Each year the State of California spends millions of dollars on software, software maintenance and renewal. Many private and governmental organizations are turning to open source software as a cost-effective alternative to closed source software. The state should more extensively consider use of open source software, which can in many cases provide the same functionality as closed source software at a much lower total cost of ownership.

The typical model for software acquisition in state government involves the purchase of closed source software solutions from the major vendors. Closed source software is any software whose source code is hidden from the public view. Under most licenses the user cannot modify the program or redistribute it. Closed source products encompass the spectrum from server operating systems, application development platforms, office productivity suites, to small yet often expensive utilities. Each of these software solutions has an initial investment cost, maintenance and/or upgrade costs.

Organizations are now starting to embrace open source solutions as a cost-effective alternative to these closed source products. Open source solutions differ from closed source in many ways, one of which is cost. Open source solutions are typically free of charge, although some companies such as IBM, Oracle and Hewlett Packard (HP) often sell versions of open source software with related maintenance. The following 10 features distinguish open source:

1. Free Redistribution: The software can be given as part of a package with other applications;
2. Source Code: The code must either be distributed with the software or easily accessible;
3. Derived Works: The code can be altered and distributed by the new author under the same license conditions as the product on which it is based;
4. Integrity of the author's source code: Derived works must not interfere with the original author's intent or work;
5. No discrimination against persons or groups;
6. No discrimination against fields of endeavor: Distributed software cannot be restricted in who can use it based on their intent;
7. Distribution of license: The rights of the program must apply to all to whom the program is re-distributed without need for an additional license;
8. License must not be specific to a product; Meaning that an operating system product cannot be restricted to be free only if used with another specific product;
9. License must not contaminate other software; and
10. License must be technology-neutral.[1]

Open source software is developed with the source code freely available; anyone can use the software, and make changes to it as necessary. Typically changes are then made available back to the open source community using a common methodology for change control. In contrast to open source, most software development companies sell their products at a specific cost, but do not allow the user to see or modify the source code.

The advent and acceptance of open source software represents a significant shift in the software development and procurement cycle. It is sometimes difficult to think of downloading a free version of software from the Internet and then using it in a mission-critical environment rather than buying software from a major software vendor. There are arguments to be made that open source can be a better choice for some mission-critical implementations than closed source. The following are some potential reasons for choosing open source:

• More secure due to the extreme scrutiny of the source code before being deployed;
• Can be run in multiple environments (i.e. Unix, Linux and Microsoft);
• May be less expensive to manage (no maintenance contracts or upgrade costs); and
• Often less vulnerable to viruses.[2]

Open source install base

Probably the most recognized open source product is the operating system Linux, which is used in thousands of mission critical applications. Amazon.com for example uses a Linux-based infrastructure to process millions of transactions per day.[3] Open source software has made the biggest impact on back-end systems such as web and application servers, with many of these products being the dominant software used in the market. According to the Netcraft Web Server Survey, the open source Apache web server software currently hosts 63 percent of all Internet pages. Open source Sendmail (mail server) is used on over 600,000 e-mail servers. Linux is used on over 7 million computers.[4]

Open source software solutions span a broad range of technologies from productivity suites (Open Office, http://openoffice.org) to web browsers, data bases, security tools, and somewhat more specific applications, like time and reporting software. It is possible today to run a fully open source desktop and still be compatible with many closed source applications.

Some state agencies have adopted open source solutions as well. Examples are provided below.

Air Resources Board (ARB) makes use of open source in their web environment. For example, ARB runs the Linux operating system with the Apache web server, MySQL database, Perl and PHP coding and a Swish-E search engine. ARB has used open source from the inception of their web install.[5]

The Franchise Tax Board (FTB) is using select open source products by including them as alternatives to any potential software purchase. The largest installation is a product called Virtual Network Computing (VNC) with a base of 5,000+ clients, which assists helpdesk staff to perform desktop maintenance and remote management. The comparable closed source solution costs approximately $66.00 per client license. For this one installation FTB realized a total savings of $330,000. In addition, FTB is being very proactive in looking at open source alternatives to software products that are due to be renewed and is also looking at larger installations of open source such as using Linux on the mainframe.[6]

The California Department of Transportation (Caltrans) initiated a project for identity and password management. The rollout required new hardware and software that was quoted at nearly $500,000. Instead Caltrans decided to run the application on an open source operating system, and as a result was able to select hardware and software that cost only $220,000, thus saving nearly $300,000. Caltrans is looking elsewhere within the organization to move to Linux for additional savings.[7]

Vendor support of open source software

Companies such as IBM, Hewlett Packard, and Oracle have been investing millions of dollars into open source software development. Additionally, open source code products are available for many different hardware platforms, including hand-held devices to mid-range servers. Typically the state relies on maintenance contracts for upgrades for closed source software and software problems. Support for open source software is available from many of the major vendors through third-party maintenance contracts; for example, many of these vendors will support any version of Linux, providing upgrades and maintenance.[8]

In summary, open source is not just about cost savings. Since the code is open, it offers the flexibility for organizations to modify the code as needed for specific uses. Many also feel that open source is more reliable and secure than closed source.[9] In closed source software, the code is hidden from the user so it is difficult to identify potential security risks in advance and to work proactively to make the system more secure. Also, bug fixes and patches must be distributed from the originating developer rather than originating from the users who have identified the problem. In this regard, open source can provide superior security than closed source.

Recommendations
For potential immediate savings, departments should take an inventory of software purchases and software renewals in the Fiscal Year 2004-2005 and implement open source alternatives where feasible.

Every state agency has hundreds of different software products in use, from desktop applications and utilities to server and application development tools; all of which have their own maintenance and upgrade costs. From the tactical perspective agencies should look at all software contracts that are up for renewal, or software that is being purchased in FY 2004-2005. They would then evaluate open source software that could be implemented in place of the closed source solution.

Incorporate open source software as a viable alternative to any software procurement.

Today, when state agencies purchase software solutions they are required to look at best value, and often go through a formal procurement process wherein vendors submit proposals. Since open source code solutions do not fit the traditional procurement model in that there is not usually a vendor promoting and proposing the product, it is recommended that state departments actively research and evaluate open source code alternatives prior to considering use of the traditional procurement model for software.

The recommendation to inventory software purchases and software renewals in FY 2004-2005 and implement open source alternatives where feasible should have no immediate fiscal impact. Agencies participating in this review could fund any minor cost from their existing budgets.

The fiscal implications for the use of open source software can vary widely depending how deep an organization is willing to use these technology solutions and whether they are used at the desktop, server or other installs. Savings could range from several hundred thousand dollars to millions. As listed above, FTB realized savings of more than $300,000 on one software installation. The Department of Transportation realized nearly $300,000 in savings on one application. Also, as software licensing and application development costs continue to increase, organizations are looking at creative ways in which to manage those costs. Looking to the open source community for applications that serve the same function as closed source solutions may cause vendors to be more flexible with pricing and licensing structures. Because these savings will depend on individual agency actions, however, the savings resulting from this recommendation cannot be estimated.

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