Linux Foundation Research Shows Economic Value of Open Source Software Rising in Terms of Benefits vs. Costs

New research led by Henry Chesbrough, pioneer in study of open innovation, finds cost savings and faster development the top benefits for companies

SAN FRANCISCO, March 2, 2023 - The Linux Foundation, a global nonprofit organization enabling mass innovation through open source, today released a report measuring the economic value of open source and found that companies perceive the greatest benefits of open source software as cost savings, faster development, open standards, and interoperability.

Almost two-thirds of the companies surveyed reported that the perceived benefits of open source clearly exceed the perceived costs. What’s more, the ratio of benefits to costs appears to be rising for nearly half of the respondents, while only 16% felt that the ratio was declining.

“This research clearly underscores that open source software has substantial economic value to companies and that its value will increase for most organizations the longer and more they use it,” said Jim Zemlin, Linux Foundation Executive Director. “By helping to quantify the impact, we help companies understand their own benefits, costs, and the value of supporting and contributing to the open source software that is foundational to the world's infrastructure and a force for innovation.”

Professor Henry Chesbrough, of Luiss University in Rome, Italy and the University of California at Berkeley Haas School of Business, a noted pioneer and author on the subject of open innovation, conducted the survey and analysis in partnership with LF Research, the Linux Foundation’s research arm. 

Many of the surveyed organizations have worked with open source software for more than 20 years while a significant number started in the last five years. Not only do companies get more value out of open source software the longer they use it, they also get more value by being more active in contributing to open source initiatives, the research found.

“It pays to be more open,” said Chesbrough. “Software is a technology whose importance is steadily increasing and we’re seeing companies reap the benefits of embracing the foundational technology of open source software. Adopting open source software allows companies to embrace a more vibrant, surprising, and exciting future.”

Because open source technologies, including the ubiquitous Linux operating system, are free to use, they are challenging to value in economic terms. The survey dug deep into open source software use by more than 430 companies, 43% with annual revenue in excess of $1 billion, and including many of the Fortune 500. Other key survey findings include:

• Most survey respondents say it would have cost significantly more to provide software functionality themselves than to use open source software. 
• Almost 21% of respondents said the benefit of using or contributing to open source software was rising faster than the cost, another 21% said benefits were rising somewhat faster than costs and 7% said benefits were rising much faster than costs. 
• The greatest perceived costs of using open source software were security gaps, hidden support costs, and those related to reducing legal uncertainties regarding licensing. Only one-fifth of respondents said perceived costs exceeded perceived benefits.

For more information, see the full report here.