May 26, 2010 – The obvious reason to use open source software is cost savings, says Mark Madsen, president of market research firm Third Nature. But, whether you actually save when it comes to license and support costs is the question among many.

Using public sources and vendor information, Madsen created a Pentaho-sponsored cost comparison report (“Lowering the Cost of Business Intelligence With Open Source”), comparing BI software and support costs from Pentaho, IBM (Cognos), MicroStrategy, Oracle and SAP (Business Objects).

Open source does matter, Madsen was quoted to say. “At the entry level with a small number of users, open source can be a little to a lot less expensive. As the environment scales up the difference becomes much more noticeable.”

Companies with small BI projects can save approximately 50 percent on software and support costs with commercial open source compared to proprietary vendors, according to the report. Larger projects (serving 500 or more users) can reach savings over 90 percent.

Madsen concludes that companies using proprietary models run the risk of over purchasing as a result of complex pricing models. Instead, he recommends a gradual targeted replacement of software with open source. “The largest cost savings opportunities are realized when starting new projects using open source BI.”

“Companies looking to discover how to significantly reduce the cost of BI and cut through licensing complexity with commercial open source will find this cost comparison report a valuable guidebook," Madsen was quoted to say. "This report gives transparency to the proprietary vendors who often make it difficult for users to compare their offerings.”

Commercialized open source software brings competent low-risk technology to BI, but requires understanding, diligence and expectation management for a good fit. Click here to read “Dive in to Open Source,” by Jim Ericson.

Click here to view Information Management’s FOCUS issue on open source.

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