Open Vs Proprietary Systems: Which Ones Should Organisations Adopt?

Recent years have seen the rise of technology within organisations. Software is seen as the "life blood of the modern world" (St.Amant and Still, 2007). It comes as no surprise that there are many models available relating to the distribution, adoption, use and licensing of software. One such model, or movement, is Open Source Software (OSS). Source code is the heart of any program and it the written instructions that defines the behaviours and actions of any software. Nowadays, companies have IT for nearly everything, from healthcare systems to financial systems. On the contrary, much software available is subject to a fee with the terms and conditions being restrictive and the source code private. The question this essay explores is if a company is able to adopt OSS as part of its strategy to create value within the business model, or if the company benefits from incorporating proprietary software. By 1979, many developers from AT&T labs had finished coding the 7th version of Unix, an operating system. As this was proprietary, it sparked Richard Stallman to quickly go against, and he established the Free Software Foundation in 1984 (Wheeler, 2003). GNU development started in 1985 - a free version of Unix, for people to use and distribute freely under the General Public License (GPL). Stallman felt strong about the freedom of software and described the society as "dog eat dog jungle" where attributes such as greed, exclusion and competition are rewarded (Stallman, 2001). Stallman argued that freedom is restricted as a result of forbidding the sharing of software (Stallman and Gay, 2009). This freedom was characterised as 1) freedom to run the program, 2) freedom to modify the program, 3) freedom to redistribute the program, and 4) freedom to distribute modi?ed versions of the program (Stallman et al., 1999). In recent times, open source systems have become popular being "The open source movement has brought a revolution in the development of software." (Palanisamy and Mukerji, 2013). According to the OSI (opensource.org), only a licensed approval should be classed as open source, otherwise it confuses people. It is characterised by individuals worldwide who volunteer to fix, add and comment on product source code (McCormack, 2006), and other benefits are emerging aside from Stallman's characterisation of freedom of the software. Many giants in the industry have embraced open source, to create value within their organisation such as Apple with Mac OS X. Most websites in US run on Apache web servers and in Europe Firefox gained 25% of the market share within 18 months of its launch (OpenStrike, news). Many companies in health sector and financial sector are weighing up the benefits of adopting OSS (Guimarães et al., 2013). Organisations have reported reduced hardware and operational costs and reduced time to process trades by 20% by adapting to Linux (Kalina and Czyzycki, 2005). Eric Raymond discussed further the idea of "catherdral" and "bazaar" in terms of developing software or hardware. Cathedral reflects proprietary software development - planning from bottom up, small scale, paid workers and cannot visit until it is done. Similarly, bazaar is an indication of open source - worldwide input, many developers, a marketplace and lower cost. These terms are used generally and do not always fit with the open vs. closed systems definitions. Creating value within organisations is strongly linked to cost, and it is one of the key drivers for organisations taking this decision. Companies are constantly trying to cut costs and create competitive advantage, moving away from product innovation to business process innovation in order to reduce costs. One example is outsourcing software development for lower paid labour (Palanisamy and Mukerji, 2013). Whilst proprietary software is sold for a price, such as Microsoft Office, open source software is usually free or low cost, such as Open Office. When adopting OSS, companies can enjoy a reduced cost of introducing the systems (Bonaccorsi and Rossi, 2006). Studies carried out suggest the most important driver of adoption to open source software is cost (Dedrick and West, 2003). Rather than building the software from scratch, "a good OSS package can help reduce costs significantly" (Lindman et al., 2011). British Telecom adapted an open source application, indicating that this saved British Telecom millions of pounds a year (Si Chen, 2006) by avoiding paying the commercial "cathedral" style fees. Furthermore "the low cost of the OSS has helped its widespread adoption at different government and organizational levels" (Spinellis and Szyperski, 2004). Furthermore, the buyer's perception of a vendor is essential in an age of uncertainty and lack of trust, therefore buyers prefer buying from a company where their sole aim is not monetary gain (Aggarwal et al., 2012). This may encourage companies to adopt OSS over proprietary. It is an ongoing saving, with costs being further reduced by delegating continual innovative development to consumers. On the contrary, proprietary software offers specialised support and maintenance, which is imperative for any organisational strategy. If