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4 reasons companies say yes to open source

By Howard Baldwin
January 6, 2014 06:30 AM ET

Carestream chose Aras, an Andover, Mass.-based PLM vendor that uses an open-source model to encourage its customers to develop and share new components with one another. Aras had "the best functionality for a reasonable total cost," says Sherburne. "It didn't have some of the functionality we needed, so we knew we'd have to do some extra development, but when we completed that, we knew we could deploy it globally from a fixed-cost perspective."

There were no upfront capital licenses costs, which allowed Carestream to move forward without having to purchase and inventory licenses. "The subscription model allowed us to enter into the PLM project and focus on proper implementation," says Sherburne. "It provided a fixed-cost platform that can be enhanced over time and scaled to allow more collaborative access without continued cost outlays."

As projected, Carestream came out ahead: Its ongoing costs for approximately 1,500 users (1,000 internal, 500 suppliers) when the software is fully deployed are at "the low end of six figures," says Sherburne, as opposed to "millions of dollars upfront" for a packaged application, not including ongoing maintenance, he says.

Big businesses aren't the only organizations that benefit from open source's cost structure. The economics mean that smaller entities with niche software requirements can get what they need in a cost-effective package.

Teri Wiss, owner of Development Is Child's Play, a Cupertino, Calif.-based children's occupational therapy practice, had been looking for several years for an application that would handle scheduling and billing for her staff of 16 full- and part-time employees.

Over the course of several years, Wiss evaluated a variety of healthcare-oriented software packages, but none offered the specific functionality she was after. Few SaaS applications met her needs because of the uniqueness of her specialty, and those that might have were too expensive, she says.

Wiss finally decided to grow her own, turning to an open-source developer whose one-time fee was about the same as the cost of one year of access to some of the SaaS offerings she'd looked at. "I was concerned because I didn't speak 'computer' well enough to tell someone what I wanted. But [the consultant] said to forget what he did, and just tell him the way I work," Wiss relates. (See "Open Source Bails Out Small Business" for details.)

Open source improves quality

Open source fans have long contended that the methodology produces better software. Their reasoning: If code is flawed, the developer community can identify and address the problem quickly, where a single coder might plod on unawares, at least for a while.

There is a consequential benefit [to open source] from both a reliability and a financial perspective.
Peter Richards, managing director of global banking,
Bank of America

That quality appeals to Bank of America. "We have a broader range of choice when it comes to high-quality software," says Peter Richards, the bank's managing director of global banking in New York. "There is a consequential benefit from both a reliability and a financial perspective."

The bank integrates open-source components into custom-developed applications on a regular basis, Richards says -- but only after they're certified. "We go through a process of ensuring that they're appropriate for use within the bank's development environment," he says.



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