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Craig McGuire
Craig McGuire
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A Star is Born: Baby Linux

It may have taken the financial services a bit longer to get up to speed, but make no mistake, Linux, the fast-growing computer operating system, is coming to the Street.

The Street, notorious for shying away from new and unproven technology, is slowly coming to grips with Linux. While CIOs are not exactly throwing their arms around the new operating system, some are at least bouncing it on their knee a few times.

It’s starting. The signs are all there. Dozens of firms across the country are quietly wrapping up their rollouts. Scores of vendors deep in development are making deals and promising the world. Advisory councils and vendor blocs are assembling. It may have taken the financial services a bit longer to get up to speed, but make no mistake, Linux, the fast-growing computer operating system, is coming to the Street.

While Y2k may have hobbled most IT departments this past year, it can’t solely be blamed for Linux’s slow, uphill crawl into the financial services industry (FSI). More likely it’s been miscommunication, uncertainty, and virtually non-existent FSI vendor support. That started to change recently as a whole host of vendors, including IBM, Oracle, Informix, Dell, SGI, Intel, and others, began developing Linux-related product lines.

Still, it’s highly unlikely you’ll find any CIO willing to dump their Sun Solaris platform and deploy Linux for mission critical applications. You will, though, find more and more firms, like Boston-based mutual fund manager, The Evergreen Funds, begin to come out of the Linux closet.

"We’re finding a lot of use for the Linux environment," says Evergreen’s CTO John Gidman. "Open source is the next big thing. We’re using Linux for file servers and basic connectivity between our Unix and NT environments. More and more, we’re going to use open source code."

Meanwhile, Linux creator Linus Torvalds of Finland is attracting a growing army of Linux zealots for the crusade against Microsoft’s dominant Windows software. From the Street to Silicon Valley, hordes of front line techs are bending and twisting Linux to make it do what they want it to.

"Remember, Unix originally got a foothold on the Street from the techies that worked in the trading houses on analytics," says Gareth Taube, v.p. of marketing at Giganet. "This new Linux community is no different, they want something they can tweak to do what they want it to do, and they have the technical skills to do it."

"These folks again have the technical smarts to tweak software to get it to scream," says Taube. "In the case of Linux, technologists have the ability to work with the source, and the operating system moves from being a black box to being something they can work with. Because they can look at the source, they can customize the operating system environment for their particular application environment."

It’s going to take more than accessibility and buzz to get tight-fisted CIOs to allocate IT funds for Linux deployment. "I think there needs to be some major vendor initiatives," says Larry Tabb, Group Director, Securities and Investments Division at the TowerGroup. "The technology is pretty good, but there needs to be some success stories of Linux installation."

Depending upon whom you talk, as it relates to the financial services, Linux is either the next big wave, or inherently flawed. Most likely, the future of the Unix-based operating system lies somewhere in the middle.

As a large user of Unix, Wall Street firms should be receptive to Linux. Furthermore Linux is free, downloadable from the Internet and constantly being updated by a global online community of programmers. This could be negative in an industry so stability and reliability conscious. On the other hand, open source could be perceived as an advantage, considering how firms like to customize their operating system for their advantage, as in trading system design.

Yermo Lamers, an official at developer DTLink Software, says in order to make Linux more attractive to firms, additional features addressing fault tolerance, scalability, as well as FSI-specific applications need to be developed. "With the advent of trusted database brands for Linux, this trend is being made possible," says Lamers. "More third party support is required. Businesses like having other businesses to consult, instead of trusting ‘the Net’ for their support needs."

Despite the heated debate and uncertainty, Linux is making its mark on the technology world. Though the Street may be holding Linux the technology at arm’s length, that hasn’t stopped aggressive investment into Linux-related service providers. First out of the gate in early August, Linux distributor RedHat Inc. saw its share price triple on the first day of its initial public offering–a price that climbed even higher the following day. At a time when many tech stocks were faltering, RedHat’s success only points toward the Street’s confidence in Linux. IPOs issued by other Linux providers are expected later this year and into next year.

