 3”, 2011)
● Utilizzo OSS aumenta con il tempo → uso

medio negli ultimi 5 anni: 35%


Che risparmio porta l'uso di OSS?
(Abts, Boehm, Bailey Clark “Empirical
observations on COTS software integration
effort based on the initial COCOTS calibration
database”)


35% di riuso porta a un risparmio in costi del
31%: 75B€/anno


“Figures suppor t the idea that FOSS
solu tions are more innovative than
proprietar y ones: indeed, in all the three
dimensions, experts’ evaluations are higher for
FOSS than for proprietary software. … FOSS
software not only show different levels of
innovativity, but, as far as, new to the world
products are concerned, they are also shaped
by different innovation processes: radical
innovation in the FOSS vs. incremental
innovation in proprietary field.” (Rossi,
Lorenzi, “Innovativeness of Free/Open Source
solutions”)

"The growing rate, or the number of functions
added, was greater in the open source projects
than in the closed source projects. This
indicates that the OSS approach may be able
to provide more features over time than by
using the closed source approach. (Paulson,
Succi, Eberlein “An Empirical Study of Open
Source and Closed Source Software
Products”)


"Findings indicate that community Open Source
applications show a slower growth of
maintenance effort over time.” (Capra,
Francalanci, Merlo “The Economics of
Community Open Source Software Projects:
An Empirical Analysis of Maintenance
Effort”)

“The fourth law of software evolution,
implying constant incremental effort, might be
violated (Koch “Evolution of Open Source
Software Systems – A Large-Scale
Investigation”)

E se un progetto va male?
● Jones :“the cancellation rate for applications

in the 10,000 function point size range is
about 31%. The average cost for these
cancelled projects is about $35,000,000”
● Standish group, 2009: “24% of projects are

canceled before deployment”
● Sauer & Cuthbertson, Oxford university survey,

2003: 10%
● Dynamic Markets Limited: “25%+ of all
software and services projects are canceled
before completion”


Tramite la riduzione di effort, staffing e durata
il 35% di codice OSS porta a una riduzione nel
failure rate del 2% → 4.9B€/anno


(Mohagheghi, Conradi, Killi and Schwarz “An
Empirical Study of Software Reuse vs. Defect-
Density and Stability”)

“While IBM initially contributed software that was
valued at 40M$, external contributors to the project
created software representing a value of roughly
1.7B$ over the examined period.” (Spaeth,
Stuermer, von Krogh “Enabling knowledge creation
through outsiders: towards a push model of open
innovation”)


● Costo di mantenimento dell'OSS
sostanzialmente più basso (Capra E.,
Francalanci C., Merlo F., “The Economics of
Community Open Source Software Projects:
An Empirical Analysis of Maintenance
Effort”)
● Jones and Bonsignour: codice tradizionale
costa 2K$ per function point,
shared/codeveloped 1.2K$/FP
● Il codice introdotto da un progetto OSS porta

ad una riduzione dei costi di maintenance del
14%


14% riduzione in maintenance and
development costs → 34B€/anno


Deshpande, Riehle “The Total Growth of Open Source”

Valore totale del risparmio dovuto al software
OSS: 114B€/anno


● Effetti di secondo ordine?
● Sappiamo che I risparmi vengono reinvestiti:


● “The principal results from this econometric
analysis are: 1) the measured output
contribution of computerization in the short-
run are approximately equal to computer
capital costs, 2) the measured long-run
contributions of computerization are
significantly above computer capital costs (a
factor of five or more in point estimates), and
3) that the estimated contributions steadily
increase as we move from short to long
differences. (“Computing productivity: firm-level
evidence”, erik brynjolfsson, lorin m. Hitt; Review of
Economics and Statistics, November, 2003 )


Effetto del reinvestimento in IT, modello
lineare su 3 anni → 342B€/anno


Revenue per employee rating
(FLOSS firms vs. Industry average)
Computer Equipment 182%
Software consultancy and supply 427%
Services (excl. software cons. and supply) 211%
Manufacturing (excl. computer equip.) 136%
Other 204%
ALL: 221%
Source: MERIT


Revenue ratio: FLOSS firms vs. Industry average
(FLOSS firms vs. Industry average)
Computer Equipment 1115%
Software consultancy and supply 262%
Services (excl. software cons. and supply) 177%
Manufacturing (excl. computer equip.) 4501%
Other 1045%
ALL: 758%
Source: MERIT


Source: Venice International University TEDIS study


DrupalCon 2010, Copenhagen


● Innovazione dagli end-users:


“[non-code] outside contributions are
signicant. Open Cascade estimates that they
represent about 20 % of the value of the
software. Matra Datavision had to inject
approximately 2M€ per year to continue to
develop its tools. In 2000, the company limited
the costs to 1.2 million.” (Jullien, Clement-
Fontaine, Dalle “New Economic Models, New
Software Industry Economy”)


Con il software proprietario, l'86% del SW
spending va fuori Europa – e riduce i margini
delle aziende locali

Ecosystem Revenues compared with MS revenues by partner type
Product- Services- Retail Logistics
Logistics-Oriented
Oriented Oriented Value-Added Partner Partner (e.g., Large
Microsoft Partner (e.g., Large
Partner (e.g., Partner (e.g., (e.g., VAR) Retail Electronics
Account Reseller)
ISV, IHV) SI, Hoster) Store)
$1 $4.09 $2.44 $2.30 $2.70 $2.93
1 24% 40.9% 43.5% 37% 34%
Source: Partner Opportunity in the Microsoft Ecosystem, IDC 2011; analysis by Daffara


● Parte speculare del modello: “pull” adoption
● Più difficile da valutare – grande variabilità

● Sui desktop (per migrazioni di successo) la

riduzione del TCO va dal 10% al 25% (media)
fino al 50% (for high-uniformity environments)
● Lo spostamento verso applicazioni platform-

independent cambia l'economia (riduzione
lock-in e migration costs)


● La valutazione dei costi reali (tangibili e
intangibili) e' stata fatta nel corso del
progetto Europeo COSPA, su un parco di
diverse migliaia di installazioni – anche grazie
a uno strumento di valutazione della
produttività dei singoli operatori tramite
sampling anonimizzato (installato con il
consenso dei sindacati e dei lavoratori)

Business on– Open Source
ItClub FVG Open - 2012

From: "The future of computing: indispensable or unsustainable?"
Royal Academy of Engineering, 2011

Grazie per l'attenzione

Carlo Daffara

cdaffara@conecta.it
http://carlodaffara.conecta.it
Twitter: @cdaffara


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