Open Source TCO: look at the COSPA frameworks (part 1)!

The EC funded COSPA project recently mentioned, defined frameworks to identify possible returns or losses of a transition to Open Data Standards or Open Source software.

frameworksTwo frameworks by clbaran

The Workpackage 3 derived two frameworks. The first one, from assimilation theory, is aimed at investigating adoption, is in relation to the often-found gap between initial acquisition and eventual adoption of a technology.

Acquiring Open Source software is easy, so the distinction between the adoption events of acquisition and actual deployment of a technology is of great importance. Considering that most of the time there is no blueprint indicating the required steps to guarantee successful deployment of OSS, the gap between the acquisition and actual deployment is often significant.

The following set of constructs form the framework used to investigate the assimilation of Open Source software:

  • Organization age & size – Older organizations are expected to be risk averse and less likely to undertake radical IT implementation initiatives such as OSS. Also, larger organizations may be better able to leverage the advantages of new technology, and have access to appropriately skilled personnel.
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  • Industry type – Certain industry types may be more capable of leveraging the benefits of technology as it may suit their particular value chain configuration.
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  • Strategic investment rationale – Strategic value propositions may justify resource commitments to adopt potentially beneficial technologies.
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  • Increasing returns to adoption – Economies of scale and network externality effects may arise through the increasing contribution of additional adopters.
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  • Knowledge barriers – extent of experience – Assimilation of new technology can be impeded by lack of relevant knowledge or experience.
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  • Top management championship – New technology assimilation may require radical and high-risk initiatives that require proactive top management championship.
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  • Extent of coordination – Coordination of knowledge across functional units of the organization can promote risk sharing & educate as to benefits of new technology.
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  • Sophistication of IT infrastructure – Organizations with sophisticated IT infrastructure are more likely to have higher levels of knowledge about new IT possibilities, and thus embark on innovative IT assimilation.

The second framework – related to the cost of transition – is aimed at revealing the causes of costs in relation to a specific context, especially to determine lock-in situations or to identify intangible costs. Intangible costs represent 75% of the IT when effects of innovation and productivity are monitored over more than five years, hence the importance to assess such costs.

TCO takes into account hidden costs and their propagation in the long run better than ROI, but also Switching Costs are important to better understand lock-in situations. Some switching costs are created by the vendor (endogenous) and are often measurable, others are exist in their own (exogenous), like the cost of gathering information about alternative products or vendors. Implicit costs, as customer uncertainty, are not measurable and often not even identifiable.

The framework used to assess the cost a transition to OSS take into account the Migration path (total migration from proprietary, partial from proprietary, partial from mixed, from scratch), the Type of Administration (High/Low economic resource growth, High/Low size of the organization) and with a strong emphasis on the difference between volatile nature of costs of migration and the cost of ownership.

Both migration and ownership costs depend on context, types of migration and organization, as above discussed. The framework defines measures and questions about five main causes of costs:

  1. Learning/training.
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    1. User acceptance: usefulness and ease of use;
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    2. Unproductive user labour: lack of productivity due to excessive time spent in training;
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    3. Internal training methods: casual learning/self-support;
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    4. Formal training methods: expenses for course time.
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  2. Software.
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    1. Acquisition and licenses fees: software and add-ons, installation included;
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    2. Maintenance: cost of routine tasks;
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    3. Operational interoperability;
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    4. Non standard PC configuration: configuration of new software;
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    5. Security: licenses cost to prevent security violations.
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  3. Contracts.
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    1. Loyalty programs: benefits from incumbent;
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    2. Contractual agreements: contractual commitments costs, including compensatory or liquidated damages.
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  4. Staffing.
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    1. IT-Staff payroll: including overtime and bonuses.
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    2. IT-Staff attitude/culture.
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  5. Support.
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    1. External consultancies: fees for external support and services;
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    2. Support search: including services for seeking qualifying apps and quality evaluation;
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    3. Security: labour cost for preventing security violations.

The next post will cover some case studies, focusing on how Open Source software is being used by public authorities across Europe.

Technorati Tags: oss, open business, COSPA, migration

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