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Slides of my talk at DITEDI event "business on open"
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Il valore economico delSoftware Open Source
Carlo DaffaraEuropean Working Group on Libre Software
CloudWeavers
Business on Open - 2012
Il valore economico delSoftware Open Source
(per l'Europa)
Carlo DaffaraEuropean Working Group on Libre Software
Conecta Research
Business on Open - 2012
“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)
Business on Open - 2012
“[..] 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 product.” (Thomas Lutz, Microsoft representative at Tunis WSIS, 2005)
Business on Open - 2012
“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)
Business on Open - 2012
“[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 [proprietary sw] firms.” (Engelhardt, Maurer, 2010 Goldman School of Public Policy)
Business on Open - 2012
“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
Business on Open - 2012
“...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)
Business on Open - 2012
● 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
Business on Open - 2012
Business on Open - 2012
Business on Open - 2012
● Overall IT spending estimate for Europe: 492B€
● 24% hardware
● software and services market: 374B€
● software market alone: 244B€
Business on Open - 2012
Quanto OSS c'e' nel codice?
Business on Open - 2012
● “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
Business on Open - 2012
● 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%
Business on Open - 2012
Business on Open - 2012
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”)
Business on Open - 2012
35% di riuso porta a un risparmio in costi del 31%: 75B€/anno
Business on Open - 2012
“Figures support the idea that FOSS solutions are more innovative than proprietary 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”)
Business on Open - 2012
"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”)
Business on Open - 2012
"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”)
Business on Open - 2012
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 $35,000,000”
● Standish group, 2009: “24% of projects are canceled before deployment”
● Sauer & Cuthbertson, Oxford university survey, 2003: 10%
● Dynamic Markets Limited: “25%+ of all software and services projects are canceled before completion”
Business on Open - 2012
Tramite la riduzione di effort, staffing e durata il 35% di codice OSS porta a una riduzione nel failure rate del 2% → 4.9B€/anno
Business on Open - 2012
(Mohagheghi, Conradi, Killi and Schwarz “An Empirical Study of Software Reuse vs. Defect-Density and Stability”)
Business on Open - 2012
“While IBM initially contributed software that was valued at 40M$, 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”)
Business on Open - 2012
● 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%
Business on Open - 2012
14% riduzione in maintenance and development costs → 34B€/anno
Business on Open - 2012
Deshpande, Riehle “The Total Growth of Open Source”
Business on Open - 2012
Business on Open - 2012
Valore totale del risparmio dovuto al software OSS: 114B€/anno
Business on Open - 2012
● Effetti di secondo ordine?● Sappiamo che I risparmi vengono reinvestiti:
Business on Open - 2012
Business on Open - 2012
● “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 )
Business on Open - 2012
Effetto del reinvestimento in IT, modello lineare su 3 anni → 342B€/anno
Business on Open - 2012
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
Business on Open - 2012
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
Business on Open - 2012
Source: Venice International University TEDIS study
Business on Open - 2012
DrupalCon 2010, Copenhagen
Business on Open - 2012
● Innovazione dagli end-users:
Business on Open - 2012
Business on Open - 2012
“[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”)
Business on Open - 2012
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
Microsoft
Product-Oriented
Partner (e.g.,ISV, IHV)
Services-Oriented
Partner (e.g.,SI, Hoster)
Value-Added Partner(e.g., VAR)
Logistics-OrientedPartner (e.g., LargeAccount Reseller)
Retail LogisticsPartner (e.g., LargeRetail Electronics
Store)
$1 $4.09 $2.44 $2.30 $2.70 $2.931 24% 40.9% 43.5% 37% 34%
Source: Partner Opportunity in the Microsoft Ecosystem, IDC 2011; analysis by Daffara
Business on Open - 2012
● 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)
Business on Open - 2012
Business on Open - 2012
● 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)
ItClub FVG – Open Source
Business on Open - 2012
Business on Open - 2012
Business on Open - 2012
From: "The future of computing: indispensable or unsustainable?" Royal Academy of Engineering, 2011
Business on Open - 2012
Business on Open - 2012
Business on Open - 2012
Business on Open - 2012
Business on Open - 2012
Business on Open - 2012
Business on Open - 2012
Business on Open - 2012
Grazie per l'attenzione
Carlo Daffara
cdaffara@conecta.ithttp://carlodaffara.conecta.it
Twitter: @cdaffara
Business on Open - 2012
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