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A simple calculation how a bank save RS 100 crore using FOSS

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  • narendra sisodiya
    Sorry cannot resist to post full story from : http://networkcomputing.in/Saving-a-Billion-Using-Open-Source-Open-Mind-001Sept009.aspx ... A leading bank in
    Message 1 of 1 , Sep 1, 2009
      Sorry cannot resist to post full story from : http://networkcomputing.in/Saving-a-Billion-Using-Open-Source-Open-Mind-001Sept009.aspx
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      A leading bank in India saved Rs 100 crore by moving from MS Office to Open Office. It is simple mathematics—if MS Office costs Rs 11,000 per user, and the organization has 1,00,000 desktops, the company would save a cool Rs 110 crore on licensing costs if it moved to Open Office. Even if we budget Rs 10 crore for training and support costs, the company would end up saving Rs 100 crore. 


      The actual cost of training would be much less. But we don't want a company to come up with a Total Cost of Ownership (TCO) study to prove that the TCO will be higher in Open Source. It never is and never will be, especially in India where  the labor costs are low. Even if you were in a western country, where the labor costs are very high, the Linux/Open Source TCO would be still lower. TCO has to be calculated over a period of time and that's when you start seeing savings. Yes, there are initial costs involved and we need to budget for these initially. Also, organizations often compromise on service costs such as training and support. Most organizations assume that these come for free. The reality is that you do need to budget for these as well.

       
      Further, how do you calculate TCO? Many companies with vested interests will put forth studies to show that their cost is lower, but who knows the TCO better than you do? So my suggestion is that it is best not to rely on these studies, but to do your own calculations. Also, when budgeting, calculate all the miscellaneous costs as well. Many people don't calculate the cost of upgrading or maintaining a proprietary system. The cost of upgrading and training people to use a new version of the same OS could be higher than replacing the OS with an Open Source alternative. The cost of acquiring a completely new server with Linux pre-loaded may be lower than the maintenance you would pay for your existing proprietary Unix/Mainframe systems. Not to mention that your Linux server will outperform your existing server. 


      The table compares the licensing costs of commonly used applications. You can do the mathematics on your own to see how much you can save.

       

      Proprietary Software Cost in Rs Free Open Source Alternative
      Windows XP/Vista6000Ubuntu
      MS Office12000OpenOffice.org
      Photoshop40000Gimp
      Windows server1500Ubuntu server
      (Base price Rs 26,000 for five users)

      MS SQL server6500MySQL/PostgreSQL
      (Base price Rs 45,000 for five users)

      Oracle 10g12000MySQL/PostgreSQL
      Visual Studio36000Eclipse
      Antivirus (per year/per user)1000ClamAV
      Adobe Acrobat16000OpenOffice
      (has PDF write capability)
      Adobe Photoshop40000Gimp
      Tally35000GnuKhata/GnuCash
      AutoCAD30000Qcad
      WinZip1700Archive Manager


      Notes:

      1. All pricing is as per user pricing.

      2. Pricing is street pricing and may vary. The author does not take responsibility for any inaccuracy in this pricing.

      3. The comparable Open Source will not have the same features; in some cases it may have fewer features than others.

      4. You need to add training and support costs to get your TCO.


      These are only software costs; you can even save on hardware costs by using Open Source solutions. For example, instead of buying a router, you can use an old computer, install Linux, and convert that computer into an inexpensive router. Similarly, instead of buying an EPABX system, you can create one by using Asterisk software, a PC and a few cards. With these, you can not only save on initial costs but also costs involved in adding features. For example, if you have an EPABX system and need to add a voicemail capability, you would need to buy expensive hardware cards to enable those features. With Asterisk, which is a software-based EPABX, you would only need to install the voicemail module.


      Does this article sound exciting to you? Then go and start exploring some Open Source solutions. Do write to me once you manage to save a few billions.

      from : 

      Prakash Advani is Partner Manager of Central Asia-Canonical. He blogs regularly at www.cityblogger.com and can be reached at prakash@... .

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