Google's announcement in July that it intends to offer an operating system is the latest, and highest profile sign, of new trends that offer cheaper, more reliable computing for organisations. The Microsoft era of making money from software licensing may be coming to an end. The smart cash is spent on value added services, not licences, and the smartest cash isn't spent at all. But there are plenty of legal traps for the unwary.
In early July 2009 Google announced that it is going to develop a new competitor for the mainstream operating systems, Apple Mac OS X, Linux and Microsoft's Windows product. It will be tiny, just enough to run a browser, and free or very low cost. Google wants the world to do its computing over the internet.
No need to wait
Google says its product will reach netbooks (i.e. tiny laptops) in mid-2010, and a version for PCs will follow. Did you know that the market is already full of like-minded, enterprise-quality software that outstrips the mainstream offerings, especially on price?
The last 18 months in particular has seen the emergence of new business models that put the emphasis on paying for service rather than software licences, and that can reduce hardware as well as software costs.
Licence cost ... nil
It is now possible to build a simple office IT environment without spending anything on licence fees and without resorting to pirate copies. This includes the operating system (Linux), word processor and other software similar to Microsoft Office, internet browser, e-mail server and client software, intranet and website content management systems, and even internet telephony. Niche applications are also available.
If it sounds too good to be true, there certainly are significant down sides. The first is, binding licence terms will still apply and they contain traps for the unwary. The second is, whilst Microsoft offers training and quality certification for administrators, the current crop of free alternatives do not. Finally, Microsoft-certified administrators are quite readily available at a good price. If you need help with Linux or other free software, quality assured help is not so accessible, or cheap.
New model army
The wave of new business models is addressing the training/quality issue, and also providing opportunities for further cost reduction. Crucially, these business models are starting to influence and be used by software providers who have previously made their money from big licence fees.
- Free software, pay for services The provider offers a licence (with which great care is needed) and a contract for implementation, support and maintenance. This removes or reduces the need for your IT department to have appropriate expertise to support the software, and you rely on binding service levels, not a qualifications certificate and general aura of competence.
- Hosted service You pay per month and use the software in your browser. You need a computer, a browser, and an internet connection. You avoid the cost of buying and maintaining a server. In the month when you don't need, say, project management software, you don't pay for it, at all.
Configuration or adaptation?
The open source movement offers a subtly different cost/benefit mix. A common weakness in IT procurements is the provider's configuration service. Even with highly configurable software like workflow management, in some applications the software may provide inflexible and the customer must learn how to fit in with the software, using workarounds.
A good open source package gets you to the same starting point or thereabouts for free, leaving a bigger budget for adapting the software to suit the customer, making it more effective. Open source lends itself to cost-effective adaptation because the licence permits open access to the software code for any technical users. Again, conditions apply and care is needed.
Security, backup, interface on hosted systems
These are important questions to ask open source and new-wave providers but they are generally ready with an answer. As for more conventional IT outsourcing, it is likely that the provider implements stronger IT and premises security than you could afford on a do-it-yourself basis. Backup is likely to be available so that you keep your data even if you drop the service.
For large or complex organisations, interfaces with your other systems and those of your suppliers and partners could present a challenge. But thanks to cutting licensing costs you might now have the budget to deal with interfacing properly.
Next steps to cheaper or more effective ICT
Here are our top 5 tips for actioning more ICT bang for your buck from these types of software:
- Write your IT strategy first and buy & implement purely to meet your strategy.
- Get the small print for licences checked. It takes us as little as 2 hours.
- Well prioritised support and maintenance, data security and excellent project management agreements are essential.
- If you use a hosted solution a robust hosting agreement is essential.
- For larger organisations, try the software in localised, non-critical applications first, to prove the business case.
It has been said that cheap broadband was the first business no-brainer of the twenty-first century from the ICT industry. Perhaps this is the second?
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.