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OPEN SOURCE ESSENTIALS

By LIV WATSON AND DANIEL SMITH, CMA
September 1, 2016
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What every management accountant needs to know about open source systems.

 

One of the main roles of management accountants is to provide insights and information to facilitate important economic decisions for their companies. To deliver on these expectations, they must understand the difference between open source accounting applications and proprietary closed source systems.

 

WHAT ARE THEY?

 

The operating system is the most important computer application for developing software. It manages the computer’s memory and all the processes, as well as all of its software and hardware. The operating system coordinates these processes to make sure each software program gets what it needs to perform its tasks. It also allows the user to communicate with the computer without having to know how to speak the computer’s programming language.

 

Software such as accounting applications and server operating systems can be categorized by technology, ownership, licensing, and usage, among other characteristics. Source code is the underlying programming language for developing a functional operating system or software. Most source code is covered by copyright, which, along with contract law, patents, and trade secrets, provides the legal basis for its owner to establish exclusive rights. The source code can be available for either an open source or a proprietary closed source system.

 

A proprietary closed source system is an environment in which the owner retains intellectual property rights, usually copyright of the source code and sometimes patent rights. The vendors who choose to develop a proprietary closed source operating system typically limit the number of computers on which software can be used and prohibit the user from installing the software on extra computers. Restricted use is enforced through a technical measure, such as product activation with a product key or serial number, or a copy-protection statement. The primary business model for closed source software involves the use of constraints on what can be done with the software and the restriction of access to the original source code.

 

An open source system is an environment where the source code is available to the general public for use and/or modification from its original design. Open source code is typically created as a collaborative effort in which programmers improve upon the code and share the changes with the community. The general rationale for this open source movement is that freeing programmers from concerns over proprietary ownership or financial gain will result in a more useful, bug-free product for everyone to use license-free. The concept also relies on peer review to find and eliminate bugs in the program source code. Linux is the best-known and most-used open source operating system, but there are many accounting and financial planning applications available in an open source environment.

 

There’s a fair amount of confusion over the term “open source.” To be considered a true open source initiative, the code must gain a certification standard issued by the Open Source Initiative (OSI) (https://opensource.org). This certification affirms that the source code of a computer program is made available to the public and is generally available for free. In order to be considered OSI certified, a product must meet the following criteria:

 

  • The programmers or holder of the license of the source code can’t collect royalties on the distribution of the program.
  • The distributed program must make the source code accessible to the user.
  • The author must allow modifications and derivations of the work under the program’s original name.
  • No person, group, or field of endeavor can be denied access to the program.
  • The rights attached to the program must not depend on the program’s being part of a particular software distribution.
  • The licensed software can’t place restrictions on other software that’s distributed with it.

 

THE OPEN SOURCE REVOLUTION

 

The concept of open source isn’t new. Back when computers first reached universities, the underlying source code generally was passed around freely. It was only when the business world saw the benefits of modern computing that vendors began to impose restrictions and charge fees for each copy. When the internet emerged with its worldwide broadcasting capability, a mechanism for information dissemination, and a medium for collaboration and interaction between individuals, the open source revolution kicked off.

 

Software vendors are adopting more and more open source business models because they allow groups of companies to collaborate in solving information interoperability problems without the threat of an antitrust lawsuit. The companies also make clear gains when the computer-programming public contributes free improvements back to the community. In fact, many open source operating systems and open source financial planning and accounting applications are available in the marketplace today.

 

Linux has become the leading open source operating system among computer-science students because of the system’s longevity and availability. These students will carry this learning with them into the workplace as they graduate, accelerating the evolution of open source development.

 

BENEFITS

 

Total access to a program’s source code comes with pros and cons. Proponents of open source often claim that it offers significant benefits when compared to typical commercial products. Open source, for example gets closer to what users want because those thousands of users have a hand in contributing to the code. The open source community attracts very bright, very motivated developers. Many proponents state that technical superiority is typically the primary reason enterprises choose open source software.

 

Open source allows for customization because business users can take a piece of open source code and tweak it to suit their needs. Since the code is open, it’s simply a matter of modifying it to add the functionality they want, and they can share those enhancements back to the open source community and free themselves from the vendor lock-in that can afflict users of proprietary packages. This visibility means developers can see the code for themselves and be confident in it.

 

DOWNSIDES

 

Open source brings several downsides as well. The critical issue is that there is no guaranteed support. Since many members of the open source community develop the code in their spare time as unpaid volunteers, there’s a chance that some of the programs in the open source directory haven’t been updated in a while and may not function properly on newer operating systems and varying interfaces.

 

Open source operating systems and open source software have come a long way over the years, and there are many reasons to incorporate the technology into the enterprise. Management accountants shouldn’t be expected to learn how to code but at the minimum should add open source to their professional vocabulary before choosing the next operating system or open source software applications in order to best assess return on investment.

 

Liv Watson is the senior director of strategic customer initiatives at Workiva, Inc., and is a member of IMA’s Des Moines Chapter. She can be reached at liv.watson@workiva.com.
Daniel Smith, CMA, is the director of data science and innovation with Syntelli Solutions and is a member of IMA’s Dallas Fort Worth Area Chapter. You can reach him at daniel.smith@syntelli.com.
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