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Could India Save Billions With FOSS? Whose Numbers Are Accurate?

Microsoft is scrambling to counter conclusions made in a study conducted by the Indian Institute of Management-Bangalore, which suggest that India could save $2 billion if open source software solutions hit 50 percent adoption across its economy in 2010. As a story from New Delhi, running in the Business Standard. reports, even if isolated categories of open source software such as server operating systems and antivirus software see broad adoption, the cost savings could be substantial.

Microsoft is firing back with its usual claims about support and other issues representing hidden costs that actually make open source more expensive than its proprietary software. There is an interesting footnote to the war of words, though: Red Hat was the sponsor of the study. Whose numbers are correct?

Business Standard confirms that Red Hat funded the study, although it was conducted independently. It also quotes Pallavi Kathuria, director of the server business group of Microsoft India, who claims that the total cost of ownership (TCO) is lower for its software products:

"IDC in its study estimates that, on an average, 68 per cent of a three-year TCO consists of staffing and training costs, and another 15 per cent of TCO consists of expenses related to downtime. Acquisition costs for software turn out to be just a fraction of TCO, averaging only about 7 per cent of the total cost over three years."

We've heard this before. It's basically the classic argument that cost savings reaped up front in deploying free software will only be eaten up as support and training expenses stack up. But those issues are exactly why it's interesting that Red Hat wanted to fund the Indian study. Red Hat specializes in support and training for free, open source software solutions. Many American enterprises, such as The Gap, are switching from Microsoft Windows to Linux, and opting for Red Hat's support subscriptions. And Red Hat spends over $100 million a year to advance Linux.

It seems like the dueling market research studies and salvos from companies like Red Hat and Microsoft on these issues will never die. However, there are many governments around the world with aggressive open source mandates, as well as bodies such as The European Commission encouraging open source adoption. As that adoption takes place, it would be good to see hard numbers, completely independently produced, on what the exact Total Cost of Ownership is for open source versus proprietary software solutions.

I suspect that such truly independent numbers would show that there are truths to weigh behind both Red Hat's and Microsoft's positions. Support and training are cost centers in big software deployments, but companies like Red Hat specialize in minimizing the costs for them. As is always true with statistics, it can get very hard to discern whether the ones we see are lies, damned lies, or truths.

• Microsoft
• Red Hat
• IDC
• India
• Europen Commission

by Michael Arrogant on Sep. 15, 2009

What these reports fail to address is the kickbacks that are an integral Indian system. Today, any large IT project, or any project for that matter, that is tendered by the local/state or central govt agencies requires ALL suppliers along the value chain to "share" part of the "value" back to various individuals & agencies in order to move forward. Some of this is done officially:

Quote: IT REALLY ought to be added, further to this previous post which only alluded to political influence, that Microsoft has a nice cycle going on. Microsoft earns money, some of which is passed to personal accounts, such as Gates’ (Foundation), which can then be funneled back into governments, whose representatives in turn feel obliged to excessively pay Microsoft for software (e.g. BECTA and the NHS in the UK). The way this is set up, politicians and Microsoft get rich in a closed cycle of money and/or favours, where the only ‘feeder’ is the taxpayer. GNU/Linux companies are locked out of this cycle because they can’t introduce kickbacks and such.

More at http://boycottnovell.com/2008/12/28/microsoft-kickbacks-cycle/

And in the vast majority of cases - this is simply a cash transaction that the likes of Enron, Bofors, Swiss Banks & others know all too well....

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