Jumping Right In, Still Holding Back

By Maria Trombly | Securities Industry News | June 28, 2004

June 28, 2004 - Wall Street firms have been bullish on Linux the past couple of years, moving an increasing number of applications over to the low-cost, easily customizable open-source operating system.

In addition, there are open-source development tools used by programmers to help them with their work, according to Financial Insights analyst Damon Kovelsky.

But when it comes to key applications, Street firms have thus far stayed away from open-source software because of a lack of support. When software is created by an amorphous pool of volunteers, documentation is usually a hit-or-miss affair. For mission-critical tasks, the iffy nature of open-source support makes many Street firms think twice about deploying open-source applications.

That may be starting to change. Companies like Red Hat Linux have paved the way, showing that it's possible to charge for support while giving the product away for free. It's been a successful strategy for Red Hat, which other open-source vendors are now emulating.

The big guys are also paying attention. Earlier this month, HP announced that it will certify, integrate and support open-source software for its customers, at no extra charge to users. The two applications certified first are MySQL, an open-source database, and JBoss, a Web application deployment platform.

According to Jeffrey Wade, manager for worldwide Linux marketing communications at Hewlett-Packard, certification ensures that the applications work well in HP's environment. Then, HP will handle all the support calls--whether the questions are about HP's hardware, Red Hat's Linux operating system, or about MySQL or JBoss. If the questions are particularly thorny, HP will work with MySQL and JBoss to resolve the problems, Wade said.

However, HP's customers will still have to go out and get JBoss or MySQL for themselves; it won't come pre-installed, said Wade, unless they hire HP's consultants to do the work. HP is currently evaluating whether to offer the applications pre-installed in future deployments.

In addition, customers will need to make support payments to MySQL if, for example, they decide to choose that database over Oracle or Sybase.

MySQL doesn't get a free ride, however.

"They're providing training for us, and are also our back-end support for level-three issues that we can't support ourselves," Wade said. He declined to say how much the move was going to cost HP, but added that HP expected some additional sales as a result.
Although the certification and support is currently limited to JBoss and MySQL, Wade said that HP plans to expand that to more open-source applications in the future.

Vendor Support
While giants like HP and IBM are offering support putting their marketing might behind open-source, other vendors are taking steps to fill in other pieces of the puzzle.
For example, Emic Networks makes MySQL more competitive with Oracle and other major proprietary databases by adding a layer of functionality that includes clustering, load balancing and fault management.

"It makes your low-cost open-source application far more secure," said Eero Teerikorpi, CEO at Emic Networks. He added that HP's support adds even more credibility to these open-source applications.

Emic claims to have seven financial services customers. "If you have a system with three to five servers, we make sure that each of these servers, at any point in time, has exactly the same information," Teerikorpi said. "Any updates are reflected immediately in all the databases."

This is particularly important for financial applications, he said. By duplicating a database across several servers, it means that more users can use it at the same time--a problem that's traditionally been solved by buying bigger servers and expensive, proprietary databases.

"When you can combine servers, you get linear scalability," he said. "That lets you have a less expensive hardware configuration. Then, you have fail-over capability. If one of the servers goes down, the remaining servers will share the load and the people accessing the database will never see a problem."

Unlike hardware-based load balancing systems, Emic's product is software-based and doesn't require any modifications in the platform or the application, Teerikorpi said. Installation can take from a couple of hours to a day or so, at a cost of $10,000 to $15,000 for a typical deployment, although some customers pay up to $50,000 for a system of 10 to 15 servers.

Teerikorpi said he's aware of the irony of charging for software to make an open-source applications more useful, and said that Emic considered an open-source approach themselves. "But open source makes sense when you have a commodity product," he said, "like an operating system or a database. Then you can create a scalable business model using open source. Load balancing has not yet reached the commodity level. For us to create a sustainable business model, we had to go commercial."

Despite the cost of the load balancing software, the total cost of deploying MySQL with load balancing from Emic is still only a fifth to a tenth the price of a comparable all-proprietary solution, Teerikorpi said. The cost savings come from being able to use low-cost hardware, an almost-free operating system, and an almost-free database program.
For example, MySQL customer Securities America Financial Corp. spent about one-fifth of what they otherwise would have, he said.

Prime-Time Player?
According to Joe Dennick, IS director at Omaha-based Securities America, MySQL is ready for prime time. In fact, he'd like to switch over all of his databases--including mission-critical Sybase databases--to MySQL.

Unfortunately, Securities America has more than 1,000 stored procedures written for Sybase. If the company switched over fully to MySQL, all those procedures would have to be rewritten--not a happy thought for Dennick's programmers.

The next version of MySQL, 5.1, is expected to use stored procedures but it hasn't been released yet, and Dennick doesn't know if he'll be able to transfer his existing procedures over. Meanwhile, he's already using MySQL for other purposes. For example, when users enter the company's secure Web sites, their login information and session information is all stored in a MySQL database.

Securities America also uses a SunGard application called Planning Station, which is an asset planning utility. "It's a commercial application but we can run it on any database we want to, and so we're running it on MySQL," Dennick said.

The firm is using other open-source applications. For example, there's quite a bit of the Apache Web server application around, Dennick said. The company also uses the Cyrus e-mail system, Bind DNS, the most popular name server in the world, and Asterix, an open-source Internet telephony application.

Other open-source applications are used for Web filtering and blocking Spam.
"I think we're a little further advanced than most firms, but a lot of them are starting to get into open-source platforms because they realize they make sense for their companies," said Dennick. "They're better applications, with lower cost of ownership, faster and easier deployment, and they're not proprietary. I can run them on any platform I want to run them on."

Securities America buys support from MySQL, Dennick said, but for other open-source applications he has to turn to the open-source community.

"I think it's very good, through user groups," he said. "But it's obvious that you're going to find the documentation isn't quite as mature as for commercial applications. Just getting the stuff installed and finding out what the features are is a little challenging."

Fun With Technology
Support from companies like HP is going to make this process a lot easier, he said, and many Wall Street firms will probably feel more comfortable deploying open source now that serious support is available. But he added that he himself doesn't mind the fact that open-source applications require more work.

"That's also the fun of open source," he said. "Most of us are here because we like to play with technology anyway. And once we've gone through the process and got everything installed, we're much more likely to support it well because we've spent time with the code."

He also said that he's not worried about the licensing implications of using open source. As the recent lawsuit by SCO against IBM demonstrated, it can be hard to tell whether the volunteers who contribute to open-source applications honestly wrote their code from scratch, or borrowed it from existing, proprietary applications.

Dennick said that he would continue using open-source software even if he has to start paying licensing fees.

"We're not using open source because it's free," he said. "We're using it because it's good technology. If it comes to mean that we have to buy licenses, we'll do it."
Dennick said that there are several reasons why open-source software can be superior to commercial alternatives.

"MySQL is a good example," he said. "Nobody has a database cluster like what Emic is able to offer. In almost every instance of a commercial database cluster, they use a single disk copy of a database. With Emic, we have an individual copy of the database on each node. That gives me a much, more higher level of availability and allows me to run it on much cheaper hardware."

Linux is another example, he said. It's more stable and easier to maintain than Windows.

Since open-source software is, in effect, written by the people who actually use it, it often has more functionality or is better targeted than commercial systems, he said. "It's safe to say that if a company doesn't have an open-source policy, it really needs to have one."