By Forrester Research
Special to CNET News.com
August 4, 2003, 11:30AM PT
By Ted Schadler, Principal Analyst
Linux is the dance partner of choice for a growing number of financial institutions. Why? Because Linux delivers "good enough" technology at a fabulous price. Wallflower firms should screw up their courage, get on the dance floor--and enjoy the benefits of Unix reliability at Intel prices.
Just about every U.S. brokerage house has deployed Linux, the open-source alternative to Unix. Now, many banks and insurers are considering following suit. So at the recent 2003 Forrester Finance Forum, we talked about Linux with Sun Microsystems' Scott McNealy, whose core business--servers running the Unix operating system--is threatened by Linux. McNealy's colorful warnings crystallize the arguments around the operating system:
"Oh, I just downloaded an open-source piston ring!" McNealy likes to parody developers who tinker with component pieces of Linux: "'I saved so much money on that piston ring!' they say. But now, what are you going to do with it?" This is a reasonable concern--and an effective scare tactic that keeps executives committed to rock-solid Solaris and Sun hardware. But with commercial support for Linux available from giants like Dell, Hewlett-Packard, IBM, Oracle and SAP--and from specialists like SuSE Linux, Sistina and LinuxCare--the alleged vulnerability is really a red herring.
"I can price at or below any creator in Linux." Behind this bravado is the great challenge to Sun. Because Linux runs Unix workloads at Intel prices, it gives companies a great migration path to low-cost Intel servers running a free operating system. The combination of Linux and Intel will reward even latecomers to Linux by putting extreme pressure on midrange Unix server pricing. When Sun matches prices, buyers win: One firm cut its Sun server upgrade cost by more than 40 percent.
"On the desktop, Linux is the alternative to Microsoft." In contrast to its cautions on high-end servers, Sun would love to see Linux on the desktop and has invested in technologies like the GNOME desktop, OpenOffice.org productivity tools and Mozilla browser to push it along. But as attractive as a $200 PC sounds, Forrester believes that Microsoft's desktop innovation--particularly products like Office 11 and the tablet PC--together with universal support among independent software vendors will keep Windows the desktop of choice for most companies and employees.
Good enough for most applications
Morgan Stanley Institutional Securities runs 1,000 Linux-on-Intel servers. Red Hat customer Morgan Stanley uses Linux, running Web, application and Reuters workloads to save money and bring consistency to its global infrastructure.
Citigroup runs Linux on IBM mainframes to simplify the data center. Why run 1,000 servers when you can run Linux on one IBM zSeries mainframe? Citigroup is taking advantage of IBM's $1 billion investment in Linux technology to consolidate Unix servers onto a single mainframe box running Linux.
E*Trade is running Linux instead of Sun. E*Trade began its Linux migration in 2000 and claims multimillion-dollar savings in capital expenses and operating costs using Linux instead of Solaris.
How to reap the rewards
Treat Linux as commercial software. Just as with any business-critical technology, companies should find commercial support for their Linux installations from a vendor like Dell, HP or IBM. These giants will also help mitigate any potential intellectual property issues (highlighted in the recent SCO Group lawsuit against IBM).
Adopt cookie-cutter configurations. Servers will never differentiate your business. Therefore, the goal should be simplicity, reliability and low costs. Use the Linux migration to simplify IT with three standard server configurations that handle the bulk of your applications.
Automate the data center. Every server configuration should include provisioning and management tools so that IT staffers can handle 10 times as many servers as they do today. By including these tools in their Linux and Windows Server installations, companies will take a necessary step on the path to the flexible, commodity data center architecture that Forrester calls organic IT.
© 2003, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.