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Companies need a strategy for the use of Open Source Software

18 February, 2020

From mobile applications to electronic control units built into digitalized products for private households and industry, to assistance systems in any means of transport: As digitalization continues, more and more companies are using Open Source Software (OSS) to develop their products and solutions.

Thanks to OSS, they can save costs and development capacities and strengthen their independence from service providers and software manufacturers. However, if companies unintentionally use OSS in violation of their license agreements, major risks arise.

Your expert for questions

Marcel Scholze
Director at PwC Germany
Tel: +49 69 9585-1746
E-Mail

Open Source Software still on the rise

In times of a shared economy, the principle of openness and collaboration is more in demand than ever. The basic idea of OSS fits in with this: anyone can use, analyse, copy, modify and distribute it, as long as they respect the license obligations. Current studies, including the "Open Source Monitor 2019" published by the IT industry association Bitkom e.V., show that the majority of companies are already using Open Source Software. Not only in enterprise IT, for example with operating systems such as Linux and Android and RDBMS such as MySQL or content management systems, but especially in product IT in the development of software for the respective products, which either supplement these or are built into those products - not further visible to the end customer.

State-of-the-art and development capacities speak for Open Source Software

“The use of OSS components in programming as well as operational products in the company IT has been state-of-the-art for many years. Anyone who prohibits his or her development departments and suppliers from doing so will not only be faced with incomprehension, but will automatically increase costs and time-to-market.”

Marcel Scholze, responsible for Open Source Software Management Services at PwC

87 per cent of the companies that PwC interviewed for a study on OSS see cost and competitive advantages in using Open Source Software.

Another advantage is in the area of capacities and knowledge: OSS components reduce your own development effort. Thanks to open source code, the transfer of know-how is made easier. The duration of software developments and their cycles are shorter. "Last but not least, the use of Open Source Software makes companies more independent in view of the ongoing digitalisation and the know-how required for this: they are no longer subject to the dictates of conditions and prices as is sometimes the case with proprietary providers," says Marcel Scholze, Director at PwC.

Open Source Software is too often used in an uncoordinated way

However, the PwC study also reveals deficits in OSS usage: in the vast majority of companies, OSS is not anchored in the IT strategy. 76 percent of companies state that they have no strategy for OSS. 84 percent have not defined guidelines and rules for the deployment of OSS.

“Open Source Software is still too often used in an uncoordinated way. As a result, companies not only miss the opportunity to fully exploit the potential. They also expose themselves to security and compliance risks. If companies violate the licensing conditions when using Open Source Software, this can lead to sensitive claims for damages, injunctions or damage to their image.”

Marcel Scholze, responsible for Open Source Software Management Services at PwC

Two thirds of the companies do not check the licensing conditions

This is all the more true as the study shows that almost two thirds of the companies (64 percent) use OSS without carefully checking the license conditions. If companies continue to develop the source code, they can also be obliged to disclose it due to the copyleft effect. "This represents a further legal risk, because trade secrets may become public and the infection may spread via the copyleft effect across many components," explains Charlotte Schaber, lawyer for IT and data protection law and expert on Open Source Software at PwC.

Last but not least, she sees risks in the areas of support and further development: "It may happen that the communities do not continue the developments for Open Source Software components. Users of these OSS components are then affected by a so-called dead-end fork effect. In individual cases, this entails a considerable business and IT compliance risk if that Open Source Software component constitutes business-critical assets and cannot be easily replaced by other Open Source Software or commercial products. An Open Source Software management system prevents these and other risks as part of a company-wide risk management system," says Charlotte Schaber.

Those who know the risks can use the great potential of OSS

"The potential for Open Source Software, especially in connection with the further digitalisation of the economy and society, is enormous. It helps both companies and the public sector to differentiate themselves from the competition with their digital services efficiently and at low cost.

“However, it is essential to keep an eye on the risks associated with its use and to establish a strategy for dealing with Open Source Software in the company.“

Marcel Scholze,Director at PwC for Open Source Software Management and Compliance

Contact us

Marcel Scholze

Marcel Scholze

Director Open Source Software Services & IT Sourcing, PwC Germany

Tel: +49 69 9585-1746

Thomas  Urband

Thomas Urband

Senior Manager, lawyer, PwC Legal AG, PwC Germany

Tel: +49 160 9627-3689

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Contact us

Marcel Scholze

Marcel Scholze

Director Open Source Software Services & IT Sourcing, PwC Germany

Tel: +49 69 9585-1746

Thomas  Urband

Thomas Urband

Senior Manager, lawyer, PwC Legal AG, PwC Germany

Tel: +49 160 9627-3689

Julian Schauder

Julian Schauder

Manager, PwC Germany

Tel: +49 211 981-4786

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