IT Cost Optimization through Open Source Software:

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IT CosT opTImIzaTIon Through open sourCe sofTware:

Reducing Information Technology Overhead for the Modern Enterprise

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IT CosT opTImIzaTIon Through open sourCe sofTware:

Reducing Information Technology Overhead for the Modern Enterprise

The cost of Information Technology (IT) as a percentage of overall overhead is growing as companies

modernize their operations and as IT becomes an increasingly indispensable part of company resources.

Unfortunately, the price tag typically associated with IT infrastructure is a heavy one, and, in today’s

economy, companies need to look for ways to reduce overhead while maintaining quality operations

and staying current with technology. With its tremendous advancements in availability, usability,

functionality, choice, and power, Open Source Software (OSS) provides a cost-effective means for the

modern enterprise to streamline its operations.

The COmIng Of Age Of Open SOUrCe SOfTWAre

Until recently, purchasing proprietary (closed source) software was considered to be the de facto industry standard. Organizations need applications that are robust, mature and supported, and building long-term relationships with software vendors was simply the best way to achieve this. As long as proprietary software led the field in market share, performance and reliability, enterprises could not afford to take the risk of using alternatives that had low adoption rates, lacked professional support, and provided inferior technology.

However, much has changed in the world of IT in the past few years. As seen in Table 1, OSS is now widely used and accepted for both infrastructure services and desktop applications. The reasons for wide spread adoption include an overall increase in product reliability and performance as well as superior security and cost. Enterprises have been integrating open source solutions into their IT infrastructure at an increasing rate and reaping many benefits.

Table 1: OSS market Share as of August, 2010

OSS SOfTWAre mArkeT ShAre

Apache web server1 _55.44%

Sendmail, Exim, and Postfix Internet mail servers2 _68.06%

BIND DNS server3 _79.31%

Firefox web browser4 _46.04%

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relIAbIlITy & perfOrmAnCe

Over the past several years, open source projects have matured as adoption rates have increased. As companies adopt and integrate OSS into their core technologies, they have the opportunity to drive development through participation in the associated open source communities. This creates a self-perpetuating cycle whereby increased adoption brings about improvements in open source technologies which, in turn, brings about even further adoption. As the market matures, it has become more desirable for businesses to offer Professional Support and Services for open source applications. In the current landscape, businesses can choose OSS applications for their mission-critical operations because support infrastructures exist to provide commercial, enterprise level support.

The very nature of OSS development necessitates the use of solid development practices to manage the contributions of developers dispersed throughout the world. To give an example, the FreeBSD Project possesses a highly organized team of developers who direct code implementation. The Project manifests a conservative professional approach to software development6_{, a vetted codebase that has been under constant development for decades, and a product release cycle that}

focuses on code stability and quality assurance. This allows FreeBSD to run in an optimized manner for reliability and stability and is a great example of how OSS projects can provide superior professional level technology.

The reliability advantage extends beyond operating systems. According to the Coverity Scan Open Source Report7_{, participating}

OSS projects have reduced their static analysis defect density by 16% over the course of the last three years. The report has marked growth from 109 to 144 projects meeting the requirements for Rung 1, 11 to 36 projects meeting the Rung 2 level, and named Samba, tor, OpenPAM, and Ruby as the first Rung 3 certified projects. These rungs are based off of best coding practices and involve comprehensive evaluations of code, where each rung signifies that a certain threshold of quality has been reached. Also, open source projects tend to be more responsive to known software vulnerabilities. According to Veracode’s State of Software Report8_{, 36 days was the average turnaround time to fix a known defect in open source software, compared to 82 days}

for commercial software.

Not only has OSS become more dependable, it is highly competitive against leading proprietary products in the area of

performance. Table 2 demonstrates the competitiveness of the Ubuntu open source operating system in comparison to market share leaders Windows® Vista and Windows® 7.

