Open-source software has been gaining traction in the business world, and a new report by the Linux Foundation highlights just how much economic value it offers. According to the report, companies perceive the most significant benefits of open-source software as cost savings, faster development, open standards, and interoperability. Professor Henry Chesbrough, a noted pioneer and author on open innovation conducted the survey and analysis in partnership with LF Research, the Linux Foundation’s research arm.
Measuring the economic value of open-source
The report surveyed more than 430 companies, including many of the Fortune 500, with 43% reporting annual revenue above $1 billion. Nearly two-thirds of the companies surveyed said that the perceived benefits of open source clearly exceed the perceived costs. The survey also found that the ratio of benefits to costs rose for nearly half of the respondents, while only 16% felt that the ratio was declining.
“This research clearly underscores that open source software has substantial economic value to companies and that its value will increase for most organizations the longer and more they use it.”
Jim Zemlin, the Linux Foundation Executive Director
The report found that many of the surveyed organizations have worked with open-source software for over 20 years, while a significant number started in the last five years. Companies get more value out of open source software the longer they use it and get more value by being more active in contributing to open source initiatives.
“Software is a technology whose importance is steadily increasing, and we’re seeing companies reap the benefits of embracing the foundational technology of open-source software. Adopting open-source software allows companies to embrace a more vibrant, surprising, and exciting future,”
Professor Henry Chesbrough
While open-source technologies, including the ubiquitous Linux operating system, are free to use, they are challenging to value economically. However, the survey found that most survey respondents say it would have cost significantly more to provide software functionality themselves than to use open-source software.
The greatest perceived costs of using open-source software were security gaps, hidden support costs, and those related to reducing legal uncertainties regarding licensing. However, only one-fifth of respondents said perceived costs exceeded perceived benefits.
In conclusion, the report confirms that open-source software offers significant economic value to companies, and its value will continue to increase the longer more organizations use it. The report also shows that being more active in contributing to open-source initiatives can increase companies’ benefits from open-source software.
View the full report: Measuring the economic value of open-source