Merrill Lynch banks on Linux

At financial services giant Merrill Lynch, chief technology officer John McKinley is blazing a trail to boost productivity and...

At financial services giant Merrill Lynch, chief technology officer John McKinley is blazing a trail to boost productivity and enhance return on investment, and that trail has led him to pursue a company-wide deployment of Linux open-source software.

McKinley says Linux is ready for prime time and set to take on increasing responsibility in the datacentre. "The speed of the evolution of the Linux story has surprised even me," he says.

Chief technology officers of major enterprises such as Merrill Lynch, which claimed $21.8bn (£13.6bn) in revenue in 2001, are adopting Linux in increasing numbers and scale. These chief technologists, spurred by the new reality of leaner, meaner IT budgets, cite savings in hardware and software costs as well as benefits of the operating system's stability and scalability.

A 2002 Forrester Research survey found that of 286 IT decision-makers, 28% plan to use Linux for enterprise application servers in 2003 and 31% plan to use Linux for Web servers.

Chief technologists are reporting favourable results, experts say. They say doubts about Linux are gradually disappearing as the OS gains acceptance and support from big-name vendors such as IBM and Hewlett-Packard.

"People are enthusiastic before they implement Linux and they are even more so after deploying Linux, which reverses the usual trend," says Dan Kuznetsky, program manager for the operating environments group at research company IDC. "[IT leaders] find it not only will it do what it promises, but will do a lot more."

However, there is a cloud in the OS's silver lining. Linux does not yet lend itself to an off-the-shelf implementation, and enterprises must still test it and integrate it into their systems, Kuznetsky says. But several companies, including Red Hat and IBM, are eager to assist with Linux implementations.

The growth of Linux is especially strong in the enterprise server market, where IT executives are finding more and more uses for the OS. "As Linux becomes a mainstream choice in more and more markets, more application and development tool vendors will say, 'We need to have a Linux solution', " Kuznetsky says. "Linux has taken on the position of the number two server option" behind Microsoft.

Money talks
Chief technology officers are using Linux to replace both back-office, mainframe systems and to take on lightweight duties such as running multiple application servers.

At Merrill Lynch, McKinley is trying to cut costs by using Linux to replace mainframe enterprise servers using IBM servers running Linux, and by using Linux with Intel-based, commodity PCs and appliances. "We are using Linux on Intel and Linux on IBM z-Series [mainframe]," he says. "We are riding both horses right now."

McKinley envisions Linux adoption spreading to embrace a wider variety of applications as companies such as Oracle and SAP move to offer support for the OS.

There is nothing to stop Merrill Lynch from deploying such applications as well, he says. "We are using Linux for everything from trading applications to infrastructure servers. Linux has proved itself to be a robust and stable solution with a compelling cost of ownership."

McKinley couldn't provide dollar figures on Merrill Lynch's savings from Linux, but others are ready to talk in those terms. Alex Zoghlin says travel service provider Orbitz saved millions of dollars in 2002 using Linux to replace expensive hardware, including Sun Microsystems' Java application servers using Sun's Solaris software.

"We replaced our entire mid-tier architecture," Zoghlin says. "We replaced $7m (£4.4m) worth of hardware with about $80,000 (£4,973) of hardware. So we saved about $6m (£3.7m) by moving to Linux."

Zoghlin had previously deployed Linux in about 400 Web servers that provide the cutting-edge flight information for which Orbitz is noted. The prohibitive cost of starting a modern flight information system from scratch forced him to look at Linux instead of proprietary mainframes, he says.

"We can route you through every city in the country, with literally billions of possibilities," Zoghlin says. "Linux gives us the opportunity to rethink options in fare search [engines].

"To bring computing costs down and lower the cost-per-minute, we turned to Linux machines," Zoghlin says. "We have hundreds and hundreds of Linux machines running Intel boxes. Now, they do everything. Some boxes run application servers, Web servers. This year we proved we are a real player in the market and drove costs down."

No licence needed
Whereas some chief technology officers seek to escape the costs of expensive mainframe servers, others use Linux to avoid paying on software licences in multiple machines.

IDC's Kuznetsky says some companies will have to calculate the cost of hiring IT staff familiar with Linux or its forebear, Unix. "If you are a Windows shop, the learning curve can be steep... because there is a different philosophical base for Linux as compared to Windows," he says. "In a Windows environment, everything is done for you, while the presumption behind Linux is that the developer controls everything."

In a Microsoft-centric environment, Kuznetsky says, "the operating system attempts to do a lot to ease the burden of the developers. But the developers have to go out of their way to get outside the software to do special things. So we find Windows-based shops often have cultural shock when they run into Linux. Although if they already have Unix, it's like an old friend."

Read more on PC hardware