Your Open Source Plan

Your Open Source Plan

Once a toy for geeks, open source is slowly but surely filtering into the enterprise and transforming the way software is designed, sold and supported. And any CIO without an open-source strategy in 2003 will be paying too much for IT in 2004.

Reader ROI

  • How the commodification of software is driving the open-source movement
  • Which areas of enterprise IT are primed for open-source transition
  • Why the major vendors are climbing on the open-source bandwagon

Until recently, Tom Jeffery didn't give a damn about open-source software.

What concerned him was finding 10,000 new cash registers (essentially PCs with cash drawers) for 1300 KB Toys stores and a new software system to run them because his old vendor was going to stop supporting the system he had.

But then a funny thing happened. “We sent out final [RFPs] to six vendors and narrowed it down to three,” he recalls. “The only thing they had in common was they were all written in Java. And ran on Linux.”

To Jeffery, vice president of IT for the Massachusetts-based toy retailer, it didn’t matter what OS the new system used. What mattered was having a simple user interface, the ability to integrate with multiple systems inside KB Toys and the flexibility to modify the systems without relying on a vendor to do the job. The only registers that had all of that used GNU/Linux, the operating system built piecemeal over the Internet by a community of volunteer developers.

Jeffery was vaguely aware of the roots of this community, how it began in 1984 when a cantankerous software programmer named Richard Stallman wrote some brilliant software designed as an alternative to the Unix operating system. It was software that anyone could use and change and distribute — as long as he promised to share any changes he made with everyone else. In 1991, a Finnish college student named Linus Torvalds added a complex kernel to Stallman’s and others’ programs to instruct them to act as the unified operating system that most have come to associate with Torvalds’ pet name for the project, Linux.

Jeffery didn’t start caring about any of this until 2001, when he was forced to.

He didn’t care because for years open source has been dismissed as pie-in-the-sky, a toy for geeks. But open source is undergoing a business revolution. Today, major enterprises are running mission-critical functions on open source, big vendors have lined up to support it, and reliable applications have emerged.

And CIOs who have implemented it report huge total-cost-of-ownership (TCO) reductions.

It’s now clear that within five years, open source will transform how software is developed, sold and supported.

When CIOs need help with their systems and software, they don’t have to depend on vendors with their own agendas because when an open-source app doesn’t work, administrators can look at the source code, figure out why and write a fix themselves. If they’re having trouble, help is just a newsgroup away.

So far, the community that has grown up around popular open-source applications such as Linux have proven to be highly disciplined, ethical and extremely competitive, with pecking orders that exclude — sometimes brutally and profanely — all but the best contributors.

“Heroism in these communities means proposing an interesting improvement and getting everyone to acknowledge it,” says John Sarsgard, vice president of Linux sales programs at IBM in the US. “That’s the way these guys get their strokes — everyone recognises that their way of doing it is the best way.” When bugs are revealed in Linux or Apache, for example, the community begins posting fixes on the Internet within hours.

Their work is good, and it’s free.

Free is good. CIOs who don’t come to terms with this revolution in 2003 will be paying too much for IT in 2004.

Software as a Commodity: The Apache Story

The reason they will be paying too much is that in effect they will be buying the vendor’s research and sales and marketing expenses when they don’t have to. They will be paying for support that others will be getting gratis. They will be paying for hardware that’s overpriced because it uses an arcane proprietary operating system. They will be paying for bows and ribbon — for packaging — when what’s inside the competing packages is essentially the same.

Open source is helping turn significant chunks of the IT infrastructure into commodities by offering alternatives to proprietary software. This is software as corn or wheat. As the products become indistinguishable, buyers will choose the cheapest, most reliable supplier they can find — and it’s hard to beat open source on price.

This commodification is happening fastest at the lowest level of the infrastructure, the level that most businesspeople never see, like server operating systems and application servers (middleware). This is not an accident: Fifty-eight per cent of the open-source community is made up of professional IT administrators and programmers (with 11 years of professional experience, on average) who use open source to fix problems they encounter in their jobs, according to a recent survey by the Boston Consulting Group.

Apache, the Web page server that now runs 60 per cent of the world’s Web sites, began this way. In 1994, there were no commercially available software packages for serving up Web pages. Randy Terbush was one among many IT people casting about the Internet for solutions. He found seven others willing to work on the problem with him. “We said: Let’s start a mailing list and work together,” says Terbush, who is CEO and president of The Tribal Knowledge Group, an infrastructure technology consultancy. He was a founding member of the non-profit Apache Software Foundation, which develops and distributes the Apache HTTP server.