companies result to paying for centralized or internal support, it could defeat the purpose by being costly (Kalina and Czyzycki, 2005). Organisations must therefore be able to have a reliable and secure support system to fully benefit from the low costs. Although organisations are able to save money by adopting "free" software, they are criticised for being insecure and unreliable, posing a security threat. Companies are thus reluctant to adopt OSS. Many studies have suggested this is not true. A study by Bloor Research compared Windows against GNU/Linux. They were accessed on nice criteria. Surprisingly, GNU/Linux was superior in seven out of nine of the categories (Boulanger, 2005). The studies demonstrate the ability OSS systems have in order to compete with proprietary systems. Although all of the aspects of software were not accessed, such as usability, this study also added to the notion that MySQL systems can be reliable and secure. Also, reports from the Software Engineering Institute state that a programmer has a defect rate of 1%. Other studies have proven that the OSS implementation of TCP/IP has a lower error rate per thousand lines of code (Reasoning, 2003). These defects significantly reduce the reliability of a system, this reducing the security. According to an article published by e-Week Labs, OSS organizations respond to problems more quickly and openly, while proprietary ''software vendors instinctively cover up, deny, and delay.'' Moreover, a study carried out by Dr Miller showed that OSS systems were less likely to fail when introduced with new random data. The proprietary systems failure rate was 18-24% compared to Linux at 9% and GNU utilities at 6%, suggesting OSS systems have "significantly better resilience to unexpected input than their proprietary counterparts" (Boulanger, 2005). Linus' Law states that the more people that can scrutinize the paper, the more likely it is that flaws in the code are noticed (Raymond, 1999). This was apparent with Microsoft's security advisory release that detailed the Zero-Day threat and how to avoid it (Bradley, 2010). It therefore takes weeks before a huge threat like this can be fixed in the proprietary world (Bradley, 2010). Furthermore, many companies offer dual licensing, so the software could be purchased with higher service levels and a small price. This is still cheaper than buying in programmers to begin the process from scratch. It is evident that both proprietary and OSS systems are bound to have software defects. However, studies have proven that OSS systems can be secure and reliable because they are constantly being checked; release updates more often and can be purchased with support services. This gives organisations hope when incorporating an open source system. In addition to security, organisations require continual support, testing and bug fixing even after adopting. OSS "greatly accelerates debugging and code evolution" (Raymond, 1999) and many beta-testers are preying on code constantly. Studies have identified many requirements organisations have around their software. (Dedrick and West, 2003) have identified companies that have claimed the importance of vendor support whereas other companies such as ISP and NewMedia have deemed it as unimportant. Proprietary software offers premium support, but help hours could be limited. However, OSS gives the option for a fee based support service (still cheaper than buying licensed proprietary software) and a world of support, resulting in savings and security. Developers are available through many mediums and although the response could be within minutes to days, there may be many solutions. Also, users could buy support, modi?cations and other related services (Stallman, 1999). Companies such as Red Hat offer the same traditional support and maintenance services (Kalina and Czyzycki, 2005, MacCormack et al., 2006). IBoss is a dashboard system offered by Red Hat to manage the systems and since support is the only revenue, it is specialised (Noyes, 2011). OSS systems are therefore as efficient as proprietary without the large fee. Furthermore, a common misconception is that the quality of proprietary systems is better than open source systems. However, OSS can equal or exceed the quality (Boulanger, 2005). This is due to a number of factors relating to how developers organise in massive communities, "the developers itch" and strong peer review systems. The software fixes are available through the use of websites and mailing systems - even the solution proposed and bug fixes are open to public scrutiny. Linux has an online community with excellent documentation, forums, mailing lists, forges, wikis, news groups and even live support chat (Noyes, 2011) and 10,000 developers from over 1000 different companies have contributed to the kernel since 2005 (Corbet and Kroah-Hartman, 2013 Linux foundation). This informal method of communication highlights the relaxed "bazaar" style of OSS systems development compared to the formal methods of propriety systems which can include projects, reports and meetings. Reasoning (2003) also studied the OSS system MySQL, concluding that it was six times better code quality than its competitor proprietary competition. The