Financial companies lead Linux charge
- 22 July, 2005 15:31
Open-source zealots may continue to play a part in instigating the spread of Linux across the European continent, nearly 14 years after Linus Torvalds hatched the operating system in Finland. But private corporations and public-sector users in Europe typically cite pragmatic reasons for taking up the open-source operating system. They point to price and performance benefits. They want freedom to swap out hardware. They find the operating system reliable. They like its flexibility.
"It was not that we just wanted to do open-source. We had to find a way to protect our investment in network computing," says Matthias Strelow, a technical project manager at LVM Insurance in Munster, Germany. "I'm not sure it would have been possible with any other operating system."
When IBM canceled further development of the network stations it owned, the insurance company needed an operating system to run its Unix-based applications and Sun Microsystems Inc.'s new Java virtual machine. So LVM customized Linux to meet its needs. Finally tiring of maintaining the software, LVM is now planning to move 7,700 Linux clients to Red Hat Inc.'s supported desktop distribution, Strelow says.
Servers Lead the Way
On the server side, perhaps no single industry has tested Linux's enterprise mettle more than the financial services sector. Companies were facing mounting pressure to cut costs at the turn of the millennium. The Internet bubble was about to burst. Prices were fluctuating wildly. Order volume and data traffic were spiking in the wake of the electronic trading boom. Revenue was not.
The number of stocks being traded was the same, and the rising cost of processing orders was becoming a big problem. When the market slump hit in 2001, that only exacerbated the trouble. Financial institutions had to think out of the box -- fast -- and Linux became an obvious alternative to consider. Several of the largest firms started to dump their proprietary Unix systems and shift to cheaper x86 hardware running Linux.
"Linux in and of itself as an operating system was not the driver," says an IT executive at a major global financial institution who didn't want to disclose his name and company. "The fact is, Linux enabled us to use a commodity platform. Trading in very expensive [Sun] Sparc-based systems for much lower-priced commodity Intel systems was the biggest win."
He says the "cataclysmic event" that paved the way for his firm to make the switch was the release of a more stable 2.4 upgrade to the Linux kernel in late 2000. The Linux/Intel server combination would ultimately enable the firm to save "tens of millions of dollars" in IT costs across thousands of servers.
"There's nothing we wouldn't run on it," the IT executive says.
Cost savings were making the decision a no-brainer. When the Amsterdam office of AtosEuronext looked to replace its on-floor trading operations with an electronic system about six years ago, calculations showed it would need 24 additional CPUs, at US$1 million per processor, for its quoting system if it stuck with the Tandem NonStops it used for the main trading system, says Willem Gorter, manager of the project.
So Atos first decided to try Hewlett-Packard Tru64 Unix servers for its quoting systems and IBM RS6000s running AIX for the data-dissemination servers. But it never finished the migration after discovering that the DDS application ran 10 times cheaper and four times faster on HP dual-processor Xeon boxes with Red Hat Linux. The quote servers doubled their performance on the Intel-based servers.
Plus, the DDS application port took just 15 days, and the quoting system took about 30 days. The total project cost checked in at $17 million, including 80 servers and labor, says Gorter.
"Most of the effort with porting it to Linux was convincing everyone that it would work," he says. The staff later marveled when the system ran for a year and half without interruption.
Strength in Numbers
Major financial institutions became one of the most powerful lobbies for Linux, pooling their clout to get their software vendors to support the operating system. They collectively urged their many software vendors to port applications to Linux.
Reuters Group PLC was one of the first to step up to the plate, porting its Reuters Market Data System to Linux. Donovan Ransome, director of channel marketing for the RMDS, says more than half of the company's 20 biggest customers converted to Linux during the past three years.
Financial institutions became the No. 1 source of revenue for Red Hat in Europe, where the bulk of its sales come from the U.K., France and Germany, according to Werner Knoblich, Red Hat's director of Europe, the Middle East and Africa. Although Linux is technically free, few companies are willing to run it without a support and maintenance contract.
In Norway, every borough, department and school had been maintaining its own IT infrastructure, and the city of Bergen was anxious to consolidate systems into a central computing center. In 2001, Bergen's city council voted that open-source should be considered for all future software acquisitions.