1 http://news.netcraft.com/archives/2010/08/11/august-2010-web-server-survey-4.html 2 http://www.securityspace.com/s_survey/data/man.200907/mxsurvey.html 3 http://ftp.isc.org/www/survey/reports/current/fpdns.txt 4 http://www.w3schools.com/browsers/browsers_stats.asp 5 http://wiki.services.openoffice.org/wiki/Market_Share_Analysis 6 http://www.freebsd.org/doc/en_US.ISO8859-1/articles/releng/article.html 7 http://scan.coverity.com/report/Coverity_White_Paper-Scan_Open_Source_Report_2009.pdf 8 http://www.veracode.com/reports/index.html

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Table 2: Ubuntu vs Windows® Vista vs Windows® 7 benchmarks9 UbUnTU 8.10/x86 UbUnTU 8.10/64bIT UbUnTU 9.04/x86 UbUnTU 9.04/64bIT WIndOWS VISTA/x86 WIndOWS VISTA/64bIT WIndOWS 7/x86 WIndOWS 7/64bIT Install time (seconds) 903 801 883 820 1235 1364 1394 1334

Disk space used

(GB) 2.2 2.3 2.3 2.3 8.2 11.9 7.9 11

Boot time

(seconds) 68 68 73 70 65 64 59.8 75

Shutdown time

(seconds) 8.5 9.7 9.7 10 9.3 25.9 13.4 14.3

Small File USB-HD

(seconds) 27.7 28.3 37.6 32.6 55.8 65.1 74.8 58.8

Small File HD-HD

(seconds) 11.3 11.3 13.7 14.9 16.6 12.1 89.8 67

Large File USB-HD

(seconds) 17.9 18.5 19.3 19.4 19.3 20.3 19.6 20.4 Large File HD-HD (seconds) 6.2 7.5 7.7 7.6 15.1 16.5 5.9 6.1 Python Richards Benchmark (milliseconds) 464.4 387.9 441.6 375.3 411.9 378.9 410.9 374.4

There have been many similar studies that demonstrate the performance advantages of open source distributions in head to head testing against proprietary distributions in a number of areas10_{. These advantages extend beyond desktop applications. For}

example, 9 of the top 10 most reliable Internet sites run an OSS operating system, with 4 of the top 5 running FreeBSD11_.

Table 3: Top Ten most reliable hosting Company Sites as of July, 2010

rAnk COmpAny SITe OS OUTAge hh:mm:SS fAIled reqUeST %

1 New York Internet FreeBSD 00:00:00 0.000

2 INetU FreeBSD 00:00:00 0.006

3 Datapipe FreeBSD 00:00:00 0.009

4 Multacom FreeBSD 00:00:00 0.012

5 www.navisite.com Windows Server 2003 00:00:00 0.012

6 iWeb Technologies Linux 00:00:00 0.015

7 www.poundhost.com Linux 00:00:00 0.015

8 www.qubenet.net Linux 00:00:00 0.018

9 Kattare Internet Services Linux 00:00:00 0.018

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reAdy fOr The deSkTOp

Beyond operating systems and server applications, OSS offers robust applications for personal and enterprise desktop operations. For example, OpenOffice offers nearly all of the features of Microsoft Office, along with ease of use and the ability to handle complex operations. OpenOffice can open any Microsoft Office document, operate with a similar interface, and use the same syntax for spreadsheet and database operations12_{. In terms of usability, OpenOffice offers an interface that is as polished and}

intuitive as Microsoft Office, and even superior in some aspects. It offers comparable performance to its proprietary counterpart, support for all major operating systems, superior localization, and better support for Visual Basic macros13_.

Open source e-mail clients such as Mozilla Thunderbird14_{and Zimbra}15_{offer all the functionality of Microsoft Outlook with the}

added benefit of built-in security and privacy measures. Thunderbird is well noted for its speed of operation and supports hundreds of add-ons16_{to customize the email experience. Zimbra extends its email features with a collaborative documentation}

management suite17_.

In the area of graphics, the imaging software GIMPshop18_{offers a powerful alternative to Adobe Photoshop. Scribus}19_{is a Desktop}

Publishing utility with functionality similar to Adobe InDesign. These open source applications provide a graphical design team with all the core tools necessary to put together quality, professional publications.

Open source web browsers, such as Mozilla Firefox and Opera, often outperform their proprietary counterparts in speed and performance benchmarks20_{. Google’s Chrome browser is based on the open source Chromium project}21_.

There are many mature enterprise-oriented OSS applications that can handle virtually every business-related function.

PostgreSQL22_{is a trusted and widely used database program. Samba}23_{and Apache are popular server applications that are used}

in enterprise and SMB environments. There are several CRM24_{and ERP}25_{software offerings, such as SugarCRM and Support Suite,}

which offer a wide array of operational management capabilities and support packages.

