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Total cost of ownership of open source software

A report for the UK Cabinet Office supported by OpenForum Europe

In the area of information systems and data management the opportunity to acquire new systems within tight budgets or to make operational savings for established systems are limited. One major opportunity however seems to be on offer: to shift to the use of open source software and reap the direct benefits of lower software costs and further indirect benefits such as greater adherence to open standards, more choice of vendor and service supplier, and working to establish flexible incremental architectures. Initiatives in many countries reflect these policy ambitions, including across Europe, in the USA and in the BRIC countries.

One way to validate the wisdom or credibility of such a policy is by careful attention to the costs associated with using open source software as compared to more conventional or established alternatives. The usual conceptual model applied to this is that of „total cost of ownership‟ or TCO.

TCO reflects a measure of all the costs of identifying and acquiring software, installing it and operating it, and finally the exit costs found in migrating away from the software. TCO reflects not just the balance of the direct qualities of competing software products (price, functionality, reliability etc.) but also the relationship of the software to the organization‟s broader set of technology platforms, installed systems, culture and skills base, and strategic goals, as well as the ability to access market and community based services and support.

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