St George endorses licensing open source software

Purchasing open source software provided by commercial companies is a good thing and installing it on more systems to reduce licensing costs is unethical, according to St George Bank’s chief manager of open systems Michael Page.

Page, who presides over the bank's loosely defined “open systems”, which includes all non-mainframe systems, attended Novell’s Brainshare conference earlier this year.

“To be a member of the open source community [Novell] has to give some of its code back the open source community and is doing that around its eDirectory and iFolder products,” Page said.

“So as a company I could get free software and run it, or I could licence it from Novell; there’s 99 percent chance that I’m going to get it through Novell.”

Page said purchasing one copy of a product based on open source software and installing that multiple times is an “ethical question”.

“I could buy 10 copies and run it on all my other systems but as an ethical company I don’t think you would do that,” he said. “How would [the company] know that I’m having a problem on one of these 8000 devices or one of the licensed ones.”

After a software licensing audit four years ago, St George discovered 200 unlicensed copies of Microsoft Office which, according to its records, were licensed.

“Everything was sorted out with Microsoft,” Page said. “We now have a good SOE based on Windows 2000 but the biggest benefit has been with our budgeting process. We also got our software licensing costs down from $6.5 million to $5 million.”

Business Software Association of Australia chairman Jim Macnamara said open source may make a slight difference to the cost equation, but companies may end up paying more for support.

“Open source is almost certainly going to grow, but at the moment we can’t observe any impact,” Macnamara said. “The only organizations that seem to be going the open source route are the large ones that have large support costs, which are often three to four times the software costs. I think there is still a certain naivety about open source that it is a free software path.”

Macnamara said that, over the next three to four years most businesses will be using proprietary and open source software and “you’re going to see [commercially] licensed open source applications and solutions”.

“The BSAA has always taken a three-pronged approach to addressing issues of software licensing,” he said. “The one that’s best known of course is litigation. And that’s simply a factor of litigation against companies being newsworthy. In cases of serious, deliberate, and reckless piracy, we will litigate.”

Neil McMurchy a senior VP at Gartner, said software licensing is a fundamental issue of good corporate and IT governance.

“The question from our perspective is why should you not be doing it, not why should you be doing it,” McMurchy said.

“Another aspect is around the TCO of the desktop environment. There is a suspicion that this is just about software vendors trying to grow licence fees but if you think about a large organization and the percentage of total IT costs represented by desktop software, the actual software cost is only 3 to 4 percent of total IT costs.”

McMurchy said the potential savings on support costs dwarf the software licensing costs.

“The focus on licence costs in our view is fairly naive compared to the total costs of running a distributed environment," he said.

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More about: BSAA, Business Software Association of Australia, Gartner, Microsoft, Novell, St George Bank
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