276 12.1 Total Cost of Ownership
12.1 Total Cost of Ownership
There is a simple answer to the question of open source software costs,
where open source solutions are comparable to closed code alternatives.
When compared with similar closed code systems, open source systems as a
general rule cost:
Much less for software
No more and often less for hardware
If other things are equal, no more for anything else
As far as software costs are concerned, we will review tables with the
prices for common open source and closed code products, and see that
open source software costs much less.
As far as hardware is concerned, open source products are available for
effectively all current hardware platforms, including the systems with the
best price/performance. Open source performance on a platform is usually
similar to closed code competitors, as already discussed throughout this
book. So hardware for open source software generally costs the same as for
the least expensive system for closed code. In most cases, we are comparing
Figure 12.1
Cost elements.
12.1 Total Cost of Ownership 277
Chapter 12
the same hardware running Windows or UNIX on the one hand versus
Linux on the other.
Other things may not be equal and total cost of ownership (TCO) stud-
ies offer an opportunity to show that. There are many forms of these, and
there is a small industry that compares and contrasts TCO versus ROI ver-
sus various other terms. Here, we will keep this simple and use TCO to
include the other costs involved over a reasonable period of time when
making a software decision.
The issue usually comes down to staffing costs. There are some pub-
lished TCO studies that attempt to show that open source software costs
more than you think, or that hardware costs more for Linux in some spe-
cific situation, but they are from obviously biased sources and are not really
credible. The three big cost elements of TCO are staffing, hardware, and
software. Of these, staffing dwarfs the others in all the scenarios we will
look at. Because of the dominance of staffing costs, even where open source
software saves millions, this will not represent a particularly large percent-
age difference in TCO. However, software may be the only controllable
cost. In these cases, TCO can obscure the real savings by adding large costs,
which are effectively fixed, such as system administration and support, to
both sides of a comparison.
12.1.1 Staffing Costs
Personnel costs dominate software costs for infrastructure. Because of this, the
savings from open source software such as Linux and MySQL will be small
compared with the costs of personnel for development and management.
An IDC report on Windows and Linux infrastructure costs estimates
the TCO cost breakdown for infrastructure, as shown in Figure 12.2.
This may understate software costs, but it is broadly consistent with
work by Gartner on IT costs, which again shows staffing and downtime as
the major costs for infrastructure. So for IT infrastructure systems, the
impact of a system on system administration and end users can be ten times
more important than its purchase cost. This indicates how inexpensive IT
infrastructure is today measured at the server. Desktop costs alter this sub-
stantially, as we will see later.
Application solutions can be much more expensive. Large applications
can incur millions of dollars in costs for software acquisition or develop-
ment, as well as large server hardware costs, particularly for database sys-
278 12.1 Total Cost of Ownership
tems. Even for simple Web applications, hardware and software are higher
than for infrastructure.
Table 12.1 has a simple estimate of resource prices for developers and
system administrators. The costs are loaded, including salary, vacation,
management overhead, general training, taxes, and benefits. They are aver-
aged, with no effort to distinguish between skill levels. There is also an
entry representing a week of training. Many projects require training of a
week or two for developers and administrators.
Support costs are difficult to calculate, because there are so many differ-
ent options. For mission-critical systems, an organization will want to con-
tract with the system developers to ensure coverage whenever there is a
system problem. For desktop systems and infrastructure, it is usually
enough to maintain competent staff and solve the issues in house. A sup-
port contract with a software vendor such as Microsoft Product Support
Services, providing a full-time equivalent, costs upward of $250,000. Con-
tracts involving a named contact and some number of incidents might start
Figure 12.2
TCO elements for
Table 12.1 Staffing Costs
Item Cost Per Details/Comments
Developer $95,000 Year Loaded cost
Sysadmin $75,000 Year Loaded cost
Training $10,000 Week Including class, travel, and expenses

Get Open Source Software: Implementation and Management now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.