Westpac tightlipped on secret penguin business

Only a week after Microsoft's CEO Steve Ballmer hit Australian shores to appease twitchy customers, IBM has jetted in its chief Linux salesman John Vitkus in a concerted effort to open the hearts, minds and wallets of Australian banks and financial institutions to penguin-flavoured solutions.

Officially, Vitkus' presence is part of a greater Asia-Pacific region Linux roadshow, with Australia a routine stop; however, IBM confirmed its "worldwide program director Linux sales" had held talks lasting six hours with Australia's oldest bank last week. Both Westpac and IBM refused to disclose if any agreements "in principal or otherwise", had been reached, with Westpac citing a 'media blackout' due to an imminent financial results announcement.

Vitkus is also understood to have held discussions with local Deutsche Bank IT representatives.

IBM's Linux push into the Australian financial sector by IBM comes against the backdrop of some claimed success in selling Linux into US and European banks. Having seen their bottom lines decimated by the twin ravages of recession and collapsing stock markets, such institutions are again looking to the IT departments to cut fat -- with hefty software licences a prime candidate.

Vitkus' view of Australian banking IT suggests that there are bumpy times ahead in the region: "The economy hasn't been impacted in Australia as it has been in Tokyo, New York or London. Financial institutions in those countries are reducing their IT costs at a much faster pace."

So far, IBM has one very public Linux case study in the form of ETrade, a US based online equities brokerage, which boasts savings of up to 66 per cent on previous spend or "over $US440 million to down to under $220 milllion [based on] server consolidation, software licensing consolidation as well as the leveraging of open source tooling like Apache", according to Vitkus.

Eurobanker Dresdner Kleinwort Wasserstein is also being offered as converts to leaner and meaner IBM branded penguin power.

When pushed for more examples, Vitkus offers only anonymous clients. One is a US-based hedge fund which "has taken its hedge fund application that used to run on Sun servers [onto Linux]. It used to cost [the company] $US750,000, and it has taken it down to under $US300,000 with a fivefold increase on performance.

"I can't offer any names, or individuals, or who they invest for. Sorry, I have to respect my customers," Vitkus told Computerworld, adding that most banks would never publicly reveal any intention to switch in order to safeguard "competitive advantage".

Penguin exposure 'embarrassing'

Those with less to lose are more candid about Linux migration at the big end of town. The view from applications and systems management software vendor BMC Software, which would conceivably gain a slice of business from any substantial migration to Linux, is that real deployments are indeed happening on the quiet. Bill Dunn, BMC's vice president for South Asia Pacific, feels that for larger users embarrassment is a big factor: "What we are hearing is that [clients] want someone else to go first, but we are seeing a significant deployment that is a lot more than tyre-kicking. Half a dozen very large sites are using Linux in more than a 'poke it and see' fashion," he said.

Calvin Guidry, BMC's worldwide vice president and general manager for enterprise systems management was a little more enthusiastic, although equally tight lipped on users' identities "[Linux] allows for new credibility and value in systems management. [Users] want Linux to be hardware agnostic. We are going for it -- it looks like a good thing," he said.

Perhaps the competitive advantages of secret penguin business really are worth keeping to oneself at the big end of town. Or perhaps banks and funds are merely petrified of how shareholders will react to any news of IT adventurism, no matter how good are the advantages, savings or ROI after the unforgettable comments earlier in the year by Commonwealth Bank CEO David Murray who attacked the role of IT.

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