The first big server project involved moving 100 schools from more than 100 aging Windows NT 4 boxes to fewer than 20 centrally managed IBM blade servers for Web, file-and-print, e-mail and directory services. The IT staff designed a test to pit Windows against Novell Inc.'s SUSE Linux. Linux won because the hardware performed better with it, and the cost was 30 percent less.
Next up is the migration of 75 Oracle databases that run on 30 servers to about 10 Linux servers. That long-term project will keep Bergen in step with corporate trends, as Linux gains traction in the data center from its initial sweet spot at the edge of the network.
"We started these projects out of necessity, because we had outdated systems or systems that were too expensive to run," says Ole-Bjorn Tuftedal, the city of Bergen's chief technology officer. "We ended up finding that Linux was in every way a viable alternative as a server operating system in an enterprise environment."
On the desktop, Linux support vendors continue to struggle for a high-profile success story that might drive adoption. Red Hat CEO Matthew Szulik says he's getting more inquiries from corporate executives about desktop Linux. But on the sales front, the vendor is careful to target companies with limited numbers of Windows-based applications, Knoblich notes. He says one of two serious pilots with large German companies could produce a migration of 30,000 desktops.
Philip Dawson, a London-based analyst at Gartner, says many projects have gone through the test phase only to encounter challenges with application support and integration when it comes time for the rollout.
"It's been the 'year of the Linux desktop' since 1998. It hasn't happened," says Chris Ingle, a London-based analyst at IDC. "You don't find CIOs saying, 'My biggest priority is changing all the desktops.' "
Europe may outpace the U.S. with Linux desktop deployments, but even there, Linux captures only a small piece of the Windows-dominated market. And when it does, it's often thin-client or limited-function deployments, as opposed to the thick-client, knowledge-worker setups that Windows commands.
Novell never positions its desktop operating system as a replacement for Windows, according to Brian Green, director of solutions management for Europe, the Middle East and Africa. Green says Novell has been able to stop Microsoft Corp. from winning data center business, particularly in Germany, where its SUSE Linux AG unit remains strong in its home territory. But on the desktop, Novell focuses on clients where Linux might be a good fit, such as call centers or retail stores.
There have been some high-profile desktop Linux wins in the public sector. The city of Munich, for instance, made news with its selection of Linux. And the German state of Lower Saxony has 11,000 limited-function Linux desktops for its police force and plans to migrate 12,000 Solaris workstations to Linux for its tax administration department, according to Michael Breest, head of client/server systems at the Lower Saxony IT center. But that will still leave Lower Saxony with 31,000 Windows desktops.
Despite government statements on the national, regional and local level in Europe, Linux penetration remains strongest on servers in the public sector. Dawson says the government directives tend to affect the evaluation of Linux more than adoption. "And it puts [users] into a strong negotiating position with Microsoft," he adds.
The European Commission has shown mixed signals with respect to Linux, according to Graham Taylor, director of U.K.-based OpenForum Europe, a not-for-profit organization that is funded by vendors such as IBM, HP, Novell and Sun. Taylor says he has been encouraged to see the commission promote choice and indicate support for open-source software. Yet the EC remains a heavy user of Microsoft software, he adds.
In general, Taylor says, it will be important for Linux to gain a foothold on the desktop, "where people see it and touch it in an organization."
"In the infrastructure," he says, "it's hidden away. Ninety percent of the users won't even see it."
Practical considerations often make it tough for corporations to consider enterprisewide Linux deployments. For instance, Banca Popolare di Milano is rolling out 4,500 SUSE Linux desktops with a Mozilla Web browser, a Web client for Lotus Notes, Sun's StarOffice suite and a Java-based custom suite of banking applications to its 500 branch offices.
CIO Clive Whincup says the bank wanted to avoid the headache of maintaining a separate collection of Windows servers for the branches, because it was already using the Lightweight Directory Access Protocol on Linux servers for its security infrastructure. The Milan-based bank runs 70 SUSE Linux images on its three IBM zSeries mainframes. But it has no plans to replace its 3,000 Windows desktops at its home office. The bank's users are accustomed to Windows-based applications.
"There is too much to migrate," says Whincup. "And there's not really an efficient business case to do it."