At RoTech Medical Corp. the decision came down four years ago: Let the penguin in.
“Were always looking for better, faster and cheaper,” said Chief Technology Officer Albert Prast, in Orlando, Fla., who decided to use Linux to run a number of applications, including purchasing and billing. “By using Linux, we were able to use old hardware, take advantage of open standards and improve the reliability of our systems.”
Given its well-known benefits—portability, low or no licensing costs, and wide-open source-code availability—using Linux does seem like it would have been a no-brainer for RoTech, which handles the billing of Medicare and Medicaid for respiratory products and medical equipment provided to patients.
The decision certainly has paid off in nitty-gritty cost savings: Prast said that using the existing equipment and Linux software, RoTech has cut the cost of running its network down to one-third of what it would have been using new hardware and a typical commercial operating system.
But then, the decision sounds like a no-brainer for any enterprise. After all, why choose to spend hundreds of thousands of dollars on new Intel Corp. platform hardware and even more money on proprietary software to run on it, rather than take a free, open-source operating system such as Linux and run it on hand-me-down PCs?
But despite all the penguins charms, Linux has only recently begun to get any measurable foothold in financial services companies—despite the fact that the industry has historically been an early adopter of emerging technologies.
The reason for the reluctance, experts say, is that financial company executives, saddled with legacy systems that still work, have been loath to make the switch to Linux.
But that may be changing, first among smaller organizations. Financial companies drawn to the operating systems low cost, ability to run on existing hardware, open standards and scalability are finally following RoTechs example, finding innovative ways to take advantage of Linux. And, as the financial services sector begins to benefit from Linux, experts say organizations in other industries would be wise to take note and begin thinking about the operating system as well.
“The financial services industry has always been willing to take a chance on unproven technologies, and it has begun to do so with Linux,” said Chad Robinson, an analyst at Robert Francis Group Inc., a consultancy in Westport, Conn. “As financial companies find benefit in the operating system, companies in other industries will follow their lead.”
The financial services sector has a long history of introducing new methods of computing to other industry sectors. “Whenever there is a new technology, financial companies always tend to adopt those technologies first,” Robinson said. “They have to save every penny, and if anyone knows how to save a penny, its financial companies.”
Experts say other industries will follow suit by adopting Linux, which had a 27 percent market share in the operating system software market last year, according to International Data Corp., of Framingham, Mass. Worldwide spending by the top 100 financial institutions on Linux is predicted to grow 32 percent in coming years—from $50 million in 1998 to more than $200 million in 2003, according to The Tower Group Inc., a financial services consultancy in Needham, Mass.
Software Firms Respond
Software vendors are responding to this increased interest in Linux among financial companies. Attendees at LinuxWorld this week can expect to see an increase in the number of Linux-based solutions developed for the financial services industry. One is IBM, which announced it will spend $1 billion this year to make Linux a computing standard. This week, the computer companys investment will begin to pay off when Javelin Technologies Inc. releases its FixBox product, built on the Debian version of Linux and running on IBMs X330 eServers.
FixBox is specifically for financial companies and translates details of a trade, including allocations, orders and confirmations, into one common language.
Javelins decision to use Linux had everything to do with the operating systems cost- effectiveness. Had the company used Solaris or Windows NT rather than Debian, the prices Javelin would have been forced to charge for the product would have been cost-prohibitive for many smaller financial companies, said John Coulter, president of Javelin, in New York.
Compared with the hundreds of thousands of dollars it takes to buy the hardware and license the software required to build systems using proprietary operating systems, Linux is a steal because of its ability to run on Pentium I and II processor machines unable to handle the latest Windows release, Windows XP.
For its part, RoTech began using Linux in 1997 as a print server. The decision to do so was prompted by the operating systems reliability. As the company became familiar with Linux, Prast began to expand its use in a controlled fashion. Two years ago, it began purchasing Linux servers from Penguin Computing Inc., in San Francisco, for use as database servers running MySQL open-source software and Red Hat Inc.s Red Hat database. Today, the company has several hundred Penguin Computing boxes in its data center and has even begun replacing its 3Com Corp. and Cisco Systems Inc. routers with servers running Linux. Currently, everything from time and attendance to medical billing and a business-to-business purchasing system runs on Linux.
Like every IT manager, Prast is conscious of his budget, and the cost savings are an added bonus of running Linux. Each of Penguin Computings routers, including the DSU/CSU, router software, Apache Web server software and VelociGen Inc.s VelociGenX—a development and Web page serving environment—cost about $1,200. In comparison, a Cisco router would end up costing three times as much as the Penguin Computing equipment, Prast said.
But cost benefit alone isnt enough to persuade most staid financial institutions to make the switch to Linux. When millions of transactions need to be computed per second, CIOs look for reliability and scalability above everything else. Prast said that working with Linux has convinced him it can meet his performance needs, and he plans to replace IBM Unix-based RS/6000 servers with Linux. He is working with Penguin Computing to develop a 64-bit processing environment for RoTechs billing applications, which handle files of 2GB and larger. Prast is also working with Covaleo Corp., a B2B integration software company, to develop a way to release digital certificates electronically using Linux.
Other cutting-edge financial services companies are also drawn to Linux because of their ability to make changes to the source code to fit their computing needs. Tradeworx Inc., in New York, has used the operating system to develop all its financial trading applications: something it couldnt do with proprietary software, said Manu Kalia, chief financial officer.
“Part of the reason we love Linux is because its free,” Kalia said. “The other reason is because its so easy for us to modify the source code. A lot of the stuff we do is custom, which we couldnt do if we didnt use Linux.”
Tradeworx has been a Linux shop since it was founded in 1999. A financial application service provider that provides high-performance analytics to organizations such as the U.S. Securities and Exchange Commission, Tradeworxs infrastructure consists of 20 servers from VA Linux running everything from Version 6.0 to 7.1 of Red Hats Linux.
“We have been a Linux-devoted shop since the beginning because of its stability, the cost advantage and the flexibility,” Kalia said. “We can write our own code very easily to the Linux platform, so its a no-brainer for us.”
Tradeworx hosts and provides a number of high-performance analytic applications that employ distributed computation and data aggregation for use in the finance world. Because these applications are both data- and latency-sensitive, Tradeworx was able to fine-tune its Linux server infrastructure by accessing the source code to deliver the computation and data management power to fit its needs.
The operating system has proved to be scalable and robust—a crucial matter for Tradeworx, which receives daily price data feeds on U.S. equities and historical data dumps from the 10,000 stock tickers it monitors. All information is stored on MySQL databases. The company also hosts Java-based financial tools such as margin calculators and limit order pricing tools, which allow users to determine whether to place an order to buy or sell a predetermined number of shares at a specified price.
If anything, the use of the operating system in the financial services sector has proved Linuxs ability to scale. Kalia said his companys Linux network is hit hundreds of thousands of times a week by visitors referred from financial portals such as CNBC.com and MarketWatch.com Inc. and has had no problem meeting sudden increases in traffic.
Experts say that as more companies are willing to bring Linux out of the development environment and begin to run mission-critical applications on the operating system, an increasing number of organizations will begin using Linux for more than just file and print serving and as Web servers.
“We are in kind of a Phase 2 right now when it comes to Linux,” Robinson said. “Phase 1 was pretty much those companies on the bleeding edge and that were kind of getting their feet wet with a few file and print servers here and there. Now, youre starting to see applications hosted on Linux boxes. Give it 18 to 20 months, and you will really start to see companies running their critical infrastructure on Linux and actually talking about it.”
In other words, penguins, coming soon, to an enterprise near you.