Open-source software: Nine out of 10 companies use it, but how much is it really worth?

Putting a value on the use of open-source technologies is challenging but important.
Written by Liam Tung, Contributing Writer

Open-source software contributes £43.15 billion ($59 billion) each year to the UK's gross domestic product (GDP) and brought an estimated £46.5 billon of "potential value" to UK businesses in 2020, according to a new survey by an organisation that aims to promote the use of open technologies.

The report marks the third and final chapter in OpenUK's investigation into the impact of open-source software on the UK economy as detailed in its State of Open: The UK 2021 paper. The organization is trying to encourage the adoption of open-source software in the energy sector ahead of the 2021 United Nations Climate Change Conference (COP26), which will be held in Glasgow, Scotland.  

The latest report claims the UK was the top contributor to open-source software in Europe and the fifth biggest contributor globally. It said 89% of companies are using open-source tech.

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OpenUK's report estimates open source gave the £46.5 billon value to UK businesses through collaborations, skills and quality of code, but it warns the "small sample size reduces confidence in these findings". The reports are based on responses from only 273 business in the UK carried out in May to June 2021. 

OpenUK reckons there is polarisation in the economy, due to large firms and small firms being more active in open-source software use and contributions, while medium-sized organisations were more hesitant to engage. 

But the authors of the report note that providing any numbers with confidence is still difficult due to a lack of data. Some companies, for example, do employ contributors to open-source software, but don't know it. 

"New ways to measure the value of open-source software need to be iterative and flexible. Rarely is there a large upfront investment that depreciates over time as with traditional assets on a balance sheet. Instead, systems are built for their flexibility, agility and ability to flex and change as and when needed, ensuring system sustainability. Open source allows for such efficiencies and as such investments may be made incrementally, contributions follow a pattern where users evolve into contributors and people are motivated to work on projects and should be compensated for this work," the report said.

"Some companies put a ton of effort into open source and they get a lot back from it, but it's hard to measure. It's like how much benefit do you get from donating to charity, like there are good things about it, but it's very hard to measure the impact of it," says Cheryl Hung, an engineer manager at Apple Cloud, in the report. 

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And OpenUK is attempting to build on calculations from a European Commission study based on the number of contributors to open-source projects. 

"The result was that if 260,000 contributors could lead to an economic impact of open-source software between £60.9bn (€65bn or $77.8bn) and £84.15bn (€95bn or $113.7bn) in Europe, then 126,000 contributors in the UK in 2019 can lead to an impact between £29.52bn and £43.15bn, on the condition that individual contribution did not change from year to year," it notes. 

It found that companies with less than £1 million revenue were the top recruiters for roles associated with open-source work, with 40% planning to hire backend developers, development leads, and full-stack developers in the next year. Companies with more than £50 million are more likely to hire cloud engineers, development operations engineers, and back nd developers. 

OpenUK says the estimated £46.5 billion contribution open source made to UK businesses in 2020 consisted of: 

  • Direct contribution to the UK economy based on open-source software - £15.7 billion
  • The potential monetary value of collaboration - £11.3 billion
  • The potential monetary value of skill development -  £10 billion
  • The potential monetary value of high-quality code - £9.5 billion

"Calculating the value that open-source software creates is tough to do by its very nature. At OpenUK we see understanding this value better as essential to UK policy development and building business understanding of its usage," explains Amanda Brock, CEO at OpenUK.

As for the energy sector, there is some belief that open-source software could help reduce emissions through improved access to energy data. 

"If you can turn open source software into the most sustainable set of software that any organisation should be running, this will play to a priority that every corporate organisation is going to have to walk through in the future," says Douglas Smith, digital, innovation and transformation director at Scottish Power, in the report.   

"Open source can be part of the net-zero solution for companies going forward, in part by harnessing the communities' enthusiasm for driving energy efficiency solutions and also by its very reusable nature." 

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