Meanwhile, according to figures compiled by Dataquest Inc., Linux will account for approximately a quarter of worldwide server appliance sales by 2003, or nearly $4 billion–enough of a presence that in an internal memo Microsoft officials identified Linux as a "significant" threat to its Windows NT system.

While it has a way to go in its courtship of the FSI, Linux has managed to woo a number of senior IT managers in the industry.

"I personally have used Linux as my primary desktop since the fall of 1994 both at work and at home," says David Niemi, an IT manager at Sallie Mae. "We have used it extensively in prototyping and testing roles, and in development of software which is then moved over from Linux/ia32 to Solaris/SPARC."

"In the near future I plan to propose using Linux for modest real production server roles where it fits well, and within two to three years I expect it will be our primary web server platform," says Niemi.

In addition to Sallie Mae, other financial services firms currently using Linux on a limited basis include InTech Asset Consulting, an Australian pension fund manager that uses Linux for network management, e-mail server, network services to local users, and software development. Additionally, Netherlands Foreign Investment Agency uses Linux as well for its Internet client software, official productivity software, modem communications, network file server and print server.

Contrary to the listing on M-Tech’s site, a consulting firm that lists Linux deployments, Putnam Investments does not use the operating system. That’s not to say it hasn’t piqued the interest of IT officials at the firm.

"We are strictly a Sun Solaris shop and currently have no plans on using Linux," says an IT official at Putnam Investments requesting anonymity. "I do, however, use it personally. I have my own little network at home, basically an NT server, Windows 95 machines and Linux and Solaris boxes."

John Goeller, a vice president at Wall Street powerhouse Salomon Smith Barney, says while he is interested in the technology, he suggests a wait-and-see approach. Salomon, another big Sun shop, also doesn’t have any immediate plans to use Linux. "It’s an interesting concept, the entire open source aspect of it, and some time back I looked into how it relates to FIX, but it ended up being too complex a model," says Goeller. "As it relates to operating systems and things like that, I think it makes sense. You eventually get a better product because more people are looking at the code."

Meanwhile, a number of industry coalitions are even starting to spring up. The Corel Linux Advisory Council, launched by Canadian Software developer Corel Corp., is one such entity.

"Unlike other OSs which are more general purpose OSs, we don’t anticipate Linux will become all things to everyone," explains Derik Belair, brand manager at Corel. "We do see Linux, which is very customizable and dynamic, becoming a very task specific and becoming the operating system to build solutions."

"So, you have financial institutions that use Oracle, Informix or another database on the back end, and Linux can be made to be molded and manipulated to fit that environment very well if you customize it to the clients needs," says Belair. For people who are in those very customizable areas, Linux will be the operating system of choice."

Though in the mainstream Linux may be pitted squarely against Microsoft, in this industry it’s a different playing field. In fact, Bob Artner, editorial director at TechRepublic.com, says when it comes to financial services the question isn’t really Linux vs. Microsoft Windows NT.

"The real question is mainframe vs. client server," says Artner. "Due to the huge volume of transactions done by financial services firms, as well as the need for redundancy and fault-tolerant operations, most of Wall Street has been late moving applications off of ‘Big Iron’ mainframes and on to client-server systems, whether Microsoft, Linux or anyone else.

Linux isn’t exactly a complete stranger on the Street. Windows 95, Windows 98 and Windows NT are the most common operating systems on desktops, but several versions of AT&T’s Unix operating system are common on mainframes and widely used by the software development industry. Linux is a version of Unix capable of running on the same PCs as Windows, as well as other hardware platforms.

Since the dawn of networking, machines running proprietary versions of Unix from vendors such as IBM, Hewlett-Packard and Sun have owned the server market.

