It is widely accepted that Open Source software has tremendous potential for cost saving for any organisation. Hence, when determining which QMS solution can offer the best ROI, Open Source software happens to be an obvious choice. Whilst the words “Open Source” are informally synonymous with “free”, care must be taken when planning for ROI. This is because implementing Open Source software (or for that matter any piece of software) involves a number of aspects, which, if ignored, can turn the pursuit of ROI into RIP for the project.
In a recent industry survey conducted by Computer Economics among organisations that had implemented Open Source software, nearly two-thirds of respondents achieved positive ROI, and only 5% failed to break even. This is promising news for any organisation considering to implement an EQMS, however, when implementing any software the following key cost aspects must be considered:
- License costs
- Support/Maintenance costs
- IT/Subscription costs
- Organisational costs
Let us go through each aspect and compare Open-Source based solutions with Commercial software in order to better understand the similarities or differences between the two.
License Costs: The key difference between Open Source and Commercial software is that there is no license fee associated with Open Source software. There is no debate here, license costs are a real saving for the business and a substantial one too as most QMS vendors charge high license fees.
Support/Maintenance costs: Critics of Open Source software have often argued that support and maintenance costs for Open Source software are extremely high because organisations would need to hire people internally to support and maintain such a system. That is not always the case. Increasingly it has been seen that Open Source vendors provide support, maintenance and training as part of their service offerings (much like their Commercial counterparts). In contrast, most Commercial vendors charge an annual support and maintenance fee (typically 20% of the license) and would still require dedicated resources internally to support and maintain the system. Surprisingly, instead of being restrictive, Open Source solutions offer flexibility, which allows an organisation to support themselves internally or take out support contracts which they can choose to extend depending on the quality of service.
Hence, Open-Source implementations either match or provide greater flexibility than Commercial implementations.
IT/Subscription costs: Subscription costs are not that different between Open Source and Commercial solutions as the headache of hardware and maintenance is handled by the service provider. However when talking about IT services such as infrastructure costs, there can be costs associated with installing the software and determining the optimum hardware and network requirements. If internal IT staff are not familiar with the Open Source software then they could spend longer to successfully install the software and hence the IT costs may be higher than Commercial software. Increasingly though, Open Source vendors provide installation as a service as well and hence the costs in this case may be made irrelevant if such services are availed.
Organisational costs: Organisational costs is an entirely different matter, and depends on the way an organisation intends to use their QMS system. With any new system, there is an obvious cost associated with lost productivity whilst users are getting used to the new way of doing things. There may also be other costs such as training costs and internal testing (User Acceptance Testing). Again, there is no significant difference between Commercial or Open Source solution here either.
We can see that Open Source software has come a long way in its service offering and continues to minimize the cost footprint for an organisation. So with costs discussed let us look at what an organisation can hope to get out of implementing an Open Source based EQMS.
Broadly speaking, organisations implement EQMS either for compliance reasons or to improve the quality of their products/services or both. Hence as a minimum the organisation should be able to:
- Reduce costs associated with compliance (Administration, Fines etc)
- Reduce costs associated with poor quality of products/services (Lost market share, recalls, refunds etc)
- Reduce costs by improving productivity and reducing wastage
- Increase competitive advantage by enabling the organisation to innovate by continually learning and improving its products and services.
Most vendors claim above benefits. However it is very hard to claim competitive advantage by putting in a stock standard out of the box system. In most circumstances the system will need to be changed in order to meet organisational specifics so as to gain competitive advantage or to improve process efficiency. This is where Open Source offers the greatest advantage as it allows complete flexibility with no implications to the license agreement. Commercial software however, does not allow changes and if changes are requested then the related costs can be stratospheric. Moreover, the downstream costs related to such updates can be equally horrific, unfortunately, there are more than a few upgrade related disaster stories circulating around, and all because the Commercial system had been customised. Open Source solutions however do not mandate upgrades in order to continue support, the decision to upgrade is purely a matter of what value the upgrade brings to the organisation.
In some respects, the question of whether an Open-Source based QMS can deliver ROI has become irrelevant. According to a recent study by Accenture, more and more organisations cite quality, reliability and security as the main reasons to switch to Open-Source systems. So why are organisations still using Commercial software? The answer is very simple, it comes down to perceived Risk.
Risk in this case being what will be the financial, operational or compliance impact on the organisation if the software vendor goes bust or the software is not supported anymore. In fact, a large number of organisations cite the lack of available commercial support as the top risk to adopting Open Source software. Organisations can easily manage this risk however by ensuring that proper arrangements are in place with the vendors of Open Source software and ensure the delivery of education, training and critical support both during project implementation and on an ongoing basis. This provides the organisation with an opportunity to increase internal buy-in, provide employees with training and career development opportunities and at the same time build an internal team capable of managing and supporting such a system.
We can conclude by saying that every EQMS project is different and that there is no single answer on how to measure ROI. However, if organisations do their due diligence and select the right vendor, right product, right services and identify all costs associated with that acquisition, then the odds of measuring and achieving ROI become considerably higher.