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 father. 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 cost. 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 products. 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 environments. *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 OS. 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 self-sufficiency. 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 estimates. 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 countersuit. 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.