Paying for Free: Security, Privacy, and Sustainability Costs for “Free” Software

Today’s tough economy creates fiscal pressures for state and federal government budgets. Resourceful policymakers are increasingly looking for ways to reduce or at least maximize their information technology (IT) spending, and utilizing free software and services is one possible direction. But what does “free” really mean?

Some solutions are “free” in the sense that there is no up front license fees to use the software or online service. Companies often provide or support these free solutions in order to help sell hardware, generate service revenue, collect user data and sell advertising, or as part of a larger enterprise strategy toward expanding market penetration and increasing revenues. Consequently, “free” does not mean that software is without cost.

Normal cost/benefit analysis still applies to “free” software, because license fees represent only a small portion of ownership costs. This is not news to most CIOs, who have traditionally analyzed their systems using a total cost of ownership (TCO) methodology. This analysis evaluates the lifecycle costs of IT systems and factors in initial acquisition and ongoing cost considerations. Upfront acquisition costs include not just license fees, but also integration and training costs. Ongoing costs include maintenance, support and updates.

Yet, traditional total cost of ownership analysis is incomplete for considering the unique costs and benefits of free software and services, particularly those delivered through the Internet. Privacy, security, and sustainability considerations exist for all software, but they are often a critical component for analyzing Internet “Cloud-based” services. These are non-monetary costs and perhaps harder to quantify, but from a buyer or consumer perspective, they are still very real. That is why we suggest integrating them into the an updated version of TCO analysis we call “adTCO.”

A decision-making process that incorporates privacy, security and sustainability considerations will result in a truer assessment by procurement officers and policymakers of the cost of software alternatives. Understanding the costs as well as benefits of “free” software will avoid creating the expectation that there is such a thing as a free lunch in IT, a benchmark that no IT business model can meet.