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Rahul De - Economic Impact of Free and Open Source Software: A Study in India - Interop Mumbai 2009
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Rahul De - Economic Impact of Free and Open Source Software: A Study in India - Interop Mumbai 2009


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A study of 20 organizations in India conducted by Professor Rahul De’s team at IIM-Bangalore reveals that free and open source software (FOSS) is widely used and is a mainstream alternative to …

A study of 20 organizations in India conducted by Professor Rahul De’s team at IIM-Bangalore reveals that free and open source software (FOSS) is widely used and is a mainstream alternative to proprietary software. The study included large commercial enterprises, small and medium enterprises, government departments, educational institutions and NGOs in India. Professor De’s session will highlight successful examples of FOSS users in India, who have saved millions by using FOSS at the server and the desktop level. Using a forecast of PC sales in India, the session will also highlight how India can save close to Rs 10,000 crore ($2 billion), by using FOSS. Besides the economic impact, the session will also highlight the intangible benefits of FOSS. The benefits include the ability to freely distribute and upgrade the software, the ability to choose software without being driven by vendors, and the ability to control pirated software in the organization, amongst others.

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  • 1. Economic Impact of Free and Open Source Software – A Study in India Rahul De' Hewlett­Packard Chair Professor Indian Institute of Management Bangalore INTEROP Mumbai 7­9 October, 2009
  • 2. Overview ● Scope of Project ● Highlights of Sample Case Studies ● Analysis of Economic Impact ● Policy Implications ● Conclusion September 2009 Economic Impact of FOSS 2
  • 3. Scope of Project ● Case studies of 20  Type of Organisation Studied organisations that have  adopted FOSS 20% Government  ● Examine cost savings,  55% Dept  Large Firm  administration and  SME NGO Higher Ed innovation with FOSS 5% 5% ● Exploratory study 15% September 2009 Economic Impact of FOSS 3
  • 4. Case Study: IT @ School ● The IT @ School project of Kerala replaced  Windows software with FOSS on 50,000 desktops  in schools across the state. Tangible benefits  amounted to Rs 49 crores ($ 10.2 million). ● Intangible benefits: ● easier development of support software  ● local language customisation ● improved teacher confidence September 2009 Economic Impact of FOSS 4
  • 5. Case Study: Great Market ● Great Market (name changed), a large e­commerce  firm, adopted FOSS for servers, MIS development,  document management and for desktops. The  savings from desktops alone came to Rs 30 lakhs  ($ 63 k). ● Intangible benefits: ● increased security ● scalability and stability  ● access to state­of­the­art technology September 2009 Economic Impact of FOSS 5
  • 6. Case Study: Life Insurance Corporation of India ● Life Insurance Corporation (LIC) is one of the  largest insurers in India, with an IT infrastructure  of 3500 servers and 30,000 desktops, saved about  Rs 42 crores ($ 8.75 million) by adopting FOSS. ● Intangible benefits:  ● ability to experiment with new technologies September 2009 Economic Impact of FOSS 6
  • 7. Case Study: New India Assurance Company ● The New India Assurance company, a general  insurance firm, has 1100 offices, and an IT  infrastructure of 1500 servers and 7000 desktops;  save about Rs 80 crores ($16.7 million) per annum  in tangible costs  ● Intangible benefits: ● increased security ● control over pirated software ● easy updates September 2009 Economic Impact of FOSS 7
  • 8. Case Study: GGG ● GGG (name changed) is a medium­sized e­ commerce solutions IT firm that relies heavily on  FOSS. GGG saved about Rs 36 lakhs ($ 75k) by  using FOSS on its desktops. ● Intangible benefits:  ● improved performance September 2009 Economic Impact of FOSS 8
  • 9. Case Study: IT for Change ● IT for Change, an NGO with 30 employees. Use  FOSS extensively on all servers and desktops.  Estimated tangible savings of about Rs 1.2 lakhs ($  2.5k) per annum  ● Intangible benefits: ● help with advocacy on IT benefits ● reduced threat of viruses  ● easy upgradation  ● convenience of distribution September 2009 Economic Impact of FOSS 9
  • 10. Case Study: Institute of Informatics and Communication ● IIC is an institution of higher education that has  adopted FOSS. The tangible benefits for an  infrastructure of 100 desktops and 5 servers is  about Rs 17.5 lakhs ($ 36k). ● Intangible benefits: ● a learning environment of free and open thinking  and innovation ●  ability to choose technology, not driven by  vendors September 2009 Economic Impact of FOSS 10
