[gnulinuxinasia] NEWS: Asia embraces the Penguin (by Irene Tham)

  • From: "Frederick Noronha (FN)" <fred@xxxxxxxxxxxxxxx>
  • To: gnulinuxinasia@xxxxxxxxxxxxx
  • Date: Mon, 12 Apr 2004 12:41:29 +0530 (IST)

MIS | Managing Information Strategies | Key business topics for technology 
executives -
Ebusiness directors, IT directors and CIOs
Subscribe Online

Click here to subscribe to MIS Asia
HomeAsiaAustraliaNew ZealandUKChina
Subscribe | Advertise | About us | Feedback | Site index
Go to Magazine ContentsGo to Research ContentsEventsGo to Special Editions
Search for: ___________ in [______________] [ Go ]
Cover Story | Features | Management | Tech Trends | Special Report | Opinions

Cover Story

Asia embraces the Penguin
By Irene Tham

From near zero adoption in 1999, the Linux OS has grabbed 9.5 per cent of
the Asia-Pacific market for servers, and the figure is set to soar. The
reason? Big cost savings.

DHA Siamwalla, a distributor of stationery and office supplies in Thailand,
had two options when it went shopping for an e-mail solution in 1999. The
company could select either Lotus Notes or Microsoft Exchange, but both
choices carried a price tag upwards of Bt1 million (US$25,000) for 80 users.

With a strapped IT budget and plans to extend the use of the application to
more employees, the company decided to look for cost-effective alternatives.
*After doing some research over the Internet, we discovered Linux,* says
Danupol Siamwalla, IT director of the company, which was founded by his

Linux, an open source alternative to operating systems (OSs) such as
Microsoft Windows and Sun Microsystems* Solaris, was first developed as a
basic version of Unix for the PC in 1991. Since then, Linux enthusiasts
around the world have made improvements to the program*s source code, which
is freely available and redistributed over the Internet.

Three months after discovering Linux, Danupol and his three engineering
staff assembled a communications suite comprising e-mail, Internet gateway
and group scheduling that runs on the free OS. Within a year, all the
company*s 350 employees were connected to the Internet at no extra licensing

What followed was the migration of the firm*s sales force automation and
forecasting, material management, order processing and purchasing
applications to the open source platform, which Danupol is counting on to
deliver technical functionality on the cheap.

However, the company*s database and enterprise resource planning (ERP)
software still run on HP Unix, its warehouse management system operates on
IBM AIX, and its human resources software on Windows NT. *We cannot move
[these] to Linux because our ERP supplier is not ready to take the leap. The
ERP module is tightly linked to the database, warehouse management and human
resources systems,* says Danupol. *We have plans to migrate these
applications to open source, but the process will take time.*

In July 2002, the firm spun off its IT arm as a separate business, selling
its suite of communications and office automation software and consultancy
services to companies looking for open source alternatives. Customers
include Japan-based box manufacturer Siam Toppan Packaging; and Cinecolor
Lab, a Thailand-based film and post-production laboratory that was acquired
in October 2003 by Thomson.

*We are now working closely with large companies to deploy basic Linux
infrastructure as well as migrate front office applications to open source
solutions,* says Danupol.

The Penguin takes off

Linux is poised to go mainstream. Globally, Linux server sales grew 35 per
cent in the first three months of 2003, generating US$583 million in
revenues, according to research firm IDC.

In the US, companies such as Merrill Lynch, DaimlerChrysler, Morgan Stanley
and Credit Suisse First Boston are already running Linux. At a February 2002
event organised by Red Hat in New York, Merrill Lynch discussed how Linux
was being implemented across the company, and not just within departments.

In the Asia-Pacific region (excluding Japan), the OS grabbed 9.5 per cent of
the market for servers in the first half of 2003, from near zero adoption in
1999. By 2007, IDC expects Linux to account for 20.6 per cent of all server
shipments in the region.

*Improved functionality and broader ISV [independent software vendor]
application support for Linux are the main market drivers,* says Rajnish
Arora, associate director of enterprise servers and workstations for IDC in
the Asia-Pacific region.

Still, Phil Sargeant, Gartner*s regional research director for servers and
storage, believes Linux-based systems have yet to exhibit a high level of
scalability for complex workload processing. *Most people would acknowledge
that Linux is not yet ready for database or mission-critical applications,*
Sargeant says. However, he believes that Linux has the capacity to overcome
these technical hurdles over time, as technology titans such as IBM, Oracle,
Intel, Hewlett-Packard and Dell continue to invest in optimising their Linux

Besides technical limitations, Sargeant notes that cost, ironically, is
another barrier. While Linux is cost-effective for supporting network
peripheral functions such as firewall, caching, file and Web page serving,
where the OS constitutes a significant portion of the total cost of
deployment, the argument for Linux becomes less compelling in complex

*If the OS is a very small percentage of the cost of a complex deployment,
one has to seriously question: *Why Linux?* * Sargeant says. In elaborate
set-ups, spending on hardware, middleware and consulting services may swamp
any savings from the OS, he explains.

