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Merrill Lynch: Linux saves money

An executive at the investment bank says research shows that using Linux internally could save the company millions of dollars.

SANTA CLARA, Calif.--Merrill Lynch research shows that implementing Linux internally could save the company millions of dollars, an executive at the financial management company said.

During a presentation Friday at the Enterprise Linux Forum here, Mark Snodgrass, vice president of Merrill Lynch's in-house technology provider, the Global Technology & Services group, said that the company has found that rebuilding its information infrastructure using Linux can reduce administration costs dramatically.

In fact, Snodgrass found that although the software licensing costs of Windows was higher than Linux, the highest cost was in managing traditional Windows infrastructure.

"It's the people that cost the most," he said.

Merrill Lynch's new plans for its information infrastructure call for running much of its Linux applications not on their own physical machines but in virtual machines running on high-end servers. Such a scheme simplifies management and allows for rapid deployment of new Linux "servers" by activating a copy of a stored preconfigured image in as little as 2 minutes 14 seconds.

"We are not trying to promote Linux," Snodgrass said. "We are just trying to reduce the cost of ownership."

Using such virtual Linux servers to store files could cut costs dramatically, he said. Keeping their file systems on Windows servers would have cost the company $600,000 in hardware and five times that to pay for the personnel to manage the servers.

"We know that Linux is not for everything," he said. "But there are not many applications that require more than Linux can give us."

Snodgrass's group proposed replacing the company's Microsoft Exchange servers with a Linux-based product that would have all the same collaboration features and have a cost savings of 70 percent to 80 percent. However, for other reasons that Snodgrass wouldn't discuss, the company's executives decided to stick with Exchange but outsource the management of the groupware to save money.

Not everyone agrees that Linux saves money, however. Last year, market researcher IDC released a report, heralded by Microsoft, indicating that the five-year cost of ownership for four out of five applications would be lower if Microsoft software was used. The sole Linux winner was Web server software, according to the report.

Snodgrass said he wasn't familiar with the study, but his own data indicated that running virtual Linux servers saved a lot of money compared with running those same services under Windows.

"We've done our numbers, and we are a bank, so we know our numbers," he said.

Other companies apparently have crunched the numbers and come to the same conclusion.

Telecommunications provider Verizon Communications disclosed that it saved nearly $6 million in equipment costs by moving its programmers to Linux from proprietary-Unix and Windows workstations. In October 2001, Amazon.com revealed that it had replaced Web application servers running on a proprietary-Unix system with Linux, saving millions of dollars.

Snodgrass said the next target for using Linux could be on the desktop. The company plans to do a pilot project that will allow thin clients--computers with minimal hardware requirements--to be used as workstations. The applications would actually run on Linux and Windows terminal servers. To a customer, the result would be the same, but to the company's administrators, all of the client's data would be centrally stored and thus, much easier to maintain.

The irony that companies may be moving toward an infrastructure that resembles the mainframe-and-terminal setups of several decades ago didn't escape Snodgrass.

"It's interesting when Solaris and Windows are the 'legacy,' and mainframes are the new big thing," he said.