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CIO  February 2009

CIO February 2009

Subject:

Re: Savings with Open Source

From:

"Walsh, John F" <[log in to unmask]>

Reply-To:

The EDUCAUSE CIO Constituent Group Listserv <[log in to unmask]>

Date:

Sun, 8 Feb 2009 09:12:44 -0500

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (180 lines)

First let me say that I am not an unbiased witness.  I started the Kuali movement with some other colleagues.  I chair the JA-SIG board of Directors.  IU was among the four founding partners of Sakai, my development staff are among the most active in the Sakai community and IU uses Sakai to support its 100,000 student/8,000 faculty LMS mission.
Our reasons for going the community source direction are driven by several factors, among them cost, but the principal force is the desire to have some degree of control of destiny in an era of M&A among vendors.  We don't think of this as an RFP style decision making process but rather one of 'path'.  This path, while defensible to us on a cost basis, has so many other valuable dimensions that it is too compelling to ignore.  I fully acknowledge that some of these are because of our scale and may not apply to other schools.  
Getting software that is by, of and for higher education is important.  In KFS, fund accounting is not an add-on; it's at the core.  In Kuali Payroll/HR, academic appointments, with their various nuances such as contract pay, '10 over 12' etc., are not modifications.  They are the norm.  
The collaboration process has had deep impacts on our institution and especially among my staff.  The opportunity to collaborate with very smart colleagues all over the world is difficult to express, but it has resulted in a much more evolved organization.  Old internal mores do not stand up to the exposure to community source development.  Personal and professional growth is increased.  I have had developers tell me that the satisfaction they get from knowing they are creating something for higher education is a great motivator.  Community source is now in our DNA but it's important to note that this is not an anti-business religious issue.  I spend as much time attracting and on-boarding commercial affiliates that want to add value (for money!!) to the community as I do anything else because they are an important part of the eco system.   For example, in the emerging Kuali Payroll/HR system, there is a firm belief that we should pay some commercial affiliate for the annual costs of updating to the most recent IRS tax tables and regs.  I could go on, but you get the picture. 
From an admittedly biased witness :-)
Barry Walsh 

-----Original Message-----
From: The EDUCAUSE CIO Constituent Group Listserv [mailto:[log in to unmask]] On Behalf Of Luke Fernandez
Sent: Sunday, February 08, 2009 3:00 AM
To: [log in to unmask]
Subject: Re: [CIO] Savings with Open Source

I'll agree that our present models for cost accounting are probably
inadequate and that as Stephen says, there is probably a lot of cost
shifting going on.   It's fair to say though that the costs of a
proprietary solution are probably just as difficult to quantify as
those for an open source solution.  For example our LMS budgets can
account for the amount of time our programmers and system admins spend
helping a vendor refine their technology through QA cycles and
bug-reporting (something that we've had to spend inordinate amounts of
time doing).  But I'm doubtful that the opportunity costs associated
with this activity are understood (or accounted for very well).  For
example, when doing this debugging and qa-ing for an open source
community that industry is plowed directly back into the software and
can be taken advantage of by other institutions with minimal costs.
But with the proprietary solution that debugging (which at our school
is publicly funded through tax payer money) is labor that is
effectively expropriated by the vendor.  The bug fix may find itself
into a future iteration of the product but we don't own those fixes
and if they make the product more competitive vis--vis other products
we may end up paying for those bug fixes again through increased
licensing fees.   What is especially onerous about all of this is that
the costs of much of this fixing and qa-ing is publicly funded  but
the profits from these fixes are privatized.   I'm not sure that the
opportunity costs in conducting business this way show up in a clear
way on our current balance sheets.   Another hidden cost that doesn't
get accounted for in partnering and supporting private vendors is the
amount of time and energy that we spend fretting about whether we're
going to get sued for patent infringement by the very companies we're
paying to keep in business.  I know that I've personally spent
unfortunately large amounts of time worrying about this.I'll leave it
to Ken Spelke and his research to speak more clearly to whether this
can be (or is) being modeled into cost accounting (cf. [CIO] Research
on Intellectual Property Enforcement and Course Management Systems ).

What I find troubling in these threads, and conversations like it, is
that the focus on budgets occludes as much as it clarifies (I'm as
guilty of this budget focus as anyone so I'm blaming myself here too).
 A conversation about the merits (or demerits) of partnering with an
open source community versus a proprietary vendor shouldn't be driven
primarily by costs unless one is working under the auspices of a
particularly blinkered administration.   Because these technologies
have such a deep impact on the texture of research, teaching and
learning at colleges and universities they can't be treated as a
simple commodity to be obtained from the cheapest provider.  Instead,
we should be asking more fundamental questions like whether as
representatives of higher education we have obligations to encourage
communities of innovation, whether we should take care to partner with
communities who strive to keep this innovation in the public domain,
and whether the activities of research, teaching and learning can be
properly advanced through partnerships where the pursuit of knowledge
and the public sharing of that knowledge sometimes seems to take a
back seat to profit.