9 http://www.tuxradar.com/node/33 10 http://www.phoronix.com/scan.php?page=article&item=ubuntu_win7_ws&num=1 11 http://news.netcraft.com/archives/2010/08/11/most-reliable-hosting-company-sites-in-july-2010.html 12 http://why.openoffice.org/why_sme.html 13 http://www.dedoimedo.com/computers/open-office-3.html 14 http://www.mozillamessaging.com/en-US/thunderbird/ 15 http://www.zimbra.com/ 16 https://addons.mozilla.org/en-US/thunderbird/ 17 http://www.zimbra.com/products/zimbra-collaboration-suite.html 18 http://www.gimpshop.com/ 19 http://www.scribus.net/ 20 http://sixrevisions.com/infographics/performance-comparison-of-major-web-browsers/ 21 http://www.chromium.org/ 22 http://www.postgresql.org/ 23 http://samba.org/ 24 http://www.insidecrm.com/features/top-open-source-solutions-121307/ 25 http://en.wikipedia.org/wiki/Comparison_of_accounting_software

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pUTTIng Open SOUrCe InTO plAy: A CASe STUdy Of IxSySTemS

As an outgrowth of BSDi, iXsystems owes its very existence to OSS. Since its inception in 2002, iXsystems has run all aspects of its operations exclusively on OSS. Today, iXsystems has approximately 45 employees and runs 30 production servers as well as 40 to 80 testing servers. All of iXsystems’ equipment runs either the FreeBSD server or PC-BSD desktop operating system, as well as a variety of open source applications for day-to-day operations. This has led to significant cost reductions in all areas of operation.

If iXsystems were to operate at its current level with proprietary software, it would have to purchase operating system and desktop application licenses for 45 desktop machines, 20 laptops, and 30 servers. In addition to licensing costs, there would be the costs of administration, support, maintenance, and periodic upgrades. Full details can be found in Appendix 2.

The first and most obvious measure of cost is the initial price to obtain all the applications necessary to operate. If iXsystems were to purchase all proprietary software, these expenses would quickly add up into the hundreds of thousands of dollars. The initial costs would be over $10,000 for desktop operating systems, $34,000 for Office Suite applications, nearly $140,000 for media and development software, $1,800,000 for server software, $23,000 for mail server software, $69,000 for CRM and ERP applications, and $180,000 for data archiving. These costs add up to a grand total of over $2 million in initial software licensing and support package costs. This is in stark contrast to the total payout of $500 for all of the open source applications iXsystems uses in its daily operations. This allows for a significant reduction in the operational bottom line which is certainly desirable for any organization, especially those just getting off the ground.

Beyond the initial cost of purchasing enterprise applications, companies must maintain and support their daily operations. This includes application support as well as administration costs. If iXsystems were to run on proprietary software, yearly software support would run upwards of $350,000. While iXsystems handles all of its own support internally, any company could obtain similar support for its open source applications for less than $50,000 annually plus administrative costs. At first glance, iXsystems administration costs seem to favor the hiring of Windows administrators. In Silicon Valley, where iXsystems’ base of operations is located, the median salary for a Unix administrator is $104,000 versus $85,000 for a Windows systems administrator26_{. However, administrative support for Unix}

operations is fairly consolidated, meaning that a company similar in size to iXsystems should require only one Unix Administrator. If iXsystems were to run in a proprietary environment, it would need a dedicated database administrator, an MS Exchange administrator, a desktop support technician, and two general systems administrators. This brings administrative support costs closer to $400,000 for proprietary software versus a little over

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$100,000 for open source. This gives a cost advantage of around $585,000 per year to iXsystems, freeing up valuable resources for the core aspects of the business and lowering the bottom line.

The next consideration for evaluating software costs is the life cycle of the software. For most enterprise applications, a company will upgrade their software at least every five years, and some applications will have even shorter upgrade cycles. In our example, proprietary software would carry a cost of $1.3 million every 5 years for software upgrades. With OSS, the cost of upgrading software to the most recent versions is negligible and can be considered part of the salary costs of the Unix system administrator. Using open source also carries the hidden advantage of being able to keep up with the latest improvements in software as they are released, rather than waiting until

budgetary constraints allow. The end result is increased and improved application features sooner rather than later, without the increased costs.

With OSS, the costs over the course of five years are around $733,750 for a company with a setup comparable to iXsystems’ current operations. If a similar company wanted to opt for proprietary software, they would have to spend approximately $5.2 million over the same time period. That is quintuple the cost for the first five years of operation. Over the course of 10 years, a company comparable to iXsystems could save over $8.7 million in software related costs. This means that, in the short-run as well as the long-run, companies can save considerable amounts of money by utilizing OSS.

