New Harvard study finds Open Source is worth up to $8.8 trillion

Open source software is worth up to $8.8 trillion on the “demand side” or in value to users, a new report has found – and a less colossal but still significant $4.15 billion to companies on the open source supply-side.

No, this is not the wish-fulfillment ramblings of some open source minnow trying to justify its existence, but a sober investigation by a trio of researchers from Harvard Business School and the University of Toronto. 

Assistant Professor Frank Nagle, post-doctoral researcher Manuel Hoffman, and doctoral student Yanuo Zhou found in their paper published January 16 that firms “would need to spend 3.5 times more on software than they currently do if OSS [open source software] did not exist.”

See also: This JavaScript library is EVERYWHERE. Its maintainer is broke

The researchers drew on data from two primary sources for insight into the OSS used at tens of thousands of firms across the world. 

The first was the “Census II of Free and Open Source Software – Application Libraries”, released in 2022 by The Linux Foundation, in partnership with the Laboratory for Innovation Science at Harvard. 

The second was the “BuiltWith” dataset, which includes the scans of nearly nine million websites to identify the underlying technology deployed by such websites, including OSS libraries.

See also: Citi CTO spearheads new Open Sourrce ‘Common Cloud Controls’ project

Amongst other approaches, they calculated the labour cost it would take an individual firm to recreate a given OSS package by measuring the number of lines of code within the package and then applying the “COCOMO II” model to “estimate the number of person-hours it would take to write the code from scratch”. The numbers sound big, but the researchers say that “we underestimate the value since our data, e.g., does not include operating systems… a substantial omitted category.”

Ann Schlemmer, CEO at Percona, a company that provides enterprise supportfor a wide range of open source databases, told The Stack: “Global gross domestic product is estimated to be $109 trillion, and you can ascribe a significant percentage to technology delivering services and products either directly or indirectly. The role for open source is to take on those infrastructural and lower level areas, so that companies and organisations can build on that base without having to do it for themselves from scratch. You can see what this would take in the comparison between what is available as open source software and the cost for having to develop those tools at each individual company.

She added by email: “Alongside this, there is also the opportunity cost - any time you spend on building that software to operate is time taken away from building the services that customers really want and will pay for. Open source software helps companies get to their goals faster, as well as providing communities so that everyone can collaborate.”

The huge amount of value that open source creates is based on the work and dedication of contributors and communities. These companies can and should pay back to the communities and support their work… 

So, what can the open source community take from this kind of report? 

Schlemmer’s view is that “some might look at the billions or trillions in value, and flag that this could have been available to those developers if they had not given away their labour for free. That is not accurate. 

“Instead, those developers would have been stuck re-inventing the wheel and moving more slowly to build software or products, rather than moving straight to what is innovative and interesting. Open source provides that route to getting everyone working on innovation faster, so that we can collectively deliver what customers want. Open source helps everyone go further, faster, opening up more business opportunities that would otherwise be unreachable.” Do you agree? Share your thoughts… 

Follow The Stack on LinkedIn