  • 11. Why Adopt FOSS? ● The most important reason for adopting FOSS is to  save costs on the acquisition of IT. This factor was  evident, with varying degrees of importance, in 18  of the 20 organisations studied. September 2009 Economic Impact of FOSS 11
  • 12. How was Economic Impact Measured? ● The economic impact of FOSS was measured by  three principal means: ● FOSS as a substitute for more expensive desktop operating  systems and office productivity applications ● FOSS as a substitute for more expensive server software  ● FOSS enabled cost savings from complementary products  such as anti­virus software required on Windows desktops September 2009 Economic Impact of FOSS 12
  • 13. Cost Savings Estimated from Retail PC Sales ● Savings on replacement of operating system  software with FOSS products on 50% of forecast  retail PC sales Projected retail PC sales in 2010 5.47 million units 50% of projected retail PC sales in 2010 2.735 million units Savings per PC for operating system costs Rs 3600 per unit Total savings for OS software at 50% Rs 984.7 crores projected sales of retail PCs in 2010 September 2009 Economic Impact of FOSS 13
  • 14. Cost Savings Estimated From Retail PC Sales ● Savings on replacement of office software tools with  FOSS tools on 50% of forecast retail PC sales 50% of projected retail PC sales in 2010 2.735 million units Savings per PC for replacement of Office Suite with FOSS products Rs 16,500 per unit Total savings for office software at 50% projected sales of retail PCs in Rs 4,515.2 crores 2010 September 2009 Economic Impact of FOSS 14
  • 15. Cost Savings Estimated from Enterprise PC Sales ● Savings from replacement of proprietary software  with FOSS on 50% of forecast sales of enterprise  PCs Projected enterprise PC sales in 2010 4.64 million units 50% of projected enterprise PC sales in 2010 2.32 million units Savings per PC for replacement of operating system and office software with FOSS products Rs 20,000 per unit Total savings at 50% projected sales Rs 4,638.8 crores of enterprise PCs in 2010 September 2009 Economic Impact of FOSS 15
  • 16. Total Estimated Savings ● Total estimated savings from use of FOSS on  forecast PC sales in 2010 Savings from replacement of operating system software with FOSS on retail sales of PCs Rs 984.7 crores Savings from replacement of office tools with FOSS on retail sales of PCs Rs 4,515.2 crores Savings from replacement of proprietary software with FOSS on enterprise sales of PCs Rs 4,638.8 crores Total Rs 10,138.7 crores September 2009 Economic Impact of FOSS 16
  • 17. Cost Savings Estimated from Enterprise Server Sales ● Savings from use of FOSS on forecast server sales  in 2010.  Projected total server sales in 2010 138000 units Savings per server with usage of FOSS products (a conservative estimate) Rs 10,000 per unit Total savings based on projected Rs 138.0 crores sales of servers in 2010 September 2009 Economic Impact of FOSS 17
  • 18. Savings From Cost of Anti- Virus Software ● Anti­virus software sales in 2010 is likely to touch  Rs 2000 crores ($416 million). This is a  conservative estimate based on ceteris paribus  assumptions (that all else will remain the same).  This entire amount is a cost that can be avoided if  FOSS products are adopted. ● Cost savings from anti­virus software is lower than  the damage wrought by virus attacks and  consequent productivity losses. September 2009 Economic Impact of FOSS 18
  • 19. Intangible Benefits ● FOSS has very strong intangible benefits  ● Increased security; reduced threat of viruses ● Control over pirated software ● Access to state­of­the­art technology ● Ability to experiment and innovate ● Choice of technology not driven by vendors September 2009 Economic Impact of FOSS 19
  • 20. Policy Implications ● Governments should actively encourage use of  FOSS in schools. Across India the savings can be to  the extent of Rs 27 billion ● Public offices and departments should ensure FOSS  technologies are included in all IT acquisition  tenders and request­for­proposals ● Government should inform/educate public on  benefits of FOSS; create labs for public to sample  and learn FOSS September 2009 Economic Impact of FOSS 20
  • 21. Conclusion ● FOSS is a mainstream alternative to proprietary  software ● Our computations show that the tangible benefits of  FOSS are significant ● In the year 2010, if FOSS is adopted at 50% levels across  the economy, the total savings are likely to be about Rs  10,139 crores ($ 2 billion ) ● FOSS has immense intangible benefits that can have  a strong impact if there is widespread adoption September 2009 Economic Impact of FOSS 21
  • 22. Thank you very much! September 2009 Economic Impact of FOSS 22