Luke Fernandez, Ph.D.
Manager of Program and Technology Development
Weber State University
http://itintheuniversity.blogspot.com/


On Sat, Feb 7, 2009 at 9:22 PM, Stephen G Landry <[log in to unmask]> wrote:
> I've been very interested in this discussion.  I think there are good
> reasons to like open source software.  On the other hand, I took Economics
> 101 some thirty years ago when I was toying with a business minor, and I'm
> nagged by a couple of questions about the cost of open source versus
> commercial software.
>
>
>
> One difficulty I have in comparing the cost of open source versus commercial
> has to do with how costs are budgeted on our campuses.  For example, when I
> license a commercial software product, the indirect costs associated with
> the product - the software firm's building rental, their electricity and
> networking costs, the benefits for their employees, their legal and
> accounting costs, etc. - are funded from the IT budget in the form of the
> licensing fees I pay for the product.  When I participate in an open source
> project, those indirect costs are absorbed by many different campus budgets
> outside of IT.  The cost of the license versus the cost of a developer are
> incommensurable quantities - there's different things bundled in each - and
> so that may not be the full story in determining whether I've saved my
> institution money by moving to open source.
>
>
>
> I also worry that in comparing the costs of open source versus commercial
> software I may run up against a mild form of the freeloading problem in
> economics.  I suspect that a relatively small number of institutions do a
> disproportionately large amount of the heavy lifting for these open source
> projects.  In contrast, software vendors tend to discount "per seat" costs
> for larger installations, and so they spread the costs very differently
> across licensing institutions.  This can distort our cost comparisons,
> especially if we're not one of those large institutions.  I also suspect
> that some of those institutions that do the heavy lifting are the ones that
> will have the greatest challenge in an economic downturn, since they rely
> more heavily on endowments or state appropriations to sustain their
> operations.
>
>
>
> This is not to say that open source systems are not worthy projects.  Seton
> Hall University uses a large number of open source systems to provide
> mission critical IT services to our community.  But we have to be realistic
> in evaluating their costs.  I have no reason to believe that the employees
> of software vendors are less efficient or effective than those employed by
> colleges and universities.  In the end, the cost of software is the cost of
> software, but different models may account for the costs differently.
>
>
>
> By the way, I have the same issue of cost accounting in other areas of my
> University.  Seton Hall University has started to move toward a
> responsibility centered management approach to budgeting that will account
> better for the costs of our various services, but right now we don't do a
> really good job of understanding the costs of our programs and services and
> aligning our objectives and incentives accordingly.  I have a colleague who
> is a program director and who is proud of the fact that his program brings
> in $1 million for only $800K in direct costs.  He believes he's netting the
> University $200K.  But for the University overall, there's $0.50 in indirect
> costs for every $1.00 in direct costs, so by another reconning, he's losing
> the University $200K.  In the end, we tend to achieve the objectives we're
> given; his objective is to maximize revenue, so that's what he does.  In the
> absence of good cost accounting, if my goal is to minimize IT expenditures,
> rather than institutional expenditures, it might sound good to me to drop
> some software licenses and replace them with open source, but I worry that
> I'd be shifting costs as much as reducing them.
>
>
>
> Steve
>
>
>
> Stephen G. Landry, Ph.D.
>
> Chief Information Officer
>
> Seton Hall University
>
> South Orange, NJ 07079
>
> Office: 973-761-7386
>
> Email: [log in to unmask]
>
> Web: stephenlandry.com
>
>
>
> For the latest news from SHU IT, see the IT News and Announcements blog at:
> http://tltc.shu.edu/blogs/projects/DoIT/
>
>
>
> For the latest news on teaching and learning, see the ePirate blog at:
> http://tltc.shu.edu/blogs/projects/epirate/
>
>
>
> ********** Participation and subscription information for this EDUCAUSE
> Constituent Group discussion list can be found at
> http://www.educause.edu/groups/.

**********
Participation and subscription information for this EDUCAUSE Constituent Group discussion list can be found at http://www.educause.edu/groups/.

**********
Participation and subscription information for this EDUCAUSE Constituent Group discussion list can be found at http://www.educause.edu/groups/.

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