Apache’s release in 1996 wasn’t accompanied by a million-dollar ad campaign. Analysts and the press didn’t track sales because you didn’t buy Apache, you downloaded it. And you could download it once, tweak it, burn it on a CD, and install your own version on as many servers as you wanted without telling anybody and without spending a cent.

Open Source Goes Big Time

Of course, free doesn’t necessarily mean without costs. Just because you download open-source applications for free doesn’t mean you won’t have a whole host of associated costs such as maintenance, integration and support. Right now, CIOs remain concerned about receiving support for open-source software solely from volunteers — however disciplined and dedicated — over the Internet. They want commercial vendors to sign contracts guaranteeing that the stuff will work. (In a CIO US survey late last year, of 375 IT executives, 52 per cent said a lack of vendor support was open source’s primary weakness.)

But in 2001 and 2002, major vendors such as Dell, HP, IBM, Oracle and Sun announced in various ways that they would begin supporting open-source products. IBM is leading the push. “We will guarantee the same [service-level agreements] for Linux that we do for proprietary OSes,” says Dan Frye, director of IBM’s Linux Technology Centre. “Response times, fix times, uptime — we’ll sign all those same contracts for Linux.”

Last summer, Oracle released an open-source version of its database to run on clusters of Linux servers — a popular way for CIOs to transition big, power-hungry applications and databases from expensive hardware like supercomputers and high-end Unix servers to groups of cheap Intel servers running Linux. Even Unix market leader Sun, which has the most to lose from the rise of cheap Intel server replacements for its more expensive Unix machines, now offers a Linux server. The only major vendor that continues to resist the march of open source is Microsoft, though company officials have stopped calling open source “a cancer”, as they did a few years ago, and now acknowledge Linux as a viable competitor.

Vendors that have embraced open source haven’t suddenly gone all soft and fuzzy. They see it as an opportunity to sell software that works with open source, as well as consulting, integration and support services. This is a major shift from a few years ago, when most vendors viewed open source as inconsequential. Now they see it as a loss leader for profitable services.

The strategy shift by the big vendors has opened the eyes of big company CIOs. “The way [open source] has been accepted and embraced by the IBMs and Suns has put it on our radar screen,” says Judith Campbell, senior vice president and CIO of New York Life Insurance. “I like what I’m seeing because however this shakes out, it represents a flight to quality in software.”

“My operations group is really very positive about using [open source],” says Sue Unger, senior vice president and CIO of Stuttgart-based DaimlerChrysler AG. “It requires less time to manage than [proprietary software]. Answers become apparent a lot easier, and they don’t seem to need as many management tools as they’ve needed with other environments.”

All the CIOs we spoke to for this story who use open source say they’ve seen savings over proprietary software, even when accounting for the extra integration work required to bring open source into their architectures. CIO’s survey respondents seem convinced too: 59 per cent said a lower TCO is open source’s primary strength.

Even if open source seems too risky to become part of your strategic plan, you should be experimenting with it, if for no other reason than to use it as a stick to keep your vendors honest. “Even if you decide you don’t ever want anything to do with open source, go out and get some and show it to your vendors when they come to call,” says Jonathan Eunice, principal analyst at research company Illuminata.

The question for CIOs now is not whether they should be using open source but where and how they should be using it. Open source will not replace proprietary software in the next few years (there aren’t, for example, enough volunteer developers with a passion for, say, financial derivatives to replace Wall Street applications today, if ever), so CIOs have to make educated decisions about where to apply open source and where to wait.


What’s your plan for 2003?


Start with the Web

The internet is the wellspring of open source and the focus of many of its applications. So if you’re looking to get your feet wet, it makes sense to start there.

Pete Sattler’s company, SPX, a valve and motor manufacturer, is highly decentralised, with divisions and plants spread around the country. Its Web sites grew like weeds during the 90s — mostly small, low-transaction sites, each with its own Windows server. The servers and Web sites propagated to the point where the annual maintenance bill started to add up.

“We figured the Web sites would be a low-risk way to bring Linux and Apache in,” says SPX’s chief e-business officer and CIO. “There aren’t a lot of hits or activity on these Web sites, and it gave us a chance to work with open source and see how it operates in a production mode.” Sattler consolidated 75 Web sites and went from 40 Windows servers down to four Linux servers. He hired a Linux expert to lead the project and develop an enterprise architecture for the Linux system. Sattler’s expert tweaked Linux to fit SPX’s needs, creating a master version of the software that Sattler can install on as many servers as he wants. For free. “I’ll be able to replicate that image onto new servers as I add them,” he says.

