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August 14, 2014

Disadvantages of Open Source Software

There is a very good reason for almost all businesses to change at least a portion of their software to Open Source.

In my last blogpost, I mentioned the advantages of using Open Source Software (OSS). So when there are so many advantages, why do people shy away from Open Source?

Let's look into a few reasons and see if anything can be done to overcome them:

No / very less advertising
When software is created for free, the revenue is not present from the sales but only from the support. This results in a weakness in advertising which push the products to the face and nil salesmen to sell it. The software has to sell on its own merit. This requires the category managers to know about the various OSS substitutes without depending on the sales people to give it on a platter

Not many people like change when there are no particular benefits to them. After all if a business has to pay for a software, why should they bother? It does not affect their salaries, right?

Compatibility with existing software
This is a particularly important issue which causes hesitancy among businesses to incorporate OSS. Take the example of Windows. Because a majority of the users uses this Operating System (OS), most of the software created are compatible with this OS. Hence a switch over to another OS would entail looking around for alternatives to the software that is being used. Instead of Internet Explorer, Firefox will have to be used, instead of MS Office, Libreoffice will have to be used, instead of Citrix, NoMachine or FreeNX (This would require changes from the server end as well). Obviously there will be differences in the software, else they will be hit by patent lawsuits but those differences are generally negligible. Other issues of compatibility would arise in cases if customized software is created for the closed source product such as macro's in MS Office which are different from the macro's created for LibreOffice (though the new versions of LibreOffice now supports Access2Base which is almost the same as VBA in programming).

One way to move around this issue is to first start with OSS which requires a limited change to the system (E.g.) instead of moving all systems to Linux immediately, start the movement to LibreOffice first. Then slowly move the other applications towards OSS until the requirement of MS Windows due to compatibility is eliminated.

Human psychology
It has been inculcated into us that if a product is cheaper or free, then the product is not good or as good as the paid or costlier product. Why else would people walk the equivalent of 5 km on an inclined treadmill in a gym after paying some amount and at the same time come in a car or bike when their home is only a couple of kilometers away? We will always be able to give some excuse for taking the costlier product when cold logic would suggest otherwise.

Fear of the unknown
Obviously if you have not experienced something, it is easier to generate Fear, Uncertainity and Doubt (FUD) about it. FUD is also increasingly used by competitors to prevent businesses from using the Open Source software. This affects only those who do not perform their research into the products.

Business pressures
If there is a business relationship between the closed source vendors and the business, there is a real possibility that the relationship could get strained leading to special discounts on the closed source software being pulled. Hence if a part of the business (around 5%) tries out the OSS before considering a full roll-out of the software, the closed source software vendor can easily increase their price of the product by around 20% by removing any discounts present. This can lead to a loss in that quarter for the company. And when businesses are run quarter to quarter, this is a real cause of concern.

Difficulty of avoiding closed source software
Has anyone tried to buy a decent branded laptop/desktop such as Dell or HP without Windows? If you have, then you will know it is impossible to get the computer without Windows. This is due to the hardware vendors having deals with the software vendors to ship the hardware only with the software. If there is an option to give the hardware without the software, there is also a possibility that the prices remain the same or increase.

After going through the pros and cons, it appears to me at least that there is a very good reason for almost all businesses to change at least a portion of their software to Open Source. For e.g. If the movement from Windows to Linux is too difficult, then why not try moving a portion of the people in the business from MS Office to LibreOffice in the beginning?

Your viewpoints are welcome.

August 4, 2014

The Changing Technology Landscape - Cheque vs. Electronic Payment Dilemma

With recent advancement of technology in various industries including banking, the relevance of cheque payment method needs to be questioned. 

During those years where the technology penetration is low, payment to suppliers were done via cheque. However, with recent advancement of technology in various industries including banking, the relevance of cheque payment method needs to be questioned. Migrating suppliers from cheque to electronic payments (ACH) is one of the levers that must be pursued as part of the transformation roadmap. However, this drive remains a non-starter in most organizations due to a combination of reasons - internal resistance, misconceptions, perceptions etc. 

Following are some techniques companies can look forward to adopt to drive this leg of improvement as part of their transformation journey -

  • Eliminating myths around 'Float':  With facilities like cheque deposits being handled by electronic image exchange, payable-at-par cheques, centralized lockbox service offerings from Banks etc., the float (in days) experienced in the past is virtually reduced to 2 to 3 days.   With these developments, float remains more or less the same when compared to electronic payment methods
  • Obtaining better clarity on cost per payment: Like in any other industry, with increase in competition, banks are working towards reducing the processing cost of an Electronic Payment from time to time.  Eventually, the costs incurred on printing, sorting, mailing, returned cheques, escheatment etc., overweighs the costs that typically spend per electronic payment
  • Removing apprehensions of suppliers: Obtaining the consent of supplier for migrating to electronic payment is the most important factor.   It is advisable to make a pro-active effort in putting together a material that explains the advantages in store by shifting to electronic payments e.g., faster access to funds, minimizing the risk of returned payments, elimination of person dependencies, assuring availability of mandatory information on remittance slips etc.,
  • Make it mandatory while on-boarding new suppliers: Comparatively, it is easy to on-board a new supplier when compared to existing supplier. For those set of suppliers who needs you more than vice-versa, make electronic payments mandatory.

At a global level, as per various benchmarking data on the web, electronic payments account for only around 60% to 65% of the total payments.  Europe (sans UK) tops the list with 100% electronic payments by way of removing cheque as one of the payment methods. As long as cheque payment method is in use in a particular country/geography, some % of cheque payments continue to be in use.  In those geographies, one should aim to drive to increase the electronic payments to a minimum of 90%.