proprietary software vendors will release updates (service packages); this can take some time as it happens away from the public and could even result in organisations turning to OSS. Evidently, the OSS community is capable of producing high standards of code and in the case of a defect - they organise quicker than proprietary systems to fix defects (Boulanger, 2005), albeit on forums. This results in plausible quality, secure and updated code. With the rise of complex organisations, innovation is vital and attractive to organisations to create a competitive edge. The presence of freely available software allows increased product & service innovation (Bonaccorsi and Rossi, 2006) and value creation. Similarly, other studies (Franke and von Hippel 2003) have identified organisations who value the ability to modify source code. Other studies have concluded that companies that are dependent on technologies to gain competitive advantage and those who focus on IT innovation will be more likely to adopt open source software (Eveland and Tornatzky, 1990), (Dedrick and West, 2003). Furthermore, open source encourages new business models (Si Chen, 2006). "As well as being involved in product development and testing, the community builds and shares thousands of modules" (Business, BBC News, 2012). Again, this innovativeness is linked to the massive scale community of contributors. Thousands of developers are better than a few (Noyes, 2011). These new developers enhance the features, as well as the security of the product. Volunteers offer to help, it is not their job, thus making their work of better quality. In contrast, proprietary software somewhat limits the ability for companies to innovate. They are often tied into contracts, licenses and would not make changes (Noyes, 2011), whereas open source improves knowledge sharing (Hawkins, 2005), increases interoperability (Aggarwal, 2012) and allows the spread of new ideas. Software is more likely to benefit organisations when it is customised to their needs and open source software allows this (Noyes, 2011). One study suggests "the ?exibility of OSS means individuals can modify the software they use to perform a wide variety of tasks" (St.Amant and Still, 2007). These features allow organisations the much desired approach needed to cater the software to their unique requirements. One example of a type of technology used in organisations is ERP systems. Successful ERP systems are characterised by being customisable, cutting the company costs and offering flexibility (Helo, 2008) (Al Mashari, 2003). A poll conducted on a popular open source site showed that these are the reasons companies adopt open source ERP systems (opentaps.org) - for the customisation. Furthermore, Ameniti Travel Clubs have taken a complete open source approach. Their comments demonstrate clear reasons for adapting open source - "customising it to our needs" (Si Chen, 2006). One downfall is that this "bazaar" style approach to programming does not allow origination of the code. Rather, existing code must be adapted first (Raymond, 1999). Organisations may feel this limits their initial demand for the systems they are seeking. On the other hand, proprietary software is usually purchased as a package, limiting the customisation. Constant updates from companies such as Windows can be overbearing (Noyes, 2011). With OSS, the company can decide what updates and new features suit their software, thus being more flexible.

For some decades, the open source market has rapidly expanded, with new complexities, licenses and strengths, presenting organisations with a viable and tempting alternative to expensive proprietary software. The SWOT analysis displays powerful strengths and opportunities. The rise of open source communities and distributors like Linux have posed a threat to proprietary companies. J Allchin, manager of Microsoft concluded "Open source is an intellectual property destroyer. I can't imagine something that could be worse than this for software business and intellectual-property business" (Charny, 2001). Companies should seriously consider adopting OSS as it could improve customisability, innovation, time to market and reduce costs. Although there is no standard technical support, organisations can add value to their software with the worldwide communities or alternatively buy additional services. Proprietary software limits innovation and could be time consuming to customise, implement and update. Much research has concluded that a proprietary business model is not optimal (Soloviev et al., 2010). Organisations should thoroughly investigate their business models and aims before adopting open source. Although the benefits seem attractive, they may not create value in all organisations. The world is moving towards a SaaS (software as a service) industry but if open source becomes a reality in every organisation, the benefits may diffuse. Finally, open source software should be easily accepted by the layman to be really successful; as Eric Raymond states "The biggest obstacle between open-source software and world domination is not Microsoft, it`s our own endemic cluelessness about how to design software that won`t make nontechnical users run screaming."