By Alan Radding
It doesn't require rocket science to figure out what's driving corporate interest in Linux. "Cost is the main factor. Saving money is important when you are faced with flat IT budgets. Cost alone is enough to get the CIO and CFO interested," says Adam Jollans, worldwide Linux strategy manager, IBM Software Group. Other issues driving corporate interest in Linux include greater reliability and security, especially compared with Windows, and greater choice, especially in terms of hardware platforms. "Enterprises like to keep their options open, and Linux gives them choices both now and in the future," Jollans continues.
But are cost savings alone enough to make Linux strategic? At this point, it is unlikely that you will find the CEO, the COO, and the CFO sitting around discussing Linux along with interest rates, the price of oil, and potential mergers. "Linux is not on the strategic agenda if you are talking at the highest management levels," says David Shpilberg, head of the global IT practice at Bain & Co. However, he notes, "Linux does play an important role in the world of information systems strategy."
Boscov's Department Stores, a 40-store Pennsylvania chain, made a strategic IT decision and now runs Linux on its mainframe computer. The company was shocked following its Y2K remediation at how much its systems were costing the company. It upgraded its mainframe to run Linux alongside its proprietary operating system, and consolidated a slew of Windows servers. In so doing, "we achieved savings in the low seven figures — and yes, that is significant," says Harry Roberts, senior vice president. In the cutthroat retail market, where Boscov's must compete with giants such as Wal-Mart, these kinds of savings loom large. "Open source is one of the things we look to for competitive computing at as low a cost as possible," Roberts continues. He expects even greater savings as the company expands its Linux efforts.
The emergence of Linux as a strategic enterprise IT option represents a new and substantial consulting opportunity, an increasingly popular service alongside offerings based on Microsoft or various vendor-specific Unix technologies. IBM, for example, reports that 10,000 customers have opted for Linux, and the company currently has more than 200 Linux projects under way with governments around the world. "Linux is a tidal wave. Unstoppable. Bigger than anyone imagined," declared Jim Stallings, general manager, IBM Strategic Growth Initiatives, at an analyst briefing in late July.
BearingPoint has taken its interest in Linux even further. The company sees Linux as a foundation for utility computing, a way to rationalize an organization's computing infrastructure, explains Manuel Barbero, managing director and chief of technologies for the firm's financial services practice.
Specifically, BearingPoint has become heavily involved in projects that migrate a company's Unix systems' infrastructure to Linux, a process that lends itself to offshore coding. To that end, BearingPoint invested heavily in a Linux development center in China. "Ordinarily, re-platforming technology would not be a business for us due to its low margin. But this is an exception because we can do offshore development," Barbero explains. The company performs a similar service in China for companies that want to move to the Microsoft platform. However, 75 percent of this type of work, he reports, is targeted at Linux.
Linux is, essentially, a version of Unix designed initially to run on the Intel processor architecture. As such, Linux is Unix running on a PC, although it should not be confused with versions of Unix — even other open source versions of Unix — that run on Intel-based PCs. Linux, however, has transcended its Intel PC roots. The appeal of Linux is that it is available on a wide range of hardware platforms, including IBM mainframes. Combined with Java and J2EE, Linux gives companies a wide range of platform choices, allowing them to shop the market for the best deals on hardware and software.
Slowing corporate acceptance of Linux initially was its open source nature. Open source means that the source code for Linux is available for free. It can be downloaded from the Internet at no charge. In addition, users are welcome to modify the source code, although the open source license does require users to give any modifications they make to the open source community, which decides whether to include the changes in the public version. (Of course, you are free to use your own changes regardless of whether they are adopted by the community at large.) As an open source operating system, Linux stands in stark contrast to proprietary operating systems such as Windows, for which Microsoft zealously guards the source code and controls all changes to the system, or Sun's Solaris, a proprietary version of Unix.
At first, the open source nature of Linux confused large companies, which are inherently capitalistic. Executives discounted the value of Linux because it was free. Suspicious of the motives of the members of the Linux open source community, they often distrusted the operating system. In addition, they were uncomfortable because it appeared that no one was in charge. There was no one to take responsibility if a problem arose, just this amorphous open source community.
The confusion was briefly compounded when software maker SCO Group charged that much of the Linux code was its proprietary property. With SCO's challenge seeming to fizzle over time and the large vendors offering to indemnify their Linux customers in the unlikely event the SCO challenge should even partly succeed, this classic FUD (fear, uncertainty, and doubt) obstacle has been neutralized.
Today, corporate management better understands the open source approach. Companies such as Red Hat, a leading distributor of Linux, make money from packaging Linux and adding services for which they charge. Large, established companies such as IBM, HP, and Novell have made major commitments to Linux, ensuring a worldwide support network. Oracle, SAP, and most of the leading software vendors support Linux, further building confidence in the operating system. IBM supports Linux in its software group, through IBM Global Services, and with its Linux Technology Center, consisting of 500 engineers and programmers who regularly contribute code to the Linux community.
"The big gorillas jumped in with Linux investments, which made Linux very acceptable," says Shpilberg. Adds Barbero: "By now, most managers understand open source and are open to it." Even Accenture, which has closely aligned itself with Microsoft, includes its open source and Linux skills in its skills portfolio, and Deloitte, reportedly, uses Linux for many of its internal systems.
More importantly, notes Shpilberg, "open source helps drive interoperability," which further increases the appeal of Linux. This is especially true in large organizations, which have been stymied by proprietary systems that make integration and interoperability difficult and costly. "The greater degree to which a technology supports openness, the better it is for IT and for business," he concludes. Linux wins high marks in this regard.
If Linux is not yet strategic at the corporate level, it has certainly established itself as a critical IT component. "IT strategy encompasses a wide spectrum of Unix. We've seen Linux gradually take over the low end. How far it goes into the high end is hard to predict," says Shpilberg.
Despite its gains, no one believes that Linux will eliminate any of the other major operating systems. Products from Microsoft, a vehement opponent of open source systems; the leading proprietary versions of Unix; and the various open source Unix variants will continue to coexist within large companies. Windows still dominates the corporate desktop, and although Linux has begun making small inroads there, few expect it to grow on the desktop beyond a small niche anytime soon. Instead, companies will strive for increased integration and interoperability as all the operating systems evolve toward key standards.
Most large consulting firms are avoiding having to choose sides in the operating system wars. "We're neutral. We are not aligned with any particular vendor or with the open source movement," says Barbero.
Even IBM Global Services, despite IBM's multibillion-dollar investment in Linux, maintains a neutral stance: "We don't force one or the other. We're driven by the customer's choice. We may make a recommendation based on a given workload, but it's not a religious position," says Peter Nielsen, Linux strategy executive, IBM Global Services.
Smaller consulting firms, except for specialized boutiques, seem to be mirroring the positions of the consulting giants, especially with regard to Linux and Windows. "We go both ways," says Steve Quinlan, principal consultant, Coherent Solutions Inc., Minneapolis. However, "Linux projects tend to be more profitable," he adds. The firm can get a better rate for Linux work, and competition for Windows projects is greater.
Linux, as an operating system, is unlikely to ever become strategic in the business sense, at least not the way CRM, RFID, or mobile computing have the potential to create sustainable strategic advantage. However, Linux has already proven that it can increase an organization's IT options and lower IT costs, which does impact the bottom line. For consulting firms, Linux represents another revenue opportunity. The open source operating system may be free, but the services certainly are not. To the contrary, services firms are finding Linux quite lucrative.
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