LXer Feature: 16-Jan-2007
The European Commission's enterprise and industry department just released the final draft (warning: 1,8 MB) of what could be the biggest academic interdisciplinary study on the economic / innovative impacts of FLOSS*. The study was done by an international consortium, led by the United Nations University / University of Maastricht's (NL,EU) department of innovation; UNU-MERIT for short. The study was prepared by senior researcher Rishab Aiyer Ghosh, who did a tremendous amount of FLOSS studies the last few years, amongst them on FLOSSpols and FLOSSWorld.
The academic grade study has a very, very broad scope and has collected real world information that is valuable for both companies, government bodies who are thinking about migration, and decision-makers in the ICT business. The study is about the direct economic impact of FLOSS, but also about the more hidden indirect economical impact of FLOSS, and also compares scenarios of open and proprietary software futures of Europe. In addition to that, the study is also about competitiveness of FLOSS software compared to proprietary software, and also provides a few TCO comparison case-studies.
Probably most important, the study gives policy strategies to European government bodies, which can also be very useful for any company or organization. In this article, I'll discuss the key findings of this report, and try to link this with my own knowledge and experience.
A must-read for anyone who's willing to Get the real Facts!
* In contrary to US articles, European's don't mind using the term FLOSS, since English speaking people are only a small minority in today's Europe, and therefore almost nobody associates FLOSS with the dentist. If you do, please don't bother to complain; just change the associations you make.
The research-consortiumFor the study, UNU-MERIT cooperated with Universidad Rey Juan Carlos, Spain, the Business Innovation Centre of Alto Adige-Südtirol, Italy, and the Society for Public Information Spaces, France, which are experts on the field of technical software-related expertise, and the University of Limerick, who helped getting access to data.
The study is called "Economic impact of FLOSS on innovation and competitiveness of the EU ICT sector", which shows the Euro-Comission commissioned the study. Some years ago, the EU-countries (20 back then) decided the European economy should be "the most competitive, and the most dynamic knowledge based" in the world, and this goal should preferably be reached by 2010. To reach this goal, the European Commission started the Fifth and later the Sixth framework program, which is a means to fund European research and development. As a part of this, Rishab Aiyer Ghosh did several studies on the effects, problems and opportunities of FLOSS. Ghosh' earlier results are also used in this meta-like study.
The main findings in this area, are FLOSS is important to the economy, and the cost to reproduce and distribute the (decent) FLOSS applications would be about €12 ($15) billion. 131 thousand people would have to work a year to recreate all that FLOSS. Because Microsoft employs about 71 thousand people, and only a part of them are software developers, that would mean a company like Microsoft would have to work more than about eight years (estimate when only one on four Microsoft employees develops software) to recreate those FLOSS software. Europe leads slightly when it comes to open source, ahead of North-America an the United States. However, once people can earn from FLOSS, a lot of them move from Europe to the US.
Speaking about GDP, an increase in the FLOSS share of software investment from 20% (now) to 40%would mean a GDP-growth of 0,1%. That's pretty much, since the GDP-growth in the EU is only about 3% or so, most of the time.
Also, FLOSS potentially saves the industry 36% in software R&D investment. This was confirmed when I asked 'the FLOSS'-prerson from Royal Philips Electronics (Arnoud Engelfriet) why they used FLOSS and sometimes even shared the software they made. I thought they didn't want to help competing companies like Sony, but it seems they both can save money, even while their direct competitors can use the software they have made, and therefore have to invest less money in software R&D than they did. Surprisingly (at least to me), 20% of software investments is made to create FLOSS.
The report sees three different futures for the EU:
- Closed. This means we keep using proprietary software. If we do so, business will be going to be more and more conservative, and real innovation will be difficult because of legal and technical regulations. This probably aims at software patents, and the lobby of the BSA in the European parliament / Commission to pledge for stronger Intellectual Property (IP) regulations. Because this is only in favour of the big companies, and is a hindrance to Small and Medium Business, the SMB's joined to make themselves heard in 'Brussels', and to stop these stronger IP laws. Nonetheless, Europe is still vulnerable to BSA's lobby.
- Generic is probably the situation as it is now; a mixed environment. FLOSS will grow gradually, but opportunities to use FLOSS to reach the 'Lisbon goals' are not used.
- Voluntary is the last. Here, policies are changed, and all the opportunities FLOSS offers are used. This, however, isn't probably possible with todays laws and policies, so we need politicians to be progressive to make this happen.
Now, to make this scenario happen, this is what the report envisions:
- Avoid penalising FLOSS in R&D incentives, public funding and software procurement. In the real world, this might mean, don't ask new software you buy to be 'compatible with Windows Vista', look at alternatives for closed software like OpenOffice, and when you give a company money to make a portal for your government, ask them to make it FLOSS, and to use FLOSS as much as possible. It also means: Teach children to work with concepts instead of particular software, teach them FLOSS, and about the freedom FLOSS gives.
- Avoid lifelong vendor lock-in. This simply means, get rid of closed software, try to get rid of proprietary drivers, and try to get rid of proprietary software formats. Only when you embrace open formats and open source software (preferably free too), you can let ISV's compete against each other to obtain the best and cheapest bid, for example on maintenance on government computers and portals.
- Encourage partnerships between large firms, SME's and the FLOSS community. This is important, because it is very often too much work for small companies to migrate to FLOSS, though it would be cheaper for them on the long run. Therefore, someone has to help them.
- FLOSS should be interesting from a tax-viewpoint. Therefore, FLOSS software contributions should be treated as charitable donations.
- Explore how unbundling between hardware and software can lead to a more competitive market. For me this is the most interesting. It simply means: No more pre-installed OEM software.
Migration and TCO
Also, in chapter 12, six migrations are discussed. The main conclusions here are (not very surprising):
Migrations means extra efforts and extra costs, but in the long term, savings will occur because the lower total cost of ownership FLOSS has in comparison to closed software.
This report is valuable to any ICT-decision maker, but also to any free software advocate. If you belong to one of these groups, I certainly advise you to at least scan the contents of the 287-page report. The report discusses far more things than I can discuss in an article of reasonable length, and moreover I haven't read the whole report, but this is the most interesting report about FLOSS I saw.