Diamonds are Forever and so is OSS OPEX

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I sometimes wonder whether OPEX is underestimated when considering OSS investments, or at least some facets (sorry, awful pun there!) of it.

Cost-out (aka head-count reduction) seems to be the most prominent OSS business case justification lever. So that’s clearly not underestimated. And the move to cloud is also an OPEX play in most cases, so it’s front of mind during the procurement process too. I’m nought for two so far! Hopefully the next examples are a little more persuasive!

Large transformation projects tend to have a focus on the up-front cost of the project, rightly so. There’s also an awareness of ongoing license costs (usually 20-25% of OSS software list price per annum). Less apparent costs can be found in the exclusions / omissions. This is where third-party OPEX costs (eg database licenses, virtualisation, compute / storage, etc) can be (not) found.

That’s why you should definitely consider preparing a TCO (Total Cost of Ownership) model that includes CAPEX and OPEX that’s normalised across all options when making a buying decision.

But the more subtle OPEX leakage occurs through customisation. The more customisation from “off-the-shelf” capability, the greater the variation from baseline, the larger the ongoing costs of maintenance and upgrade. This is not just on proprietary / commercial software, but open-source products as well.

And choosing Agile almost implies ongoing customisation. One of the things about Agile is it keeps adding stuff (apps, data, functions, processes, code, etc) via OPEX. It’s stack-ranked, so it’s always the most important stuff (in theory). But because it’s incremental, it tends to be less closely scrutinised than during a CAPEX / procurement event. Unless carefully monitored, there’s a greater chance for OPEX leakage to occur.

And as we know about OPEX, like diamonds, they’re forever (ie the costs re-appear year after year). 

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2 thoughts on “Diamonds are Forever and so is OSS OPEX

  1. Good reflections (!), Ryan. I wonder how many OSS procurements are justified on the basis of reducing the Opex only *of the current OSS*, rather than reducing the cost of achieving what the original OSS was created to do? The former is much easier to procure (but may have less benefit to the business). The latter is harder (more difficult analysis to do and change to manage, but payoff potentially much larger). The belief that OpenSource will simply eliminate OSS vendor costs at a stroke still seems remarkably rife – with the risk (as you rightly identify), that operators tie themselves into a lifestyle of everlasting opex leakage.

  2. Brilliant insights Robert!
    There’s a part 2 coming shortly that touches on some of your points and more! Well spotted!!

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