
New analysis reveals significant ROI in open source technologies - johnmark
https://blogs.worldbank.org/opendata/leveraging-open-source-public-institution-new-analysis-reveals-significant-returns-investment-open
======
Animats
Three blogs deep, there's a link to the actual paper.[1] It's a study of one
project, a geospatial database:

 _" Starting in 2009, the Global Facility for Disaster Reduction and Recovery
(GFDRR) and its partners developed GeoNode: web-based, open source software
that enables organizations to easily create catalogs of geospatial data, and
that allows users to access, share, and visualize that data. Today, GeoNode is
a public good relied on by hundreds of organizations around the world ...
GFDRR’s direct and in-kind investment in GeoNode over the past six and a half
years has been in the range of $1.0–$1.5 million USD. Partners have also made
significant investments in GeoNode; a conservative estimate of these partner
investments comes to approximately $2 million USD over the same time period.
GFDRR’s investment in GeoNode would be a reasonable amount even viewed
strictly as a software development cost: the GeoNode software today represents
an approximately 200% return on investment in terms of code written, since thh
current GeoNode project would most likely have cost $2.0 – 3.0 million USD if
GFDRR had produced it alone as proprietary software, without building an open
source community around the codebase."_

This is an unusual situation; many people need geospatial databases, and
contributing their local data is useful to them. The value here is in the
data, not the code. This is more like Open Street Map than a software package.

[1] [https://opendri.org/wp-content/uploads/2017/03/OpenDRI-
and-G...](https://opendri.org/wp-content/uploads/2017/03/OpenDRI-and-GeoNode-
a-Case-Study-on-Institutional-Investments-in-Open-Source.pdf)

~~~
knz
> This is an unusual situation; many people need geospatial databases, and
> contributing their local data is useful to them. The value here is in the
> data, not the code.

I disagree. Every organisation with geospatial data needs these types of
applications and tools like GeoNode are viable alternatives for organisations
that are invested in FOSS GIS or that can't afford ESRI.

I've worked in GIS at national, state, and local level government and have
fought the same battles to bring open source GIS tools into the enterprise at
every level - IT leadership are almost always enamoured with COTS products
(i.e. ESRI) and resist the FOSS approach of having to assemble something
equivalent to ArcServer/ArcPortal etc. Having solutions like GeoNode allow
FOSS to actually compete with ESRI when the decision is being made by IT
leadership who know nothing about GIS and are impressed by "solutions".

------
TallGuyShort
On the other hand, what's the average ROI on investing in proprietary software
development? It's rarely a question of spending the resources on software
development, it's do we spend the resources in an open, or closed way? Nice to
see a positive ROI, though - there's definitely a fear that it's just "giving
stuff away" and clearly it's not that simple.

I'm all about open-source, but I wish people wouldn't focus on how companies
should do it because it's good for them financially (although granted that's
probably more effective with the intended audience than what I would say). I
wish a bigger deal was made about how it's just a douche bag move to sell
software and proactively prevent users from having freedom to understand, fix
or modify it for their needs - that applies to more than just the source
availability and license.

~~~
justforFranz
ROI for whom?!? Who is investing money here? Who is reaping the rewards of
investment? Yeah, no shit getting people to work for free has a high ROI. What
the heck?

~~~
seanhandley
A huge number of open source contributors do so on company time (with the
blessing of their employer). It certainly isn't "for free".

~~~
pirocks
n00b here. Can someone explain to me how this works. I imagine a good
developer is fairly expensive, so letting them do something unrelated to there
job must be pretty expensive. How does this make business sense?

~~~
TallGuyShort
Quite often the company's product is the open source project. It's just that
instead of selling licenses, they're selling support contracts. You could get
the software free, but for a fee you get to call the engineer that built it in
the middle of the night for help keeping it running. And as a bonus, you get
to leverage their ability to drive the roadmap when you have feature requests.

So really the debate here is not "do you hire an engineer full time or not?"
it's "do you allow the output of that engineer to be open source or not?"

There's also a perk for the engineer: they work on stuff they can publicly
point to as their portfolio full-time. Want to see me code? I don't
necessarily have to have a bunch of side-projects on Github. Go check out the
JIRA for these huge features I worked on!

------
Top19
A good example of the ROI of Open Source is the OpenEMR project. That free
system replaces multi-hundred thousand dollar hospital systems from companies
like Cerner. I used to work at Oracle, and when I found out about OpenEMR I
remember thinking "this makes the price difference between Oracle Enterprise
Edition and MySQL Community look trivial".

A lot of times I hear the implementation cost is where all the money is so it
doesn't matter what the software costs. That is sort of true, but large
companies are not incentivized to make it any easier to implement, less they
put their System Integrators out of business and/or push them to other
vendors. The Open Source community does not have this incentive obviously.

EDIT:
[https://en.m.wikipedia.org/wiki/OpenEMR](https://en.m.wikipedia.org/wiki/OpenEMR)

