Open Source for Companies: When Does Open Source Software Bring Real Savings?

The main reason for choosing open source in a company is saving on software costs. However, open source doesn’t always mean savings. I’ll explain when using open source actually translates to reduced spending.

Besides zero cost (in most cases), the second argument for open source is the ability to modify and adapt the software to your own needs. This is also indirectly related to costs, since modifications require time (opportunity cost) or money paid to a company or person to carry them out.

Definitions

Let me start with a few definitions I’ll use in this text.

Company size categories:

• small company: 1–50 people
• medium company: 20–100 people
• medium-large company: 50+ people

The numbers overlap because much depends on the type of business, market, stage of development, etc. These categories should be treated as a guide for making open source decisions, not as rigid criteria.

Implementing software in a company is a multi-step process. The main stages are:

• Analyzing available options, testing and learning.
• Pilot deployment.
• Customization to the organization’s needs.
• Ongoing regular use — software fully deployed.
• Maintenance (mainly updates and security patches).
• Periodic review of alternatives or improvements.

These steps require time. Someone needs to be assigned to carry them out and invest time at the cost of other tasks.

Open Source in a Small Company

A small company has a low budget for all expenses. It’s often a flat organizational structure (usually the owner and a few employees). For such a company, any software that can improve processes and is available for free is a major benefit.

However, implementing software also requires analysis and testing. This takes time and technical skills. Particularly for web-based software, you often need to set up a server, database, Git repository, etc.

In a small company, testing and analyzing implementation options will in most cases fall to the owner. They need to find time for implementing changes, but must account for the fact that this time will be limited and often insufficient to perfectly tailor the software to their needs. Then you either reject using the software or adjust the company’s processes to fit what the software offers.

Adapting the company to how the software works can actually be beneficial for a small company in many cases. Open source software is often built on best practices and the authors’ experience. If a small company doesn’t have well-established processes, it can adopt them along with the software deployment, which enforces certain workflows.

In summary, open source in a small company is worth considering when:

• You have time for learning, testing and deployment
• You’re open to changing company processes to fit the software’s default capabilities

Open Source in a Medium Company

A medium company often has many defined processes with metrics that the company works to improve. Task completion times are measured to optimize and improve productivity. In such companies, open source software will often be compared cost-wise to SaaS options.

A simple example calculation you can adapt for your own company and use when analyzing software costs:

• Average salary in March 2024 was PLN 8,408.79 gross.
• For the employer that’s a cost of PLN 10,100.
• For the company to have funds for marketing, sales, training, development, hardware, etc., the revenue per employee should be 2x, i.e. PLN 20,000.
• Average working hours per month after holidays is about 140h.
• 20,000 / 140 = PLN 142/hour.

If someone is in a higher-wage industry, the calculation should be proportionally higher.

If we assume someone will spend 10 hours per month maintaining software, that will cost the company PLN 1,400 (calculated as opportunity cost — if that person had spent that time working for a client instead).

The most common SaaS pricing is $8/month per user, about PLN 30.

Based on these numbers, you can compare and determine what’s better for your company — e.g. 50 people × PLN 30 = PLN 1,500. The SaaS option is slightly more expensive. But if maintenance takes 20 hours instead of 10, you’re comparing PLN 2,800 vs PLN 1,500, and SaaS comes out cheaper.

These calculations don’t include the time to implement the open source software. Depending on the type (CMS, CRM, ERP, Marketing Automation, etc.), implementation time can range from a few hours (basic install and config) to several hundred hours. Each case should be analyzed and included in your calculations.

When considering open source in a medium company, it’s worth doing the math carefully, since a lot depends on the specific situation.

Open Source in a Large Company

The entire calculation changes significantly for large companies. In a 1,000-person organization, PLN 30 per person amounts to PLN 30,000 per month, PLN 360,000 per year, and over PLN 1,000,000 over 3 years. In such an organization, spending PLN 300,000 on open source to perfectly adapt it to the company (branding, colors, additional modules, integrations, etc.) is still much cheaper than paying for SaaS. At that scale, choosing open source makes tremendous financial sense. Additionally, there are all the benefits of customizing the tool to the specific company. No SaaS will meet all the functional requirements of a large organization, while open source has no such limitation.

Another example is CMS/CMF solutions in organizations managing dozens, hundreds, or even thousands of websites. A few examples:

• Manufacturers who launch a new website for each product
• Universities that have websites for each division, faculty, and institute
• Government institutions, such as a district court with subordinate local courts

For a single-domain CMS, SaaS is often a better choice, but as the number of sites grows significantly, the costs increase dramatically. Using multisite/multidomain capabilities in open source solutions (e.g. Drupal) can significantly reduce costs for deploying and maintaining a large number of websites.

Large companies can achieve enormous benefits from implementing open source. But that implementation must be done thoughtfully. Consultation with a company specializing in the specific software and a well-planned project phase are definitely necessary. Working at Droptica, I’ve seen many times how such companies implementing, for example, intranet on Drupal or multisite on Drupal adapted the systems to their needs while reducing costs compared to developing and maintaining their previous systems.

Summary

As always in the IT industry, the answer to “should we implement open source?” is “it depends.” Each case needs to be analyzed separately using examples from this text.

When choosing open source software, beyond functionality you should also check the license (there are many types of open source licenses), look for deployment examples, check available support options (whether the creators or third-party companies offer support), and assess the size and activity of the community around the software (the more active people, the faster the project typically develops).

I also recommend using tools like ChatGPT to describe your implementation and ask what else to consider when calculating the time and cost of deployment, so you don’t overlook anything in your calculations.