Linux-Based ERP Apps on the Rise

The ERP installed base will increasingly embrace Linux at the expense of Windows Server and Unix, according to researchers.

Companies running ERP (enterprise resource planning) applications will shift away from Unix and Microsoft Corp.s Windows Server to Linux over the next five years, officials from IBM and Peerstone Research Inc. said on Friday.

That move would spell bad news for Microsoft and would sharply slow the growth rate for Windows Server, they said.

Adam Jollans, chief Linux technologist for IBMs software group, said in a media teleconference that the trend of Linux moving to critical business applications and up the stack from the edge of the network was continuing unabated.

"This is a trend weve been hearing about from customers and seeing from ISVs, who are now increasingly making their applications available on Linux. PeopleSoft Inc. and Siebel Systems Inc. have both done so this year, joining SAP AG," he said.

IBMs software revenue on Linux also quadrupled between 2001 and 2003, far outstripping the growth rate of Linux in general, he said. This move from simpler uses of Linux to more complex, mission-critical uses was expected to continue, particularly with the 2.6 Linux kernel included in commercial shipping distributions, Jollans said.

Peerstone Research analyst Jeff Gould then presented his firms latest research findings. Gould said that Peerstone had surveyed more than 400 companies and governmental agencies running SAP, Oracle Corp. or PeopleSoft ERP applications.

"We found that two-thirds of the ERP installed base is currently on Unix, 28 percent on Windows and a small sliver, some 2 percent, running on Linux. But this figure is so small as it reflects the fact that ERP vendors have only moved their applications to Linux over the past 18 months," he said.

But Peerstone believed that the Unix share of the market would drop to 50 percent over the next three years, while the Windows Server share would stagnate at 27 percent, and Linux would surge to 15 percent.

"Linux will clearly not take over the world and will remain a fair distance from the other two operating systems, but Linux will double its share of the installed base over the next few years." Much of this will be from users abandoning Unix and adopting Linux, Gould said.

The move over the past six years away from Unix to Windows has been essentially a move to cheaper hardware, with Windows the main beneficiary as it was really the only alternative for most of that time, he said.

Microsoft is still aggressively trying to court and catch Unix customers before they move to Linux, even offering its own product called Services for Unix.

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IBM and HP have also launched their own Unix-to-Linux migration plans, targeting primarily Sun Microsystems Inc.s Solaris operating system.

But regarding plans for the next three years, Gould said one in five ERP customers surveyed expected to move from Unix to Windows Server, while four of them said they would move to Linux. "That will see the prime growth of users for Windows Server in the enterprise decline, so Windows penetration here may have peaked," he said.

There is also less of a cultural gap between Linux and Unix than between Windows and Unix. According to Peerstones research, the biggest negative of Linux is the difficulty of hiring affordable and experienced systems administrators—not the issue of intellectual property rights, security or anything else, Gould said.

With regard to the long-term future—beyond five years—for the server operating system in the enterprise space, Gould said, "We have a third of the ERP installed base saying open-source Linux is the way to go, a third saying they will never touch it, and others say they will consider it, but not in the near future. So in five years we expect to see a third of people running Unix, a third Linux and a third Windows."

He also pointed out that this was an unsponsored and noncommissioned research project and that Peerstone was not advocating any operating system or commenting on the intrinsic worth of any of the companies involved.

During the question-and-answer session, Gould said that while some customers are concerned about the possible fragmentation and easy customization of the Linux operating system, the only distributions supported by SAP, Oracle and PeopleSoft were Red Hat Inc.s Red Hat Enterprise Linux and Novell Inc.s SuSe Linux.

The reason for the small amount of migration away from Windows Server to Linux until now was due to two things, he said. Windows Server customers were already using cheaper hardware and were mostly satisfied with Microsoft. Also, the skill set of the staff within the organization was key, and many companies had staff with Windows skills, far more so than Linux," Gould said.

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