The image will help as Sattler experiments with open source in the next level of the infrastructure: the network. Open-source tools exist at varying levels of maturity for network-centric functions like management, intrusion detection, middleware and databases. “These are commodity activities,” says Sattler. “I want the infrastructure to be cheap, standard, reliable and provide good performance. Linux is helping me swap out more costly components of my infrastructure, drive down my costs and increase my reliability. You want this stuff to be like an electric utility. It just runs and you don’t think about it.” That is, Sattler doesn’t want to think about his network in tactical terms (such as bringing crashed servers back up); he wants to focus on infrastructure strategically.

The network is about as high as most CIOs are willing to go with open source right now. Even at the network level, the transition will be gradual as tools continue to mature. But Sattler says that the lowest rung on the ladder, the Web, is a lock to be turned over to open source. “We just had a security and penetration audit last month, and the only systems the auditors weren’t able to penetrate were the Linux systems,” he says. (Of course, now that more people are using Linux, hackers are getting better at hacking it. Everyone agrees, however, that good software is safer than bad software.)

Take Back Your Infrastructure

Open source forces you to get reacquainted with your IT infrastructure. It’s the kit car of IT. You buy the frame and customise to your heart’s content, putting, say, a Bentley grill on your VW Bug.

“Acceptance of open source depends on the CIO’s personal style as much as anything,” says Bob Wolf, operational director of the Strategy Practice Initiative for The Boston Consulting Group. If you don’t like your people fiddling with stuff, he says, you will probably wait on open source until it’s plug-and-play.

“You have to own open source,” says Ed Wojciechowski, vice president and CIO of packaging and plastic products manufacturer Menasha. Wojciechowski did what most CIOs would only consider doing as a contestant on Fear Factor: from 2000 to 2001, he switched his SAP ERP system from Unix machines over to Linux on Intel servers. SAP had only just ported its applications over to Linux for public consumption during that time.

CIOs at Fortune 500 companies worry about moving their ERP applications over to Intel servers because they rely on huge databases that need lots of processing power. Unix workhorses can accommodate many more processors in each box than Intel servers running Windows or Linux. But the performance gap is narrowing, says Manfred Stein, product manager of LinuxLab and Unix Platforms for SAP, the biggest ERP vendor. “The number of systems where Intel would not provide sufficient resources to run the database is very small, less than 1 per cent of our installed base,” he says. For that 1 per cent, SAP is evaluating Oracle’s RAC clustering system for Linux so that customers can simply add more Intel boxes as the databases grow, says Stein.

Wojciechowski had an ace up his sleeve for his SAP switchover: a brilliant college kid contributing code to the Linux kernel in his spare time. He started designing Wojciechowski’s Linux ERP architecture as a part-time employee during the summer of 1999. Now he’s out of college and working for Menasha full-time. Wojciechowski won’t give his name, much less offer him up for an interview. “The whole world would come after him,” he laughs.

Not that the issues in making open source work are all that esoteric. “There is nothing that gets delivered that just plugs in and everything is beautiful,” says Josh Levine, chief technology officer of E-Trade Financial. “So you need people who know the technology.” Like Wojciechowski’s prodigy.

“There’s a little more onus on your IT people to reach out and provide answers rather than going back to a vendor and asking for a patch,” says Harry Roberts, senior vice president and CIO of US retailer Boscov’s, which moved a legacy invoice processing app to Linux on its IBM mainframe. “But they like the new way,” Roberts continues. “They don’t want to wait weeks or months for solutions to come from the vendor. They want to get things done quickly.”

Indeed, Roberts says his staff ported the old invoice processing app over to Linux in 45 days. Not bad, he says, considering that “it had a lot of functions and touchpoints with other systems like ERP and a rigorous online and batch cycle. We said: If we can make this work, we can make anything else work.” Roberts ran the new application in a parallel environment with the mainframe system to work out bugs for four months before going live. “That was six months ago,” he says, “and we haven’t had a failure yet.”

Design Your Own Desktop

David Chugg had a dream. He wanted to remove the Internet Explorer icon from the Windows desktop.

Chugg’s not a US Justice Department lawyer, nor does he have a particular beef with Microsoft. It’s just that he didn’t want reservations agents at the 6600 hotels that are franchises of his company, New York City-based Cendant, to be surfing the Internet when they should be taking care of guests.

But, of course, everyone knows Windows won’t work without Explorer.

