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When Government IT Mandates Can Be Counterproductive

by Andrea Di Maio  |  September 27, 2012  |  3 Comments

Last Monday I had an inquiry with a small software vendor about a recently approved amendments to the Italian Digital Government Code according to which governments should favor open source vs. proprietary solutions. Article 68 says (see here, in Italian):

Proprietary software acquisition is allowed only when a technical and economic evaluation shows that pre-.existing or open source solutions cannot be acquired at a lower price

I have to confess that I had missed this amendment, although I had followed all the lobbying that well-known consultants to the Italian government have been doing on the topic. The software vendor told me that clients are hesitating to buy their product, even when they believe it is the right choice, while they try to understand how strongly this amendment will be enforced and what others are doing.

I know nothing about this vendor, nor about the quality of their product. I know that there are plenty of great open source solutions across the whole technology stack, and many clients are using those. However I am somewhat surprised that several years after the first wave of open source mandates that was mostly a reaction to the dominance of Microsoft on desktops and – to a lesser extent – servers, a EU country comes up with such a procurement constraint.

Public procurement should always be about value for money and not about mandated solutions. Open source is one example, but the same applies to mandates requiring cloud to be the preferred sourcing approach, or even proposing a single vendor, as it may happen with shared services.

Value for money is a combination of two factors:

  • the total cost of ownership, which includes the actual cost of the product (or service) license, any migration cost (including exit costs), maintenance fees, internal or contracted resources needed to support, training, peer support
  • the total value of opportunity, which includes the impact on productivity, any saving accrued by the business in its operational costs, as well as further positive impacts in terms of agility and flexibility to support the business objectives

A choice should be made after looking at all solutions that meet the functional and non functional requirements and comparing them in terms of both TCO and TVO. The amendment above assumes that license price and economic evaluation are somewhat disjoint, which makes the use of TCP and TVO quite hard.

Forcing to adopt one particular approach, be it open source or cloud or else, skews the decision toward potentially suboptimal solutions. Buyers can probably still apply a due process and examine TCO and TVO across all candidate solutions, but this definitely requires an extra effort, as they need to justify why alternative technologies are being considered. In government compliance is the easiest route to take, and once buyers can tick the required boxes (in this case identify one or more open source solutions), why should they bother?

We are at a moment in time when there is great choice of technology. Government strategies aim at making their buyers better and smarter, through an appreciation of the variety of sourcing options at their disposal, including small and large providers, proprietary and open source, products and services. And yet, ironically, some are still willing to hold their hands to direct their choices.

One of the reasons that open source advocates have used in the past to request government positive actions and mandates is not to fall prey of proprietary vendors, with growing costs and lock-in risks. The other, more implicit reason, is to favor local vendors over large foreign behemoths.

As far as the former, there are still considerable dependencies on the selected vendor or on internal resources. It is not a surprise that highly insourced IT organization, with sizable application development as well as infrastructure and operations staff are more inclined to adopting open source. But how sustainable is this, looking at the emergence of commodity services as well as consumer technology that challenge the value and cost of internal IT organizations? And how relevant is open source, now that the old battleground between vendors has moved to the cloud? I often mention the case of a client with whom I had a conversation many years ago about replacing Microsoft Office with OpenOffice, and who called me again more recently to discuss Google Apps vs Microsoft Office 365…

As far as the local industry, how many vendors are there like the one I spoke to? Of course the dependencies on a myriad of small and less small proprietary vendors is not advisable either, and it is indeed very good that they compete.

But this is the crucial issue: favoring a healthy competition among vendors with different technology solutions, while training government buyers to relentless apply value for money. Restricting the market to open source, or cloud for that matter, looks very similar to reinstating barriers to free movement of goods and services in the EU.

It is no longer time for the political battles that burst almost ten years ago around open source. The common enemy is the budget, which keeps shrinking and may threaten the ability of government organizations to sustain their services and operations. Open source brings important ammunitions to this fight, but not the only ones.

The greater the choice, the smarter the government.

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Category: open-source-in-government  smart-government  

Tags: italy  

Andrea Di Maio
Managing VP
19 years at Gartner
33 years IT industry

Andrea Di Maio is a managing vice president for public sector in Gartner Research, covering government and education. His personal research focus is on digital government strategies, open government, the business value of IT, smart cities, and the impact of technology on the future of government Read Full Bio

Thoughts on When Government IT Mandates Can Be Counterproductive

  1. I have read with great interest your views on the argument, but I am somehow puzzled by some of the (implicit) argument. As a matter of fact, the only constraint that this amendment impose (if, and it’s a big if, it will ever be enforced) is that acquisition will be forced to have an a-priori economic assessment, which is one of the big selling point of proprietary solution. In my work as a researcher on IT economics, I have spent countless hours listening proprietary vendors claim that despite lower acquisition costs, the TCO of proprietary solution is lower; they will simply have to demonstrate that OSS (or solutions developed by other PAs, even if non-OSS) do have an higher cost.
    Despite all the talk, the *norm* nowadays is still for purely proprietary solutions, explicitly because they are available by ticking boxes, and very little PAs I worked with performed any single TCO or economic analysis whatsoever in more than 10 years of work.
    Also puzzling is the claim of “restricting”. The only restriction that is imposed is that choice cannot be performed without a justification – be it technical or from the economic point of view. If you see it as a restriction, you should then conclude that there is ample room for improvement from both technical and economics in the current procurement by introducing OSS, a fact that should be seen as positive.
    All in all, despite (being italian) my personal belief that it will be mostly unapplied, I still plaud it as a balanced approach to solve an unbalanced market. Given the substantial skew towards proprietary in tenders, and the comparable difficulty in proposing OSS solutions in internal PA marketplaces like CONSIP, I consider it a reasonable first step.

  2. I am not suggesting that OSS has a higher or lower cost. All I am saying is that proprietary and OSS should be on a level-playing field. The statement says “Proprietary software acquisition is allowed only when a technical and economic evaluation shows that pre-existing or open source solutions cannot be acquired at a lower price”, but also the reverse should be true, i.e. “Open Source software acquisition is allowed only when a technical and economic evaluation shows that pre-.existing or proprietary cannot be acquired at a lower price”. Now it is quite evident that such a formulation would be laughable, but the only version that would really make sense is that “software acquisition requires a technical and economic evaluation leading to the solution that offers the best value for money”. At most one could suggest – as they do in the UK – that open source as well as proprietary solutions must be considered.
    So the formulation is indeed restrictive, and unjustifiably so.

  3. Barry Polley says:

    I have heard the \level playing field\ argument for more than 20 years now, and I have yet to see evidence that such a thing is possible. It’s really more a matter of what variables the adopter considers to be most important and how disciplined the related measurement is. Perhaps Italy has a different set of priorities than you do – freedom to evolve their tools as they see fit rather than as suppliers do, need to empower the local labour force, desire to grow support for their language in multiple ICT ecosystems….

    What you describe as a \laughable formulation\ is precisely how procurement processes in government and large corporate have worked around the world within the ICT realm. Not only have these discriminated against open source solutions, but they have also created very high barriers to entry for non-incumbent PROPRIETARY software vendors who could offer a better value proposition, allow greater responsiveness to change, support frugal forms of innovation, etc.

    TCO is only part of the argument but remains central because (a) value for money is still an overwhelming driver and (b) software licence costs are only a small part of system costs in most cases.

    As any open source advocate will tell you, free-as-in-freedom is not the same as free-as-in-beer, and different people have different views on their relative importance.

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