HPCwire: Hard Times May Boost Linux in Financial Services

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April 06, 2009

Hard Times May Boost Linux in Financial Services

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Today Linux is the go-to operating system for high performance computing, while it continues to extend its footprint in the broader IT community. In the financial services arena, in particular, Linux is being seen as a critical technology for increasing ROI.

On Monday, at the High Performance Linux on Wall Street conference in New York, Inna Kuznetsova, director of IBM's Linux Strategy, led a panel that discussed how Linux can be used to reduce costs and improve performance in these economically challenging times. We recently got the opportunity to ask Kuznetsova about the increasing profile of Linux for IBM customers and how the technology is enabling them to realize cost savings.

HPCwire: How have your clients IT priorities changed during this economic downturn?

Inna Kuznetsova: The priorities have certainly changed. First, we see our clients much more focused on the whole aspect of the total cost of ownership reduction. The financial crisis is putting a new lens on TCO claims. Companies prioritize projects with a clear ROI and predictable time to savings. The focus switches from enhancing functionality to cost reduction. Second, the expense control calls for higher accountability. Stimulus packages in different countries include funding for IT infrastructure but it comes with an increased scrutiny. To spend taxpayers' money in a prudent way, reducing up front costs becomes increasingly important. Third, as we know from the experience of the previous recessions, companies often have to merge to withstand tough conditions -- and that brings the issue of consolidating IT infrastructure. Being able to merge IT systems fast and keeping costs under control becomes vital for success.

HPCwire: How does Linux help address those new priorities?

Kuznetsova: Linux has unique attributes that help to improve savings. You cannot only reduce the costs with often lower rates but also eliminate CALs to avoid uprgrade penalties. Paying for a subscription instead of a license provides for a higher degree of flexibility should the customer decide to reduce resources, as often happens during an economic downturn. Standardizing on Linux reduces the number of skilled resources needed to manage multiple environments -- and at the same time, a customer can select the best hardware platform for a particular workload. Also, during mergers, Linux, because it runs on the broadest set of hardware platforms, often becomes the "common denominator," providing for a streamlined integration.

Consolidation on larger servers is one of the best ways to reduce energy consumption, office space and systems management costs, and many of our customers consolidate these days on Power Systems or mainframes running Linux. IDC recently published a study based on applying quantitative measures to such consolidation and quoted an average ROI in less than seven months and the reduction of TCO by 50 percent. Many of our financial customers follow this route -- for example, the Bank of New Zealand consolidated its front office, Internet banking and tellers system on an IBM System z mainframe running Linux. It has reported a decrease in energy consumption close to 40 percent, 33 percent reduction in heat output and a need for only one administrator per 200 virtual servers.

Last but not least, customers can achieve great savings by leveraging Linux desktop in a traditional or virtual implementation. IBM offers an open-standards-based alternative to Microsoft Office, called Open Collaboration Client Solution (OCCS). It is a package of office productivity tools, including email, messaging and social collaboration software, that can work in a heterogeneous environment, with some users working on Linux and some on Windows. Users save 500-700 dollars per workspace when switching to Linux with IBM OCCS, and they can keep users on different systems collaborating with each other, using the same team rooms and tools. There are further savings associated with the virtual Linux desktop, launched last December, which can be deployed from any x86 server and provides additional savings in energy consumption, reduced need for workstation upgrades, memory, and system administration.

HPCwire: Are there instances where a proprietary OS is preferable?

Kuznetsova: There is no "one size fits all" approach in the selection of an operating system -- many factors come into play. The customers have to consider what workloads and what applications they are running, what skills they have in house, what are their requirements to the reliability, availability, security, level of service, costs and resources for system administration.

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