eGovernance in India

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Why Your Future Depends on Open Source — Part 1

Posted by egovindia on June 30, 2006

Why Your Future Depends on Open Source — Part 1

The Open Source

Many IT organizations are starting to experiment with open source. There is an element of kicking tires about these experiments, as in “I’ve heard a lot about this new open source stuff — let’s take a trial spin to see how it goes. Of course, we’re still committed to our proprietary infrastructure, but we might as well check it out.” It’s like you might try out that new exotic restaurant that just opened — not that you’d ever stop eating at the tried-and-true place that you’ve been going to for years.

Get over it. Your future depends on open source — and for reasons that have nothing to do with open source being a better way to develop software, enabling less contentious relationships between users and vendors, and certainly nothing to do with abstract notions of “open source is free as in free speech.”

Your future depends on open source because of fundamental economic trends in the IT industry. You need to get on the right side of these trends or face real danger to your organization — and your career. You ignore them at your peril.

There are three important reasons you need to adopt open source. This post will address the first; I’ll address the other reasons in subsequent posts.

Reason #1 to Adopt Open Source: Your Budgets Demand It 

 IT Capital Investment chart

The above chart (source, Bureau of Economic Analysis, Department of Commerce) shows the historical trend in IT capital investment (including both hardware and software) over the past 30 years.

As you can see, in the early 70’s, IT made up only about 15% of total Equipment and Software Capital Investment (the category also includes items like machine tools and the like); the percentage of total capital spending for IT increased steadily over the years to around 40% or so. It has stayed at that level for several years; this percentage is not likely to grow any further going forward — after all, the economy still has to invest in things besides IT.

What this chart doesn’t show, however, is the multiplier effect on IT spending due to the strong economic growth during the 80’s and 90’s. Multiplying the increased percentage of capital spending by the underlying economic growth gave us the heady IT budgets of those years, where increases in IT spending within organizations routinely ran 7% to 10% (remember “Get us on the Internet, no matter what it costs” and “We have to get ready for Y2K”?). 

That was then, this is now. The multiplier effect of increased capital spending percentage is over. And good economic growth these days is 3% to 4%. That means that future IT budgets are going to grow pretty much in line with the underlying economic growth; after employee raises, that means IT budgets for the foreseeable future are going to be a zero-sum game.

On the other hand, however, the demands on you and your organization aren’t staying constant. In fact, they seem to be growing. Your organization needs a mobility capability. SarbOx requirements must be met. What about RFID? And you want to implement analytics to run the business more effectively, too.

In a zero-sum game, if you want to increase one thing, something else needs to shrink. Which brings us to open source.

IT organizations must direct their capital investment to customer-facing, business-improving, revenue-growing initiatives. In the IT budgets of the future, spending millions of dollars on plumbing — storing, pushing, and presenting bits — is out. IT organizations — you — have to reduce spend in non-essential places to have any chance at all to deliver on all the commitments your boss is demanding.

Moving to open source is not an option to be explored at leisure. It is a deadly serious strategic necessity. If you aren’t seriously looking at open source yet, you need to get with the program.

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