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Open source is the new innovation platform

Open source is what big banks are using to set themselves apart. It's not a commodifying tool--it's an innovation tool.

Matt Asay

According to a managing director at the Bank of New York Mellon, open source is not about commodification. That's the pedestrian role served by proprietary software. Instead, open-source software is about innovation and competitive differentiation.

I was fortunate to speak at theLinux on Wall Street conference in New York today, and came away having learned much from my co-presenters, Stuart Cohen (CEO, Collaborative Software Initiative), Stan Rose (Managing Director, Technology Risk Management, Bank of New York Mellon), and Eben Moglen (Director and Co-Founder, Software Freedom Law Center). For the record, I'm fairly certain that Eben Moglen is the smartest person to have ever walked this earth. I could have listened to him all day....

Stan Rose of the Bank of New York Mellon, also impressed me. He gave some insight into how his company views open source, and I got the sense that he's not alone in this. In a nutshell, financial services companies like Bank of New York Mellon increasingly view open source as the foundation of choice for their innovation. For non-differentiating software (like a general ledger system), they use proprietary software, but would likely prefer to use an open-source alternative where these exist.

Get that? Proprietary software is essentially for IT that doesn't provide a competitive advantage. Open source is what you use in applications that really matter for setting you apart from the competition.

IT, in sum, does matter, but some IT (read: open source) matters more than others. We've come a long way in such a short time in how we look at open source.