~~~
tonyedgecombe
Actually I think the Open Source community does have that incentive, assuming
the developers are making a living as system integrators.

~~~
ajc-sorin
[https://en.wikipedia.org/wiki/Captain_Obvious](https://en.wikipedia.org/wiki/Captain_Obvious)

------
roymurdock
Good case study on one successful open source project. Shouldn't be used to
draw any broader conclusions about impact of open source on any company's biz
model. Some portions of typical software stacks are amenable to open source
biz models (such as general purpose server OS), while many others are not.

Note that the study does not actually measure ROI from a revenue perspective,
but estimates based on theoretical saved costs: The company invested $1M in
open source infrastructure and potentially saved $2M in direct development
costs (given that the code base is current worth $3M). [1]

Most interesting takeaway for me is the implications of open source for
government funded projects, and a ratification of the idea that contributions
of code for some public tool can save the general public tax money. A forward
thinking org could try to broker some sort of tax cut based on SLOC
contributed to public, government-sponsored projects? Maybe that already
exists.

Would suggest studying Red Hat's rise to $2B in yearly revenue to understand
how a company takes open source and turns it into revenue.

[1] _GFDRR’s direct and in-kind investment in GeoNode over the past six and a
half years has been in the range of $1.0–$1.5 million USD...GFDRR’s investment
in GeoNode would be a reasonable amount even viewed strictly as a software
development cost: the GeoNode software today represents an approximately 200%
return on investment in terms of code written, since the current GeoNode
project would most likely have cost $2.0–3.0 million USD if GFDRR had produced
it alone as proprietary software, without building an open source community
around the codebase._

~~~
bsears
I'm currently working on trying to replicate the success Wordpress has seen in
monetizing open-source, It's my belief that the key to creating a viable open-
source product revolves around creating a platform people can host themselves
and make it open to plugin development. I don't see much value in the smaller
projects most people work on because those rely on licensing for revenue.

------
mikekchar
I haven't had time to read the report in detail, but it appears that the 200%
ROI figure is simply derived from the ratio of externally written software to
internally written software. So, by writing an open source tool instead of
keeping it closed, they got contributions of code that exceeded their own
investment. However, this is not actually the main point of the paper, and
neither is it the whole picture. For example they discuss sponsoring in-person
events and I don't think that kind of cost is accounted for in their ROI
figure. Indeed, the paper goes to some effort to explain that the benefit they
received goes far beyond the outside contributions of code. I know nothing of
the project, but from their description it seems that it was very well run.
I'm not sure that we can reasonably assume that they wouldn't get similar
results from a well run consortium, for example.

Anyway, it looks like an interesting report and I look forward to reading it
in more detail, but I think the headline in the blog-pointer is unwarranted.

~~~
kfogel
Expenses like conferences (both organizing and sending attendees) _are_
accounted for on the "investment" side of the ledger in this report, FWIW.

(Full disclosure: I'm one of the authors.)

~~~
aaronchall
This specific article is being criticized for not getting the sources right,
and multiple intermediate sources are given, which is best, in your opinion,
read the actual paper? Or the first secondary source?

------
makecheck
Most people receive infinite return because they invest nothing.

A more meaningful measure is how _quickly_ you can resolve a problem with
open-source for X amount of investment, versus other options. With that, if a
package doesn't do what you want then investing _nothing_ appropriately yields
NO return; whereas, investing certain amounts of time (asking questions,
filing bugs, etc.) may yield more return, and fixing it yourself may yield the
most.

------
btown
Mods, can we change the title to that of the source report? "OpenDRI &
GeoNode: A Case Study for Institutional Investments in Open Source."

The current title, "World Bank-Sponsored Report Shows 200% ROI on Open Source
Participation," the contents of this link, and even the World Bank's own
blog's title, strongly suggest that this was a World Bank-commissioned study
across multiple open-source projects/communities. Note the plural in OP: "to
quantify the benefit of contributing to and participating in open source
communities." And the World Bank's blog title: "Leveraging Open Source as a
Public Institution — New analysis reveals significant returns on investment in
open source technologies."

But that's not the case at all. As noted in other comments, this is a single
community, a single project. Granted, it's a successful one. But we shouldn't
get our hopes up about "oh s __*, this is an article I can forward to the
C-suite to get us to invest in open source! " What we have here is technically
accurate clickbait that relies on the brand of the World Bank's analysis. And,
in being disappointingly vague, it tarnishes that brand.

------
pavement
Link references link:

[https://blogs.worldbank.org/opendata/leveraging-open-
source-...](https://blogs.worldbank.org/opendata/leveraging-open-source-
public-institution-new-analysis-reveals-significant-returns-investment-open)

Which references link:

[https://opendri.org/resource/opendri-geonode-a-case-study-
fo...](https://opendri.org/resource/opendri-geonode-a-case-study-for-
institutional-investments-in-open-source/)

Which references PDF:

[https://opendri.org/wp-content/uploads/2017/03/OpenDRI-
and-G...](https://opendri.org/wp-content/uploads/2017/03/OpenDRI-and-GeoNode-
a-Case-Study-on-Institutional-Investments-in-Open-Source.pdf)

Titled:

    
    
      OPEN DATA FOR RESILIENCE INITIATIVE & GEONODE
      A CASE STUDY ON INSTITUTIONAL INVESTMENTS IN OPEN SOURCE

~~~
codelitt
Maybe dang can change both the title and the link. The World Bank blog is
quite good as is the original paper. The linked article is complete garbage
with a sensationalized title.

~~~
sctb
Thanks, all! We've updated the link from
[https://osenetwork.com/2017/06/13/bombshell-
report-200-roi-o...](https://osenetwork.com/2017/06/13/bombshell-
report-200-roi-on-open-source-participation) to the summary blog post.