That’s why Chugg likes Linux. “It’s a loosely coupled system, so you can rip out the stuff you don’t want without harming the rest of it,” says Cendant’s IT senior director of hotel solutions. “Don’t want the Internet?” Chugg says. “Just rip it out.”

Linux is supposed to be DOA on the desktop — too scattered, too feature poor to compete with Windows. But not in Chugg’s world, the world of the locked-down or embedded operating system, where limited is good. This is where Linux excels. It’s reliable, easily tweaked to perform specific tasks, and cheap. Indeed, when you’re talking about 6600 hotel reservation screens, the cost of putting a licensed version of Windows on each begins to add up. And Microsoft’s new licensing program is adding fuel to the fire, especially among retailers that typically want to devote only 1 per cent to 2 per cent of revenue to IT.

Chugg, meanwhile, is upgrading his system to provide live connections into all the hotels from Cendant’s headquarters, and he likes what’s happened to his hotel’s desktops since he first installed Linux: nothing.

“They look pretty much like we left them two years ago,” he says. “We used to have to go in and clean off games and all kinds of things from the Windows machines before we could upgrade them.”

The first time he went with Linux, it was because his hotel management system vendor didn’t offer the software on any other system. This time, the vendor offers other operating systems, but Chugg is sticking with his original Linux system from UnitedLinux vendor The SCO Group — by choice.

Get Leverage! Kill Off Your Expensive (Proprietary) Hardware

For years, Josh Levine had to settle for boring meetings with his Unix vendor, Sun Microsystems. Sure, there were some exciting times there at the beginning — back in 1998, when E-Trade was first shopping for Unix computers to run its custom online trading system. Levine could pit Sun against the other Unix vendors like IBM and HP. But once E-Trade decided to go with 60 Sun boxes at $US240,000 a pop and a $US25,000 yearly maintenance fee on each, the fun — and Levine’s leverage — was gone. All Unix vendors have their own versions of Unix designed to run solely on their hardware. “All their strategies are based on proprietary operating systems. Once you buy the hardware, you can’t move,” Levine says.

Now, when Levine wants to buy some new hardware, he can have a party and invite everybody. That’s because he replaced those 60 Sun boxes with 80 $US4000 Intel servers (which became commodities long ago; they’re virtually identical no matter who you buy them from) and a commodity operating system, Linux, which is supported by all the major Intel hardware vendors. The Intel boxes are less powerful than their Unix counterparts, so Levine just bought more of them. And since Linux is based on Unix, his support people easily made the transition.

The fun is back in Levine’s procurement life.

“We get to manage the vendor as opposed to the vendor managing us,” he says. “Now they compete on performance and price; they can’t hide behind an operating system. And we’ve cut out the maintenance fees we had to pay on the Unix machines. That’s huge. That’s a sea change.

“Linux is about levelling the playing field across all the hardware vendors,” he says.

Levine moved to Linux cautiously. He looked over the possible savings (which he estimates at $US13 million in the first year) for a few years before leaping. Though Levine has an IT staff of 650, including 350 developers, he bought full support contracts from Linux distributor Red Hat and IBM. “It’s possible that open source is supportable without a major vendor,” he says. “But our feeling has been that without major vendor support, we’re gambling, and there’s no use gambling. So we held off until HP, IBM and Sun stepped forward and said they were going to support it vigorously.”

Even with that support, Levine tested the Linux system in parallel with his old Unix system for six months before switching over in March 2002. It’s run with just a couple of minor hitches since then, he reports.

At DaimlerChrysler, CIO Unger deployed Linux to kill the three supercomputers that the company uses to run crash simulations. She turned the three into 108 Intel servers running Linux, all whirring away on the crash dummies’ misfortunes.

“We expected cost savings, but we were surprised at how big they were: 40 per cent for hardware, software and service combined,” she says. But then Unger saw something she didn’t expect: an application performance improvement of 20 per cent. “Everyone thinks you just do this because of cost reduction, but we’re seeing other factors.” Besides improved performance, the machines are simpler to manage. Based on the US experience, Unger did the same thing to DaimlerChrysler’s Mercedes crash simulation centre in Germany, with the same results.

Free at Last . . . Well, Not Yet

If there's a roadblock to universal open-source adoption, it’s the lack of industrial-strength enterprise applications to run on Linux, things like CRM and ERP. But the difference in 2003 is that CIOs are demanding to know what the vendors are planning to do about that. They didn’t much care before.

“In the last year, interest in Linux has taken off like a rocket,” says SAP’s Stein. “We just passed 1000 customer installations on Linux [out of 13,000], and we expect about 5 per cent of new deployments to be on Linux.”