COnClUSIOn

Running operations utilizing open source applications has greatly contributed to the success of iXsystems as a financial enterprise. The alternative costs to run licensed proprietary applications are simply too great to justify without substantial increases in quality and productivity. While in the past, proprietary software may have provided significant advantages in the areas of stability and support, those advantages can no longer be claimed in the current IT marketplace. Since open source solutions are competitive and mature in all areas of enterprise applications, iXsystems cannot justify such a substantial increase in company expenditures. As demonstrated by iXsystems’ experience, open source solutions are now preferable to their proprietary counterparts.

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appendIx 1 - seleCTIng QualITy open sourCe sofTware

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There are many OSS applications in the marketplace today. distinguishing high quality,

mature applications from the rest is essential. The following is a short list of factors for

making this determination.

repUTATIOn

What kind of reputation does the software you’re investigating have? Do you know anyone whose opinion you trust on these matters? If so, it is a good idea to talk with them about the application(s) you are looking into. You should also do some independent online searches and see what users and reviewers have to say.

OngOIng effOrT

Is the application you are investigating still being developed and improved? Take a look at their website and see whether they keep a change log or provide product updates. If this information is not available, it could mean that the software is no longer being developed.

STAndArdS And InTerOperAbIlITy

To ensure ease of use and compatibility, try to choose software that does not stray too far from standard operations. A radically different program layout may create an unnecessarily challenging learning curve. Also, if possible, choose software that uses open standards and file formats, as interoperability between other open and closed source applications will improve your overall efficiency.

SUppOrT

Does the software have a forum or a mailing list? You may want to join them to see how actively things are updated and how readily the community answers questions. If the community is responsive and helpful, it means you will have to rely less on outside sources that cost money to help you with your software problems. Another important factor to research is whether third-party commercial support is available for the application. Community support is wonderful, but having dedicated Professional Support means you can rest easy with your decision.

VerSIOn

Are new versions being released? Are software bugs being reported and fixed from version to version? Is there a development roadmap? How old is the most recent stable release?

dOCUmenTATIOn

Does the application have end-user documentation? How about development documentation? Having a well-documented program indicates quality and a user-developer oriented project. An available listing of bug fixes and feature changes is a good sign.

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SkIll SeT

It is also important to consider your in-house IT skills. If you can maintain and deploy the application, it means your savings will be greater. If you do not have this ability, what sort of third-party support will you require? What kind of training will you need?

prOJeCT deVelOpmenT mOdel

Does the application have a clear and identifiable development process? Is there a description of how contributions are made and included? Are users encouraged to submit customizations and influence the development process? If so, this means the software will work better for your company as time goes by.

lICenSe

What kind of license does the application have? Take the time to research the type of licensing agreement and what it will mean to you as a company. Common open source licenses are the BSD license and the GPL license. Different licenses28_have

different restrictions, so it is necessary to make sure that your intended usage or deployment does not infringe upon any of the license’s clauses.

appendIx 2 - CosT analysIs

COST deTermInATIOn OVerVIeW:

Software costs in this analysis are based on the applications that iXsystems uses in its daily operations. There are 45 iXsystems employees who require the use of a desktop workstation. iXsystems runs approximately 30 servers for its regular operations and has an additional 40-80 test servers in use at any given time. Every employee requires operating system software, office applications, access to e-mail, and controlled access to company ERP and CRM software. Two fully capable media workstations are needed for graphics, publications and web development. To run all the servers used at iXsystems, the equivalent of 100 operating system licenses, 100 SQL server licenses, and 2 mail server licenses are required.

Prices have been determined using site/volume licensing from company websites29,30_{. When this information is not available, list}

prices have been obtained from retail vendors31_{. Administration costs are based on median salary figures from Salary.com.}

Internal salaries are not included in initial software support costs, but as administrative costs. They are listed in the “Yearly Administrative and Support Costs” Table.

26 http://www.salary.com 27 http://www.oss-watch.ac.uk/resources/tips.xml 28 http://opensource.org/licenses/alphabetical 29 http://www.microsoft.com/licensing/mla/ 30 http://www.ingeniux.com 31 http://www.amazon.com

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Table 4:

InITIAl SOfTWAre COSTS

OperATIng SySTemS

Open Source Software/Free Software Closed Source Software/Proprietary Software Initial Software Cost Initial Support Cost Initial Software Cost Initial Support Cost

FreeBSD $0 $0 - -PC-BSD $0 $0 - -Microsoft Windows - - $8,415 $4,905 Subtotal $0 $0 $8,415 $4,905 Total $0 $13,320 Table 5: OffICe SOfTWAre

