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The Challenges of Open Source in Non-Profits

Not So Different from For-Profits

  • September 11, 2006
  • By Ian Hodge

Open source seems to present a number of obstacles to those making technical purchasing decisions in those businesses that are classified non-profit. These could be educational institutions, government departments or religious organizations.

The interesting facet of this discussion, however, is that the same business needs exist in not-for-profit institutions as it does in for-profit ones. At the end of the day, each organization has to have money in the bank to conduct its affairs. This could be achieved by donations or by selling products or services for payment.

This article attempts to survey some of those issues facing open source in the not-for-profit sector of the business world.

The primary difference between the organizations is the way they handle their profit. In the not-for-profit sector any profits are to be used according to the aims of the organization rather than distributed to members or shareholders.

It is worth remembering that profit, as Peter Drucker has told us, is the future cost of staying in business. Thus any organization, no matter how it establishes itself legally, needs money to pay existing and future costs. Profit is essential to the health of any organization.

So, too, is technology. The needs of the organizations require productivity increases and advantages that technology can deliver. The primary drivers to purchase and implement technology are either cost advantages or increased revenue advantages. That is, either the technology reduces costs or else it helps deliver increased revenue.

In this environment, Open Source is competing against other providers in the market place. If the business analysis above is accurate, then it is possible to apply the two considerations to open source.

First, is the consideration of the underlying technology itself. The Linux platform allows a company of any kind to obtain some substantial savings in licensing fees. These can amount to thousands for dollars for larger organizations.

Yet so often the businesses will not take advantage of the cost benefits. Why? I think the one answer is this. They will not take the advantage because no one has really explained to them in a meaningful way how they can obtain the cost benefits without adding risk to the equation.

Too many IT departments are familiar with operating systems that require constant maintenance. This is their world. It keeps them employed. To cut into this paradigm with a product that can significantly reduce maintenance costs in addition to purchasing costs, creates a problem for many. The initial problem is one of disbelief. Can Linux really save those licensing fees? The answer to this one is easy.

But the second question, can Linux really deliver maintenance savings, is a little harder to establish. Can another operating system really reduce the costs in this area? Only those who have experienced this can speak with certainty.

But the broader aspect of technology implementation is application based. People, at the end of the day, do not buy an NT or Linux server because that is what they need. Rather, they buy application software then look for a platform to run it on.

Here is the crying need in the open source market: applications. Yes there are some, and they are really good. But in other areas, the open source developers are running behind market demand.

Now you come to the real source of the issue for open source: making money. If you have to develop software which you give away, you have to have some method of recovering development and ongoing costs. In the open source market, this can only be obtained through service. This probably means, however, a longer payback time for investors. If you cannot get money immediately from sales, then you may need additional time to recover costs through service agreements.

Can this be done successfully? The answer is positive, as many open source providers have discovered. That path is not easy, but each success somewhere else makes it easier for the next person to bring open source applications to the market.

To be successful in open source, it is necessary to remember some crucial issues. One of these is the problem that in many companies business decisions are driven by the technocrats rather than the business managers. The solution to this problem is to have a compelling business case for a business to consider and apply an open source solution to its needs. When that occurs, the fear, uncertainty and doubt from the IT department will take second-place to the needs of the business.

Here are some key questions for open source suppliers and developers.

  • In what way does my open source application satisfy a business need?
  • In what way does my open source application distinguish itself from its competitors?

It does not seem reasonable to expect buyers to move into the open source marketplace unless you can answer these questions for them. When you can do this and they are convinced you have a business solution for them, then the discussion can begin on delivery platform.

At this stage, the technical people will get involved. If they are ignorant of Linux, then you'll need to be ready to educate them. If they are fearful of losing their job because you can reduce the costs of technology maintenance, then you better have a solution to help these people.

If doing business was easy, many more people would be in business for themselves, and we'd all have less stress in our lives. It is the challenges that helps separate those who will step up to the plate to solve problems, and those who will avoid the risks involved.

In this climate, the entrepreneurial spirit is needed to carry those who make the decisions to bring open source applications into the marketplace. But it can be done.

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