Lastly on the most important aspect of cost savings, an electronic payment (ACH) typically reduces the cost per payment up to 50%.

With cost reductions continuing to be the primary focus across the organizations, it is strongly recommended to keep the exercise of migrating suppliers to electronic payments in the top priority list.

August 1, 2014

Advantages of Open Source Software

There are pressures and complexities that are faced by businesses due to the use of closed source software and the answer may lie in the use of Open Source Software (OSS).

In my last blog post, I discussed the pressures and complexities that are faced by businesses due to the use of closed source software and that the answer may lie in the use of Open Source Software (OSS). This in turn would raise the question of the other advantages and the disadvantages of using this type of software.

Below, I have entered the different advantages of using OSS:

As many open source software are free, there is a scope for huge cost savings. This reason is one of the most cited reasons for using OSS (mainly for those who only look at the money factor) though much more important reasons are given below. So I kept this as the first point to get it out of the way.

Each OSS, once it becomes popular, gets reviewed by hundreds if not thousands of people who suggest changes to the software. These changes once incorporated by the main developer (after reviewing the changes), will help to increase its quality. The bugs or defects in the program are quickly found out by the people who give feedback and mostly a fix is also suggested.

Also if there is any doubt about any backdoors being created by any agency, it is quite simple to check the source code for them unlike only depending on assurances from the vendors that their software does not contain any backdoors.

But what about security? If a software is kept open for anyone to look at it, will not a smart person be able to find a bug and easily exploit it? Fair point but in order to explain let me use a metaphor. Imagine two buildings; one which is hidden somewhere in a remote village and another which is kept right in the middle of a busy city. This being equivalent to a closed source (whose code is hidden) and an open source software (whose code is seen by all and sundry). Now it would seem that the house in the middle of the city would be easy to break into rather than the house in the remote village.

But one should also remember that people are basically honest and hence the majority, by the sheer strength of numbers would be able to find out the weak points and work to strengthen it. This would then make the house in the city something like a Fort with missiles and lasers to prevent any malicious activity while allowing all beneficial activities.

What about the house in the remote city? Well those who want to cause harm would just have to decode/understand the working of the source code (No small feat I agree, though from the evidence of the multiple viruses created, it is not an impossible one) and then find the weak points which can be used to break into the house.

To illustrate its effectiveness against attacks; Servers are mainly the target of multiple attacks and to reduce the quantity and severity of the attacks, the dominant operating systems among all servers are UNIX-like open source distributions, such as those based on Linux and FreeBSD. Hence if the computer experts use them to prevent any malicious activity and losses, its best to follow them in their practice.

Freedom to Customize
If any business would like to change a core feature of the operating system, it is easy to tweak it (For those who know how to program). In the case of closed proprietary systems, if you try to do so, prepare to look out for lawyers at your doorstep ready to sue you.

Responsibility to the world at large
Instead of having nice visions and clauses stating that the business is responsible to the world at large and then giving something like 2% of revenues as "Corporate Social Responsibility", if the business itself works towards increasing the information and tools open for anyone to use, it benefits not only itself but also everyone else. Hence all its effort goes towards improving the world at large while benefitting itself.

Continuity of systems
A change which was forced upon all organizations at large was the change in the structure of Microsoft Office from 2003 to 2007 (From the menu interface to the ribbon interface). Everyone had to learn a new interface in order to continue to be productive. This change can keep occurring as long as someone else forces it upon us.

Another move which was forced on all organizations was the movement of Windows XP to Windows 7. This change was not only about a change in the operating systems but rather a change in the whole hardware itself as the new versions invariably require much higher resources to operate in order to be able to run the same tasks such as browsing the internet or running the same applications.

Suppose Microsoft follows the example of Adobe in supporting their software only from the cloud, then there will be a lot of policy changes required for businesses to allow their confidential documents to be edited on a system not controlled by them. This is only a hypothetical situation but it is very much possible in the future as the software vendor can then easily monitor the software sold and utilized by any business.

By the way, I use Microsoft Software as an example for closed source software as they are having one of the best support systems for users and the most user friendly among the closed source software vendors.

Simpler selection of systems based on needs
Consider two similar software being upgraded to the next version - one being open source and the other being closed source.

Invariably, it would be seen that the open source has only one upgrade path while the other would have multiple paths of upgradation. For example:- If you want  MS Office, select between Home & Student Version, Home & Business Version and Professional Versions. If you want MS Windows then select between Starter, Home Basic, Home Premium, Professional, Enterprise and Ultimate.

On the other hand, once the Open Source software has been selected one time, such as Linux Mint or LibreOffice, there is only one option to upgrade to and this would include almost all features anyone would require. This major difference is simply due to the way they operate. Closed Source software businesses, require to collect the maximum revenue from all segments of the population. Hence after creating one software, they keep cutting out the features to create the different editions. On the other hand this does not make much sense to Open Source software companies as they get paid primarily only for support and not for creating more complexity such as different editions. Hence they create only one edition of the software.

Software created by passionate people
Most of the Open Source software is created and maintained by people all over the world who work on it due to their passion and not because the work has been hoisted on them. When you have a bunch of passionate people to develop anything the outcome is nothing short of incredible.

The level of support on online documentation, forums, wikis, mailing lists, etc. are very high and free. If extra support is required, there are paid support options where the OSS creators get their revenue.

Freedom from external audits
When a business buys a Closed Source software, they have to sign an agreement, which gives the software vendor the right to check their systems for extra licenses which have not been bought.

So if a business buys, say 1000 licenses all over the country and the audit finds that the different regions have used 1500 licenses, there can be a huge penalty which will have to be paid.

These kind of external monitoring is not present for the OSS which are generally free to use.

Watch this space for my third and concluding post in this series.

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