As a variant of Unix, and many Wall Street firms possess Unix expertise both for mainframe and Sun applications, Linux could be a natural migration path for moving into the client-sever environment. "One advantage that Linux might have is that the huge base of installed Windows applications don’t matter as much to financial services firms, who typically do a huge amount of custom programming themselves, which might give it higher appeal," says Artner.

Linux offers connectivity capabilities that have been the calling card of Unix-based systems, as well as additional connectivity functionality specific to Linux. These capabilities include TCP/IP connectivity; drivers for many serial, ISDN and frame relay controllers; Appletalk for Mac/Linux connectivity; and IPX protocol support for Novell Netware/Linux connectivity.

Since introducing Linux in 1991 while still a student in college, Linus Torvalds has harnessed suggestions and corrections flowing from hundreds of volunteer programmers all over the globe. The copyright on the Linux kernel belongs to Torvalds, filed in a manner so users may freely copy it, change and distribute it, but may not impose any restrictions on further distribution and must make the source code available. The licenses of the utilities and programs which come with the installations vary.

The entire open source argument, weighing heavily in Linux’ favor in the mainstream, diminishes in the financial services arena. Microsoft, like most software developers, offers users only the machine-readable form of the program, whereas open source developers make a human-readable version of the source code available. Since introducing Linux in 1991 while still a student in college, Linus Torvalds has harnessed suggestions and corrections flowing from hundreds of volunteer programmers all over the globe.

However, Artner says, "Remember, financial services firms see their IT investments as yielding a strategic advantage over their competitors, so they are perhaps less interested in sharing software developments than other types of businesses."

Some say, though that openness is advantageous. "Free availability of source code and the open development process permits me to find, report and get permanent fixes for all nature of bugs with far less effort or elapsed time than for traditional commercial OSs," says Niemi at Sallie Mae.

Familiarity with Linux is a big issue, and issue not just with Linux. "As with most areas of IT right now, the critical factor is the number of people who are actually trained in the technology," says Artner. "Again, the experience that most Wall Street firms have with Unix could help in migrating resources to Linux."

Don’t, however, believe everything being circulated by these rabid Linux fanatics. There are some inherent kinks that need to be worked out. "At present, for use in financial banking and trading system technology, Linux does lack a few features and capabilities that are certainly required," says Lamers. "Among these are better scalability to very high end loads, better fault tolerance support, journaling filesystems, and others."

"As a desktop operating system, one factor limiting Linux’s growth is the lack of a standard graphical user interface," says iCorp Technologies’ Hadley.

Recent deals inked by a number of high-profile vendors point in the right direction. IBM, Oracle, Informix, Dell, SGI, Intel, and others well-known brands continue to promote Linux as an alternative server platform to Windows NT, and sometimes even their own proprietary Unix flavors. Promotion alone, though, will not be enough.

"The growth of Linux as an operating system will depend upon the extent to which application manufacturers and developers focus on it," says Michael Hadley, president and CEO of Mass.-based IT consultant iCorps Technologies. "Although companies like IBM, Hewlett-Packard and Oracle are coming out with products that run on Linux, financial software vendors have yet to port their applications to Linux."

As it stands, it looks like Linux is poised to feed off the growing Internet-related demands of the financial services industry. Netcraft, a London-based consultant, estimates that overall, the number of Web servers running Linux now stands near 30%, ahead of the 24% running some form of Windows, with the rest relegated to Unix. And, Linux seems especially well suited for infrastructure services such as Internet access, e-mail, proxy servers and firewalls.

For their part, financial services IT folks, usually ahead of the curve when it comes to fiddling with new technology, have not exactly been sitting on their hands this past year.

"The word on the Street that I’ve heard is that firms have been absorbed in shoring up their systems and making sure legacy apps are up to snuff to meet industry requirements, whether it be Y2k-related or another projects," says Ken Farber, senior vice president at Computer Associates. "Moving into 2000, you’ll hear a collective sigh of relief, and then everyone will have an opportunity to start seriously looking at Linux."

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