Feature: Counting on Linux

At financial services giant Merrill Lynch & Co. Inc., CTO John McKinley is blazing a trail to boost productivity and enhance ROI with his strategy. And that trail has led him to pursue a company-wide deployment of Linux open-source software.

McKinley says Linux is ready for prime time and set to take on increasing responsibility in the datacenter. "The speed of the evolution of the Linux story has surprised even me," he says.

CTOs of major enterprises such as Merrill Lynch, which claimed US$21.8 billion in revenue in 2001, are adopting Linux in increasing numbers and scale. These chief technologists, spurred by the new reality of leaner, meaner IT budgets, cite savings in hardware and software costs as well as benefits of the operating system's stability and scalability. A 2002 Forrester Research Inc. survey found that of 286 IT decision-makers, 28 percent plan to use Linux for enterprise application servers in 2003 and 31 percent plan to use Linux for Web servers.

Chief technologists are reporting favorable results, experts say. They say doubts about Linux are gradually disappearing as the OS gains acceptance and support from big-name vendors such as IBM Corp. and Hewlett-Packard Co.

"People are enthusiastic before they implement Linux and they are even more so after deploying Linux, which reverses the usual trend," says Dan Kuznetsky, program manager for the operating environments group at Framingham, Mass.-based research company IDC. "[IT leaders] find it not only will it do what it promises, but will do a lot more."

However, there is a cloud in the OS's silver lining. Linux does not yet lend itself to an off-the-shelf implementation, and enterprises still must test it and integrate it into their systems, Kuznetsky says. But several companies, including Red Hat and IBM, are eager to assist with Linux implementations.

Additionally, many CTOs have the expertise in-house to do their own Linux integration. J. E. Henry, CIO of Regal Entertainment Group, the 520-theater chain based in Knoxville, Tenn., says that in 2002 Regal deployed 3,000 Linux-based IBM point-of-sale terminals with minimal help from IBM. "We have very talented people and we do a lot of internal development," Henry says. "There's some risk-taking involved [in implementing Linux] but the fact is that Linux has been so stable it takes a lot of the risk out of it."

The growth of Linux is especially strong in the enterprise server market, where IT executives are finding more and more uses for the OS. "As Linux becomes a mainstream choice in more and more markets, more application and development tool vendors will say, 'We need to have a Linux solution,' " Kuznetsky says. "Linux has taken on the position of the No. 2 server option" behind Microsoft.

Money talks

CTOs are using Linux to replace both back-office, mainframe systems and to take on lightweight duties such as running multiple application servers.

At Merrill Lynch, McKinley is trying to cut costs by using Linux to replace mainframe enterprise servers using IBM servers running Linux, and by using Linux with Intel-based, commodity PCs and appliances. "We are using Linux on Intel and Linux on IBM z-Series [mainframe]," he says. "We are riding both horses right now.

McKinley envisions Linux adoption spreading to embrace a wider variety of applications as companies such as Oracle and SAP move to offer support for the OS. There is nothing to stop Merrill Lynch from deploying such applications as well, he says. "We are using Linux for everything from trading applications to infrastructure servers," McKinley says. "Linux has proved itself to be a robust and stable solution with a compelling cost of ownership."

McKinley couldn't provide dollar figures on Merrill Lynch's savings from Linux, but others are ready to talk in those terms. Alex Zoghlin says Chicago-based Orbitz saved millions of dollars in 2002 using Linux to replace expensive hardware, including Sun Microsystems' Java application servers using Sun's Solaris software.

"We replaced our entire midtier architecture," Zoghlin says. "We replaced $7 million worth of hardware with about $80,000 of hardware. So we saved about $6 million by moving to Linux."

Zoghlin had previously deployed Linux in about 400 Web servers that provide the cutting-edge flight information for which Orbitz is noted. The prohibitive cost of starting a modern flight information system from scratch forced him to look at Linux instead of proprietary mainframes, he says.

"We can route you through every city in the country, with literally billions of possibilities," Zoghlin says. "Linux gives us the opportunity to rethink options in fare search [engines].

"To bring computing costs down and lower the cost-per-minute, we turned to Linux machines," Zoghlin says. "We have hundreds and hundreds of Linux machines running Intel boxes. Now, they do everything. Some boxes run application servers, Web servers. This year we proved we are a real player in the market and drove costs down."

No license needed

Whereas some CTOs seek to escape the costs of expensive mainframe severs, others use Linux to avoid paying on software licenses in multiple machines. At Regal Entertainment, which claimed $21.1 billion in revenue in 2001, Henry avoided the cost of Microsoft licenses in thousands of point-of-sale terminals in the chain's theaters. For hardware, he selected IBM SUREPOS500 terminals that supported Linux.

"We are conducting a major rollout in connection with concession stands in 520 theaters," Henry explains. "We started 12 months ago with 3,000 workstations running Linux and will roll out another 1,000."

IDC's Kuznetsky says some companies will have to calculate the cost of hiring IT staff familiar with Linux or its forebear, Unix. "If you are a Windows shop, the learning curve can be steep ... because there is a different philosophical base for Linux as compared to Windows," he says. "In a Windows environment, everything is done for you, while the presumption behind Linux is that the developer controls everything."

In a Microsoft-centric environment, Kuznetsky says, "the operating system attempts to do a lot to ease the burden of the developers. But the developers have to go out of their way to get outside the software to do special things. So we find Windows-based shops often have cultural shock when they run into Linux. Although if they already have Unix, it's like an old friend."

But many companies are eager to take on the challenge of migrating to Linux. Henry and his 42-person IT staff selected Linux as the operating system because they decided it was stable and scalable, and it lowered the cost of ownership in the short term as well as the long term.

"We decided we were going to implement Linux before we choose the hardware," says Regal's chief technologist. "We did code development internally. We were able to identify, spec it, and select a workstation in 90 days.

"You need to look at a lot of things" when evaluating Linux, Henry says. "In addition to cost, you look at its stability and any support issues over the long term, such as who else is going to be using it in the future." An IBM engineer was available to help with any initial integration issues.

The savings were clear-cut. "We saved [on having] to pay a Windows license at every point of sale," he says, "and we will have 4,000 [terminals]."

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