Cost-Conscious Companies Turn to Open-Source Software

in BusinessWeek

After the tech bubble burst, E*Trade's technology chief, Lee Thompson, needed to find a way to do more with less. In 2001 and 2002, the online stock trading company shrank its tech budget by one-third. "We had to go through and figure out every penny that we were spending…and make alternatives to reduce those costs," says Thompson, vice-president and chief technologist of E*Trade (ETFC). So he began using software that can be downloaded at no cost via the Internet. By the end of 2002, he was saving $13 million a year thanks to use of these freely available applications known as open-source software, and the fact that he could run that software on less expensive hardware .

It's 2001 all over again. With the economy in a tailspin, companies once again are under pressure to cut IT costs (BusinessWeek, 11/13/08). Growth in U.S. tech spending may contract to 0.9% in 2009, according to market researcher IDC. The end of 2008 looks particularly bleak, according to an October survey by ChangeWave Research, which noted the sharpest decline for corporate software on record. About 40% of the 1,841 corporate software purchasers surveyed said their companies would spend less on software in the coming 90 days.

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