A definition of Open source:

“When the source code of a computer program is made available free of charge to the general public, it's known as open source. The basis of open source software is to produce more useful and bug-free products for everyone to use. The concept relies on peer review to find and eliminate bugs in the program code, a process which commercially developed and packaged programs do not utilize.”
Source - Intel Definition Glossary

The open source model works on the idea of total transparency of software. This means that when software is developed, all the original source code is available to public review. As this code is freely available to everyone it can be changed, developed or deployed as the user sees fit.

The end result of this is that as well as making the software free of charge, it also means that programs are rapidly developed and modified to the end users requirements. It also means that bugs are identified and fixed faster than traditional commercial software. This usually makes the software
more secure and reliable than paid for software.

In the business world this means that the only money you will have to pay is for any training and expertise required in the deployment and running of the system. Although this will not be inherently cheaper than any other technical support resource, because all the software is open source if you are unhappy with an existing supplier changing over to a new supplier will be easier to achieve.

You need look no further than the Internet itself as an example of how this works. Based on Open Source standards and software it has enabled different systems to interoperate together in a way a closed network would never have been able to do. As the software is publicly accessible it means companies and individuals are able to freely choose what email software, web browser, ISP or operating system they choose to connect through.

The Open Source Initiative (OSI) have defined a set of standards for approving that software is open source. It presents the following case for open source in the commercial sphere.

“The open-source model has a lot to offer the business world. It's a way to build open standards as actual software, rather than paper documents. It's a way that many companies and individuals can collaborate on a product that none of them could achieve alone. It's the rapid bug-fixes and the changes that the user asks for, done to the user's own schedule.
The foundation of the business case for open-source is high reliability. Open-source software is peer-reviewed software; it is more reliable than closed, proprietary software. Mature open-source code is as bulletproof as software ever gets.”
Source - OSI “Open Source Case for Business”

A good case study advocating open source software is presented at the CNET Site detailing how guitar string manufacturers Ernie Ball moved to open source software