Open Office $0 $0 -

-kOffice $0 $0 -

-Microsoft Office Suite - - $21,780 $12,645

Subtotal $0 $0 $21,780 $12,645

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Table 6:

medIA And deVelOpmenT SOfTWAre

Gimp $0 $0 - -Scribus $0 $0 - -Joomla $0 $0 - -Eclipse $0 $0 - -Quanta $0 $0 - -kDevelop $0 $0 - -Interchange $0 $0 - -Ingeniux - - $100,000 $20,000 Visual Studio Professional - - $4,000 $800

Adobe Creative

Suite-Master Collection - - $12,500 $2,500

Subtotal $0 $0 $116,500 $23,300

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Table 7:

SerVer SOfTWAre

Apache $0 $0 - -MySQL $0 $0 - -SQL-Ledger $0 $0 - -Windows Server - - $258,305 $129,335 Microsoft SQL Server - - $949,423 $474,712 Subtotal $0 $0 $1,207,728 $604,047 Total $0 $1,811,775 Table 8:

mAIl SerVer SOfTWAre

Postfix $0 $0 -

-Microsoft Exchange - - $15,210 $7,608

Subtotal $0 $0 $15,210 $7,608

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Table 9:

Crm & erp SOfTWAre

Open Source Software/Free Software Closed Source Software/Proprietary Software Initial Software Cost Initial Support Cost Initial Software Cost Initial Support Cost Sugar Community Edition $0 $0 - -Support Suite $0 $500 - -Microsoft Dynamics - - $46,095 $23,127 Subtotal $0 $500 $46,095 $23,127 Total $500 $69,222 Table 10: dATA ArChIVIng

Amanda $0 $0 -

-Enterprise

Vault-Essential - - $150,000 $30,000

Subtotal $0 $0 $150,000 $30,000

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Table 11:

TOTAl InITIAl SOfTWAre COSTS

Subtotal $0 $500 $1,565,728 $706,132

Total $500 $2,271,860

Table 12:

SOfTWAre UpgrAde COSTS

OperATIng SySTemS

Open Source Software Closed Source Software

FreeBSD $0

-PC-BSD $0

-Microsoft Windows - $8,415

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Table 13:

medIA And deVelOpmenT SOfTWAre

Gimp $0 -Scribus $0 -Joomla $0 -Eclipse $0 -Quanta $0 -kDevelop $0 -Interchange $0 -Ingeniux - $30,000 Visual Studio Professional - $2,750

Adobe Creative

Suite-Master Collection - $4,500

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Table 14:

SerVer SOfTWAre

Apache $0 -MySQL $0 -SQL-Ledger $0 -Windows Server - $258,305 Microsoft SQL Server - $949,423 Total $0 $1,207,728 Table 15: OffICe SOfTWAre

Open Office $0

-kOffice $0

-Google Docs $0

-Microsoft Office Suite - $21,780

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Table 16:

mAIl SerVer SOfTWAre

Postfix $0

-Microsoft Exchange - $8,304

Total $0 $8,304

Table 17:

Crm & erp SOfTWAre

Open Source Software Closed Source Software Sugar Community

Edition $0

-Support Suite $0

-Microsoft Dynamics - $26,170

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Table 18:

dATA ArChIVIng

Amanda $0

-Backup Exec Agent for

Enterprise Vault-Essential - $35,000

Total $0 $35,000

Table 19:

TOTAl SOfTWAre UpgrAde COSTS

Subtotal $0 $1,344,647

Total $0 $1,344,647

Table 20:

yeArly AdmInISTrATIVe And SUppOrT COSTS

Unix Administrator $104,000

-Systems Administrator - $382,500

Open Source Support

Costs $42,750

-Closed Source Support

Costs - $349,466

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Table 21:

CUmUlATIVe COSTS And SAVIngS

Open Source Software/ Free Software

Closed Source Software/

Proprietary Software Savings

1 Year $147,250 $2,271,860 $2,124,610 2 Years $294,000 $3,029,660 $2,735,660 3 Years $440,750 $3,761,626 $3,320,876 4 Years $587,500 $4,493,592 $3,906,092 5 Years $734,250 $5,225,558 $4,491,308 6 Years $881,000 $7,302,171 $6,421,171 7 Years $1,027,750 $8,034,137 $7,006,387 8 Years $1,174,500 $8,766,103 $7,591,603 9 Years $1,321,250 $9,498,069 $8,176,819 10 Years $1,468,000 $10,230,035 $8,762,035