By: Francois Aubin.
Topics: Procurement of enterprise software, Open source, Cognitive Engineering.


Software costs can be reduced by 70% to 90% when using open source instead of enterprise alternatives. While it requires the engagement of developers with specialized skills, leading to additional costs, the overall economic benefits are considerable. This cost efficiency primarily stems from its free-to-download nature, sparing businesses the expense of funding the extensive research and development typically undertaken by enterprise vendors. Furthermore, open source software provides enhanced scalability, adeptly adapting to a business’s evolving needs.


The IT Procurement Process in Large Organizations

In the realm of modern business, organizations are increasingly relying on technology investments to stay competitive. This typically includes expenditures on enterprise software like CRM (Customer Relationship Management) and ERP (Enterprise Resource Planning) systems, cloud services, networking, cybersecurity solutions, and data storage and management. Large organizations approach IT procurement through a collaborative process, focusing on selecting proven solutions from established vendors. To inform their decisions, these organizations often consult analyses from prominent research firms like Gartner and Forrester, or engage with large consulting companies such as E&Y, PwC, Accenture, and KPMG.


Challenges and Client Diversity

On the flip side, vendors, particularly those offering ERP and CRM systems, must cater to a diverse client base. Different clients have varying needs: some may require only sales pipeline tracking, while others might need functionalities for direct marketing, lead generation, or advanced dashboard capabilities. A challenge arises when software comes overloaded with functionalities, much like how Microsoft Word offers over 960 functions but the average user utilizes fewer than 30. This excess can lead to complex and expensive solutions not fully utilized in specific contexts. In addition, an organization might have specific needs not covered by the enterprise solution, which will require costly adaptations.


Alternative Approaches: Open Source and Tailored Technology

There’s a growing trend towards more granular, cost-effective procurement strategies. Instead of opting for complex, all-encompassing enterprise solutions or developing applications from scratch, organizations are now considering integrating open source software or utilizing specific functionalities that precisely meet their needs.


Three Key Options for Organizations:

  1. Buying Enterprise Solutions: This approach provides a sense of security, leveraging expertise and infrastructure that may address future business challenges. However, it often comes with high costs and unnecessary features. Specific, unaddressed functions might require additional development and integration.
  2. Developing In-House: Effective when software development is core to the business, this option allows for creating tailored solutions that can also be commercialized. However, it requires significant internal development and engineering capacity.
  3. Integrating Open Source Software: This could be the most cost-effective and efficient approach. It combines the best of both worlds – tailored to specific needs and cost-effective. However, it demands strong internal development and engineering capabilities, alongside a deep understanding of business needs.


Cognitive Engineering Approach: A Strategic Solution

Traditionally, organizations have not perceived themselves as software entities, often opting to outsource IT functions to external vendors. However, the escalating dependence on software, particularly for automation, is reshaping this mindset. Core organizational functions are increasingly being automated, becoming essential components of the software infrastructure. This transformation underscores the notion that ‘software is eating the world.’ As a result, mastering the integration of open-source solutions, augmenting functionalities, and automating critical processes is now a key competency for businesses.

The role of cognitive engineering is pivotal in advancing the ability to automate and integrate open-source software. This approach empowers organizations to rapidly discern their specific informational needs and automation prerequisites, in addition to designing interfaces that are both intuitive and user-friendly. Equipped with these skills, organizations are better positioned to select and incorporate open-source solutions, ensuring they steer their technological progress effectively.