Why Don't we Value Open Source Software Assets?

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2021-07-15 17:00:08

Developers and software providers love open source software (OSS) for its capability, maturity, accessibility and transparency. So why isn't there more promotion of the use of open source software and why do procurement professionals find it so difficult to grasp the value of open source software?

One of the key reasons may lie in the genuine lack of clarity that surrounds the accounting of open source software, which has zero license cost. The ubiquitous use of open source throughout the technology sector coupled with the lack of accounting policy clarity surrounding the acts of creating and open source software, is undervaluing the assets of software intensive sectors like finance and healthcare and of large institutions like the National Health Service (NHS).

Global accounting standards, as well as those of the United Kingdom, require that software creation and use be recorded as 'assets' on our balance sheets to reflect the fair value transacted by software. Because of this inclusion, the business community is able to treat it as a visible contribution to the capital asset base (i.e. an investment), which requires risk management and security in financial planning.