What does a recession mean for open source?

· by Steve · Read in about 5 min · (1041 Words)

Like most people I’ve been following the current economic news with a mixture of morbid entertainment and mild trepidation. I’m not likely to be out of a job soon (my employer and I are on very good terms), but inevitably my work is part of the global economy, so I can’t expect to be completely unaffected.

There are a few interesting lines of thought in the blogosphere that I thought I’d share with you. Open source and related business models weren’t really around in any great quantity during the last big recession, so what precisely will happen in this area is subject to some speculation.

A Boon?

On the one hand, there’s the argument that when money is tight, companies will be more likely to investigate less high-profile, cheaper alternatives to the usual IT purchasing they do, which actually means that open source software actually stands to do better. In the good times, it’s easy to justify buying the majority of your technology from one very large vendor (Oracle, Microsoft, IBM etc) because it’s ’easy’ - everything has a better chance of working together out of the box, you can expect common terminlogy and tools, that kind of thing. However, when funds get tight, people inevitably start examining all these things in much greater detail than they did before, searching for a budget to cut. There is an argument that says that staff are the most costly resource, and therefore if a suite of technology is familiar and easy (but more expensive), those costs will be recovered in staff efficiencies. However, there’s a problem with this argument - even if you accept that expensive proprietary software is easier to use than open source software, which is not always the case, savings in staff efficiency are non-tangible, compared to licensing and annual support costs which are very much tangible. Cashflow is also a big deal in almost any company, and the open source model of ‘use now, pay later (maybe)’  is highly attractive. And, when it comes down to it and your CIO needs to cut the budget, I’m sure you’d rather he/she cut the license/support contract expenditure rather than your job. That also makes sense for companies too - when the recession ends re-skilling is a pain in the ass, it’s much better to hang on to your good staff and save money elsewhere.

So in fact open source projects and the companies that provide products and services around them may actually be one of the few winners in a downturn. That’s certainly the impression I’m getting from bigger open source companies, and in fact even I have seen a modest upturn in business in the last month. It’s too early to tell whether this is a trend or just a coincidence, but I can hope.

A Drought?

Another opinion is that as the economy gets tougher, and people start to lose their jobs, they will start becoming more ruthless about earning money, and will stop contributing so much for free to open source projects, and to other volunteer activities. This is the view put forward by Andrew Keen - that the culture of ‘free’ only works during a boom, and that that will affect numerous Web 2.0 companies, open source projects and user-contributed sites like Wikipedia.

Personally I think the trouble with Keen’s argument is that he fails to acknowledge the widely different types of ‘free’ contribution / project, and the wide array of motivators people have for being involved. I can definitely see that in a downturn, companies that have significant burn rates and are built on the ‘attract people by the million now, figure out how to pay for it later’ will finally have to undergo significant reality checks. I’m all for this - the days of companies like Facebook attracting stupendously highly capitalisations without having anything close to a viable business model should be finally over, and not a moment too soon. Twitter have announced that they’re going to ‘find’ a business model next year - right, good luck with that.

However, the viability of these money-pit Web 2.0 companies is a completely different matter to the more organic open source projects and companies out there. I’m sure those that have grown their communities gradually and sensibly, rather than on the back of some ‘get rich quick later’ scheme, will be entirely unaffected by an economic downturn, because the communities are made up of people who want to be there. Sure, there will be cases where a community member is there only because of their current job / project, and the demise of that may cause them to cease being involved, but I’m confident that’s not a huge number of people. And besides, those leaving because of economic conditions may well be compensated for by the people that lose their jobs using open source involvement as a good way to network, keep their skills sharp, and to build a portfolio / reference work which they can use when obtaining their next employment.

Overall, although a recession is never a good thing, I think open source and related businesses are in a position to come out of it stronger, rather than weaker. Open source is no longer a pipe-dream - I remember having an argument with my (then) boss in 2000 about the viability of running some core functions on Linux instead of spending money on more Windows servers (with the inherent upgrade requirements, licenses etc); his opinion at the time was that Linux and open source were always going to be amateur and not ready for prime-time, and that the only sensible option was to buy into more Microsoft tech. He thought I was crazy to suggest that something non-proprietary might be viable for business - I challenged him that in 5 years he’d be proven wrong, and I kinda wonder whether he ever acknowledged that I had a point. There are many real, viable options in open source, and even Microsoft acknowledges this now, despite years of ranting and FUD about it from their blustering executives. When we come out of this recession, I think the scales will have tipped even further towards open source as a core component in the IT strategy of many companies.