Home > Articles > Operating Systems, Server > Linux/UNIX/Open Source

This chapter is from the book

Software Costs

What is the number one reason IT organizations are turning to open source solutions? It shouldn’t surprise you that it’s to save money. It has been estimated that software costs U.S. companies more than any other capital expenditure category, including transportation and industrial equipment. Given the fact that software doesn’t naturally decompose like delivery vans or office chairs, this expense might be justified. But in reality, software costs a lot—maybe too much.

Trying to determine the actual value of software to any particular business or organization is difficult. In some cases, such as financial trading markets in which the value of instant access to information is measured in millions of dollars per minute, if a connection goes down, software costs are easy to justify. In other cases in which a particular application is made available to all with only a few utilizing it, or most using it only occasionally, the standard market value is tough to justify. In different instances, the same software might provide a dramatic range of actual business benefit.

This disparity is what has driven both software vendors and their customers to devise elaborate licensing schemes based on everything from individuals, to workstations, to usage, to sites, to organizations, to connections, and beyond. Although licensing strategies such as site or corporate licensing and software metering have helped to quantify the value of use, they have also introduced management variables that have increased costs to maintain and manage. Plus, licensing schemes have in some cases conditioned the environment for software producers to take advantage of vendor lock-in tactics.

In many respects, the open source movement is a consequence of disparity in use value for the same software in different situations. It is also a result of the vast difference between what software costs to produce compared to what the market will bear—the difference between the actual resources required to develop, debug, and post software by a user community to what a monopolistic market leader can charge to reap a maximum rate of return.

In general, you get what you pay for, but with open source, some interesting dynamics are altering the rules of the software licensing game. The primary area affected is licensing fees. With Linux, there are no licensing fees. You don’t need to pay for extra seats—no cost to make copies and run multiple servers, and no fee differentials for high-end enterprise uses as opposed to simple desktops. It costs nothing to obtain and nothing to share. The GNU GPL under which Linux is protected specifically states, "You have the freedom to distribute copies of free software." This single fact could be worth significant savings to your organization. Eliminate the cost of an operating system for every desktop and every server and you could cut your budget considerably. Add to it an office productivity suite for every desktop and you gain even more.

You might be thinking, "Well, both Red Hat and Novell charge for Linux—what gives?" The Linux kernel is free. What you are paying for with most distributions in which a transaction fee is involved is the packaging, testing, additional services, and utilities that are included with that particular distribution. There is a cost, but it’s significantly less than you would be paying for proprietary software. For example, Novell’s packaged distribution of SUSE Linux Enterprise Server 9 is retail priced at $349 USD. Compare that to Microsoft Windows 2003 at $1,020 USD. That’s a big difference!

This might be elementary, but the savings are not just a one-time benefit with the initial software purchase. Here are several ways that you can significantly reduce software expenses:

  • Initial purchase—If you buy software outright as a capital expenditure and plan to buy it once and forget it, you eliminate or reduce this cost. The initial purchase price is reduced to either the cost of the distribution or the manual effort to go find a place to download it.

  • Software maintenance—Software often continues to evolve and improve, even after a version has been distributed to market. These improvements are packaged and sold as the next generation of the product or as a new, updated version. If these updates are released to market within a certain window from the time you made your initial purchase (for example, 60–90 days), you are often entitled to the latest bells and whistles by getting the update at no charge. But, if the release is beyond that window, you have to purchase the update to obtain the new features. The price for software updates is often less than the initial purchase price, but updates can still be a significant expense—especially if the software is rapidly evolving with new features and enhancements. With open source software, the price of an update is, again, usually just the time it takes to download it. With open source software, there are no fees, and as updates are made available to the community, you can implement them as needed.

Open source can help enterprise companies cut other costs related to software asset management. Some organizations have created entire departments around ensuring that licensing restrictions are enforced and that the company is in compliance with all signed software agreements. With open source, resources used to monitor and enforce software compliance can be repurposed and expensive software asset management solutions can be shelved. The detailed and sometimes tedious business of contract negotiation and determining actual use can be eliminated.

A study conducted by a leading industry analyst firm asked enterprise software purchasers which software-licensing model they preferred. The most frequent response was, "Allow me to pay for what I use." The second most frequent was, "Allow me to pay for the value I derive." Open source helps bring licensing fees in line with value received.

Software licensing fee savings are dramatically evident for organizations that are choosing to eliminate replacement costs by migrating to open source. An article from IT Manager’s Journal details the savings for a company of 300 users. After pricing the cost to upgrade server OS software and email server and client software with associated access licenses, the IT manager was able to implement a superior solution using open source for 25% of the cost of a Windows solution. With the savings, he was able to buy all new hardware and purchase a new Oracle application. Savings of software costs can be significant.

Novell recently migrated from Microsoft Office to OpenOffice.org. With the open source solution, it was possible to get equivalent feature and functionality but immediately trim nearly a million dollars per year off of licensing costs.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020