Truck and Barter: Transaction Costs By Any Other Name...

May 12, 2005

Transaction Costs By Any Other Name...

By Ian

non-scientific, though interesting in it's own right, survey by Computer Economics purports to show that the lower costs of Open Source Software are not, in fact, the biggest perceived advantages.

The survey indicates that IT decision makers value “reduced dependence on software vendors” as the most important advantage of open source. This indicates that software buyers must feel some level of dependence on proprietary software vendors, from which they desire freedom. Such dependence includes reliance on the vendor for maintenance and support and the necessity for the buyer to accept version upgrades that the buyer may not need or want.

This might be overgeneralizing the issue, to some extent, but I would tend to include this in with the "lower cost" advantage. The savings from not waiting around for support, for not having to fight with the sales reps about how much maintenance was included under the original sales contract, being limited to inferior choices among other software because of interoperability issues...the avoidance of large costs due to potential hold-up problems, generally, can be significant. That the respondents didn't identify them as "costs" doesn't matter if, in fact, the benefit of avoidance is being able to reinvest time and energy into things more productive for the company. Rightly or wrongly, open source is seens as facing this problem far less than vendor-specific products. On the other hand, one must hope that the open source community decides to become interested in solving a particular software need that your company may have. With no profit to respond to, it could well be that the best programmers are spending their days addressing what they believe is a desperate need for a really good OS X emulator.

Posted at May 12, 2005 12:51 PM

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