Over in India, however, some companies running mission-critical applications
on Linux are proving Sargeant wrong. The Central Bank of India, one of the
largest banks in the country, started implementing Oracle9i database on Red
Hat Linux OS in 2002.

Today, the system is supporting key functions such as inter-branch
reconciliation, accounts and balance sheet dealing, credit disbursement,
telebanking and cheque collection for its 25 million customers at 1,600 core
bank branches. By 2005, the bank expects to link up all 5,000 branches
throughout the country.

*The system is robust. We have not faced system scalability problems or
other issues such as corruption of data so far,* says K. Raghuraman, the
bank*s general manager of IT.

In another example, India*s IDBI Bank has been running Oracle*s financial
and human resources management software to manage the data of 1,500
employees. The application, implemented in 2001, operates on the Red Hat
Linux OS. IDBI Bank also runs other mission-critical applications such as
e-mail and its interactive voice response system on Linux.

*We have never had performance issues,* says Sanjay Sharma, IT head of IDBI
Bank, which has over 90 branches in India.

In fact, the bank conducted internal benchmark testing, including process
audits, to compare Linux applications with Microsoft and Unix applications.
Results showed that the Linux applications were the most cost-effective,
stable and least resource hungry, says Sharma. He adds that IDBI Bank saved
about 70 per cent on hardware and software licensing fees by opting for the

Another attraction of Linux for Sharma is the constant upgrade through a
global community of hard-core programming volunteers.

Security imperatives

With an army of loyalists patching vulnerabilities in the open source
program at a fast pace, there is little wonder that a growing number of
organisations are spurning the pricey, proprietary offerings of vendors such
as Microsoft.

Viruses aimed at computers running Microsoft Windows, a dominant server and
client OS, have also worked in Linux*s favour.

At the Central Bank of India, trouble-free system maintenance is paramount.
*In a geographical area as wide as India, it is very hard and costly to send
people around to troubleshoot systems,* says Raghuraman. *With Linux, there
is no such issue. It has been trouble-free since we started deployment.*
Raghuraman expects to realise savings of about US$3 million on software fees
and manpower over three years.

Patriotic push

Indian politicians have called on the country*s huge pool of programmers to
develop open source products on grounds of national security and

In China, programmers have developed a home-grown version of Linux, called
Red Flag. The Chinese Government has touted the program as a secure
alternative to the hacker and virus-prone Microsoft Windows.

Among the companies responding to China*s push for open source is NTK, a
Hong Kong-based manufacturer of connectors and DVD loaders.

Godwin Choi, its financial controller, says NTK*s decision to adopt Linux is
more political than economic: *Linux will be the dominant OS in China, given
the government*s administrative direction. By going with the flow, we can
protect our investments and ensure future interoperability in Greater China,
our target market,* he says.

NTK recently won the inaugural Linux Business Adoption Award, under the
office automation and business application category, organised by the Hong
Kong government.

The company was recognised for using Linux-based enterprise resource
planning (ERP) and manufacturing resource planning (MRP) applications to
derive business benefits in a cost-effective way.

The ERP suite has been in use since June, while the MRP software is being
installed in NTK*s sole manufacturing site in Xin Tang, China. The
applications run on Red Hat*s 64-bit Linux operating environment and two
Intel Itanium 2 servers located in Hong Kong.

Compared with operating on the Windows platform, Linux will save NTK close
to US$500,000 on manpower and software licences over five years, Choi

Rocky road ahead

Meanwhile, a legal dark cloud hangs over Penguinland. In May 2003, SCO,
which claims that its Unix intellectual property has been illegally copied
into Linux, sent warning letters to about 1,500 large international
corporate users of the open source platform.

The event followed a March lawsuit against IBM, alleging that Big Blue
improperly used SCO*s Unix technology to improve Linux. IBM responded with a

Despite these challenges, users we spoke to remain unfazed. *We will
continue to move applications to Linux,* says IDBI Bank*s Sharma, who is in
talks with vendors to migrate online banking and transaction processing to
the operating system.

The Central Bank of India is equally steadfast in its support of Linux. *We
are not looking back. We still feel that we*ve made the right decision,*
says Raghuraman.

As the industry waits for the lawsuits to pan out, there seems to be no
stopping the march of the Penguin.

Other related posts:

  • » [gnulinuxinasia] NEWS: Asia embraces the Penguin (by Irene Tham)