SAP was the first major ERP vendor to offer its software on Linux, and all the others have now pledged to do the same. As always, pledges are one thing, delivery another. But with continuing pressure from customers to lower implementation costs, all major software vendors had better start coming through.

For CIOs, this is the year to start figuring out what to do with open source — even if it is nothing. Don Bullock, vice president of IT at Eaton, the Cleveland-based diversified industrial manufacturer, had his advanced technology group do two pilots with Linux last year: one on the mainframe platform and one to use Linux as a locked-down operating system for a voice recognition application on an Intel platform. He decided the incremental expenses of establishing a new OS (retraining IT staff and users, buying and integrating new hardware) was too great — for now. “But we’re going to keep looking at it,” he says.

Art Huffman, CIO at Halliburton, a Dallas-based oilfield services company, has also looked at Linux, and he came to a different conclusion. He plans to move 13,000 users of his company’s SAP system over to Linux in the next two years.

“We’re looking to move to a clustered Linux/Intel platform to run the Oracle database,” he says, “and we think the technology will be there. It isn’t today. But it looks like the pieces are coming together.”

Huffman has an open-source plan.

Do you?

Giving Back to the Developers


If you go to the bottom of most well-established open-source software Web sites, you’ll see something unusual: a button for making a donation. “You have to water the garden,” says Randy Terbush, a founding member of the non-profit Apache Software Foundation. “You’re saving dollars by utilising this development community, so you need to treat it as if it’s an important part of your business. It’s in your best interest to give something back — whether it be financial support or engineering support — to help extend the platform you depend on.”

Three Strikes on Unix



The Unix market is shrinking as Intel-based machines, which already cost a fraction of Unix machines, become even cheaper and more powerful.


Each of the major Unix vendors created its own proprietary, incompatible versions of Unix, locking CIOs into systems they could not change unless they bought new machines. This artificial lock-in has kept Unix hardware prices higher than they need to be.


Linux is based on Unix, so converting Unix applications to run on Linux is relatively straightforward and Unix administrators can easily learn Linux, providing a ready base of support for CIOs who want to make the switch.

If Unix has any remaining advantage, it’s that Linux can support only eight Intel processors stuffed into a single computer, while Unix can support 32 (or more) powerful RISC chips in a box. But Linux (and Windows) development is not standing still and neither is Intel’s. The Unix hardware vendors, with their shrinking customer bases, will have less revenue to invest in R&D, while Intel’s war chest continues to swell.

Who Are Those Guys?

The mysterious pleple designing open-source softweare are the same people who are working for you right now.

Worried about trusting your infrastructure to a bunch of shaggy college kids who might bolt at any moment for a yearlong backpacking trip to Switzerland? Don’t worry. Even if every one of them left for the Alps tomorrow, 90 per cent of the open-source community would still be checking in to one of the community’s Internet hangouts ( and are the most popular) to see what’s new.

Turns out these people have real jobs — 58 per cent of the open-source community is made up of professional IT administrators and programmers (with 11 years of professional experience, on average), and 30 per cent of them will have to answer to their bosses if they don’t write open-source code. That’s right: open source is their job, according to a recent survey of 678 open-source developers that was conducted by The Boston Consulting Group (BCG).

The most successful open-source projects are those that solve a problem that the community’s biggest constituency — IT admins — are encountering in their day jobs. “To form a successful open-source community, you have to have an overlap between people who want to solve a problem and people who have the skills to solve that problem,” says Dan Frye, who leads a group of 250 IBM programmers who work on Linux full-time.

Though most projects focus on the IT infrastructure, some flock to gaps you might not expect. The open-source GIMP photo-editing software got started because Adobe took too long to build a Unix version of Photoshop. Clearly, the community isn’t afraid to reach beyond its most direct areas of expertise.

That’s because they are all hungry to learn. Ninety-two per cent said that was their primary motivation for working in open source, according to BCG — and to write code that gets respect. In this way, the open-source community resembles the scientific research community. You rise or fall based on the quality of your contributions, and you can see everything that has already been done. “You can stand on the shoulders of others” and let their work inform your own, says Jeremy Allison, who leads development for Samba, the open-source file and print server for Windows.

But it can be brutal out there, even for the coders who have won the respect of Linus Torvalds, who flames regular contributors to the Linux kernel. “It requires the willingness to be judged by people you don’t know, and that takes a thick skin,” says Frye. But in the end, everyone agrees, good code always wins.

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