Open-source for business

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One of the more unlikely developments in the software industry during the last few years has been the rapid uptake of Linux in the financial services sector.

Most of the Linux deployments in this sector have been for non-trivial data-intensive applications on blade servers, and are at the core of investment bank operations.

We shouldn't be surprised. Several leading players, most notably Intel, HP, IBM and Oracle, have been pushing Linux as a cheaper, more flexible alternative to Unix. The ISVs have followed suit. The financial services sector depends on compute power, and Linux on blade servers is both cheaper and more scalable than the alternatives.

The main driver for Linux adoption has been price/performance. Lehman Brothers moved to Linux after losing a thousand servers in the attack on the World Trade Centre, claiming "a 50 per cent improvement in cost and about a 20 per cent improvement in performance", and Morgan Stanley claimed to have achieved a 13-fold increase in performance after switching its equity options calculator from Solaris to Linux in November 2001.

In this sector Linux has become the first choice for numerically intense computing for "equities, derivatives, risk analysis, and foreign exchange positioning" and, according to Ian Dent, HP's Linux business manager, many of the finance houses "have now accelerated adoption far beyond the initial application point for which Linux was adopted". Italian financial institution Banca Popolare di Milano, for instance, has replaced Unix and Windows with consolidated Red Hat Linux servers and thin client desktops throughout the organisation, from the data centre to the branch.

Extending the reach of open-source

The growth in the Linux market has extended to other sectors. In financial institutions, the public sector, telcos, high performance computing and the retail market, Linux has become the dominant choice for certain classes of application, and has transformed the way in which many companies approach software development, allowing individuals and organisations with a diversity of interests and skills to come together to solve sets of problems, facilitated by the channels of communication that have been opened up by the Internet.

Dresdner Kleinwort Wasserstein, for instance, has released the code for its Open Adaptor Java-based software development toolkit, and other investment banks and individuals are now participating in the project's development, an unusual example of collaboration among financial institutions.

To a large degree the success of Linux has been led by the computer hardware manufacturers. Organisations such as SGI, Intel, HP, Novell, Sun and IBM have not only contributed software under the GNU General Public License (GPL) and its variants, but have also actively participated in free software projects for their own benefit. Sun Microsystems, for example, has just released much of its Java source code under the GPL, and for several years has donated code and personnel to the development of OpenOffice, Firefox and Gnome, which have been deployed on its Linux and Solaris offerings.

In the wake of the Java announcement, Jonathan Schwartz, Sun's chief executive, has also hinted that Solaris might be a candidate for future release under the GPL, which, if true, may provide an interesting competitive spur for the future development of Linux.

Supporting open-source systems

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