The financial potential by increasing the use of open source components in governmental IT-projects

The following is a shortened English version of the report "Det økonomiske potentiale ved en øget anvendelse af open source komponenter i statslige it-projekter"

Executive Summary

In the spring of 2011, Danish National IT- and Telecom Agency (NITA hereafter) invited Zangenberg & Company to gather information about 128 ongoing and scheduled IT-initiatives in order to estimate the potential of an “open source approach” to development of governmental IT-systems.

Within the scope of this project, the term “open source approach” is used to describe a strategy, in which system elements or components are developed centrally by means of open and fully accessible source code. We base the project on the concept that any individual authority is obliged to employ these system elements where appropriate – by such obligation, achieving the potential becomes more realistic. The system elements may be configured and adapted to the individual local solution. The open source-approach is a supplement (and not an alternative) to development of centrally driven system elements such as NemKonto[1]or common user- and rights management.

Our estimations are based on open source being combined with an iterative agile development model; you use a compilation of fixed elements as a basis for shaping your own system. Studies have shown that such approach reduces development costs and, perhaps even more important, reduces project risks. And so, the open source-approach makes it easier for authorities to use agile development methods.

The 128 analysed initiatives are produced from 12 authorities representing app. 30 % of the total governmental IT-budget. The total amount of DKK 970m for the 128 projects represents between 39 % and 49 % of the annual expenditure for governmental development projects.

Our conservative model calculations show that the potential of a combined use of open source-approach and an agile development model may reduce costs of annual governmental IT-development by DKK 175 to 219m. Use of open source-components constitutes DKK 78 to 97m of that amount. These calculations are based on the part of the project portfolio where the potential is most obvious. The remainder holds a potential of more than DKK 200m (and more than DKK 100m in the open source-element alone). Add to this the reduced project risk and reduction of annual maintenance costs.


Zangenberg & Company and the NITA have chosen 30 authorities with significant IT-budgets.[2] These authorities have been asked to fill in a questionnaire including ongoing and future it-projects amounting to an economical volume of more than DKK 500.000.

This illustrates that the focus of the report is on those authorities most concerned with IT in order to cover as much of the government’s project portfolio as possible.

Zangenberg & Company have processed the data and on the basis of the project descriptions drawn a number of project categories, which will be described next. It is important to stress that the project categories were not predetermined and that the authorities have not been required to categorise their initiatives.

Database/registration solutions

These are projects with the purpose of establishing a system with a database and registration system as its core components. Included in this type of systems are typically registration- and reporting functions and various search functions. To the extent the system contains developed functionality for case management, such system is categorised as case management system and not a database/registration system.

ESDH (Electronic management of cases and documents)

Projects establishing electronic management of cases and documents based on a standard platform. The difference between ESDH systems and case management systems is the proportions of organisation-specific functions.


Reporting projects implement solutions with the primary purpose of providing external stakeholders (citizens and companies) with the opportunity to register data electronically through a web-interface. In such projects systems for receiving data will exist. An example of such project could be an authority’s development of new blank forms for virk.dk. Reporting solutions separate themselves from data/registration solutions as a database is not established and focus is on providing external stakeholders with an interface – often for an already existing system or an existing database.


These are projects establishing or upgrading physical infrastructure (locale network, servers, etc.) or system infrastructure in terms of architecture components such as mail.


These projects establish integration between companies’ own systems or between own systems and external systems.


Communication projects establish new communication solutions such as telephone systems or “unified communication”.

Management information

Systems with the primary purpose of collecting data from different systems and present relevant management information and/or provide an analytical environment (business intelligence).


This category comprises projects where existing systems are modernised e.g. in terms of moving functionality on to a new platform, updating basis components or changing/developing functionality within an existing system architecture.

Economy and payment

Economy and payment projects implement financial functionality e.g. payment modules.


Projects establishing intranet portals and internet portals where users can find content provided by different sources. Such projects will typically contain Web Content Management elements

Administrative procedures

Projects implementing interrelated systems that support case management, and manages documents and cases in its core and ensures that the documents and cases are managed by relevant personnel.


Considering the increased focus on financial management it is noteworthy that projects supplying management information systems only account for app. 1 % of the total financial volume. The reason for this may be that a part of management information functionality is supplied through other projects and not as separate projects.

It is also noticeable that solutions focusing on economy and payment does not account for more than DKK 12m. Based on previous reviews of project surveys, we expected to see more projects implementing actual supplementary solutions, but this type of solutions apparently does not attract much attention.

The term “special-system” is in this analysis used as a collective designation for systems not logically fitting into the categories described earlier. 33 projects fall into this category. We have reviewed the descriptions of these systems and are not able to find further groupings. App. a quarter of all the projects and 40 % of the total financial volume falls into this category. Presumably, within this category there is a potential for using open source components; only, we are not able to quantify this potential within the framework of this analysis.

Modernisation of existing systems normally consists in updating the basic programming or infrastructure and in functional extensions due to new or altered legislation. Modernisation comprises a substantial volume (estimated at more than DKK 250m annually) and it is worth noticing that a number of the modernisation measures has a volume that enables replacement of central components by shared (open source) components at a moderate additional price. It is comparable to “energy renovation” of houses; it is substantially cheaper to make such renovations in connection with a repairing compare to an energy renovation done as a separate project.

Conclusion and recommendation

Based on a data material comprising projects for nearly DKK 1bn we are able to conclude that projects containing and open source potential constitutes a total volume of between DKK 733m and DKK 916m annually. We have estimated the savings potential if components are developed and used as per the open source approach in combination with a more agile system development process. A conservative estimation points to a savings potential of between DKK 175m and DKK 219m annually. Concurrently such an approach will contribute to risk reduction related to this type of projects.

Zangenberg & Company recommend that an architectural work is initiated in cooperation with authorities that are about to introduce projects of the types identified in this report. The architectural work should lead to a definition of a number of open source components being developed as a part of the development projects.

An organisation for the future work with these open source components needs to be defined. It could be beneficial to refer to the cooperation of SBSYS and TING for inspiration, each having taken on the task differently but arrived at the same result.

A financial model ensuring economical additions for developing reusable components must also be defined.

Finally, a governance structure ensuring that the reusable components are being reused must be determined.


[1]Most Danish citizens occasionally receive payments from the public sector. These payments can be tax refunds, child subsidies, pensions, student loans, unemployment benefits, housing support or social welfare payments. All citizens and companies in Demark are required to have a NemKonto. A NemKonto is a normal bank account that your assign as your NemKonto.

[2] All government agencies have been ranked according to their IT-budgets collected in connection with earlier analysis. Some have been removed as they were not able to participate. The 30 largest have subsequently been selected.