Linux Gains Ground

While still cautious on open source, insurers are seriously studying-and increasingly implementing-Linux-related solutions. Arbella Insurance is like a lot of insurance companies, reckons Richard Leek, senior manager, information systems, of the Quincy, Mass.-based P&C carrier with $1.04 billion in assets. Estimating his company to be at about the 60th percentile in terms of the application of new technology, he says the attitude toward Linux is probably a common one: "We have a lot of our guys looking at the Linux option, but we haven't come across any viable uses yet.'

While interested in the versatility and flexibility Linux might be able to offer, Arbella lacks the resources to devote to a non-production use of the operating system, and has reservations about the system's viability for many production needs. The carrier is in the process of moving major applications away from an outsourced mainframe arrangement to a more flexible architecture, but Linux doesn't qualify. "Our enterprise claims application is an old client/server application which will be migrated to a Web architecture," Leek relates. "[The system] is not certified on Linux, and we're not willing to take the risk to bring something like that onto an uncertified platform. The same would be true for a lot of other applications we're looking at."

Arbella is not alone in its concerns. Lack of a complete and fully integrated software environment tops a list of concerns businesses have about Linux, according to a recent InformationWeek study, with the lack of management tools being another issue of concern. But even a limited opportunity is still an opportunity.

"I don't know if I'd do a lot of my core business on Linux, though not because of the stability of the product, but more because of the unavailability of resources associated with being open source," says Darren Joslin, assistant vice president, distributed systems, Zurich North America (Schaumburg, Ill., $13.6 billion in premiums written in 2002). But Linux's limitations haven't dampened Zurich's enthusiasm for using the operating system. "Linux is a strong play for us," he adds. "It's a matter of developing and embracing point opportunities to continue to demonstrate its viability."

Among those point opportunities are front-end e-business services. Zurich subsidiary Farmers Insurance (Los Angeles, $12 billion in assets) has already implemented a Linux-based Red Hat (Raleigh, N.C.) solution to run its independent distributor-facing new business Web application. That application is only the beginning of the Linux opportunity for Zurich, according to Joslin, who sees the chance to do high-end processing for a very low cost. "We see Linux replacing a lot what of what we've done in the (Sun Microsystems, Santa Clara, Calif.) Solaris world for e-business front-end projects," Joslin relates. "We feel Linux and Apache (Lincoln, Neb.) server combinations will really help to lower our costs and improve our performance and support capability to support our growth over the next year."In the near future Joslin also will be pushing the use of parallel databases on a Linux platform to deliver enterprise-scale database services for some of Zurich North America's critical applications and business intelligence processes.

As Joslin's and other executives' concerns demonstrate, the Linux proposition is significantly limited by the maturity of Linux-based offerings and management tools for enterprise uses. Accommodation by industry vendors is another issue, and some of the biggest players are taking strong positions.

Vendor Investment

IBM is making a big bet on more widespread adoption, saying that Linux and the open-source movement are central to its e-business On Demand strategy, and to the future of the IT industry in general. The Armonk, N.Y.-based vendor operates a Linux Technology Center, staffed by more than 300 engineers worldwide who, according to IBM, work full-time on Linux as participants in the open-source community. IBM also claims to have more than 7,500 employees involved with Linux in porting centers, research, services, development labs and sales and marketing; and the vendor is currently shipping more than 65 software products that run on Linux across its IBM DB2, WebSphere, Lotus and Tivoli software families.

Although the insurance industry has been slower than other financial services segments to move on Linux, greater adoption of the open source technology by carriers is a matter of time, in the opinion of Bill Pieroni, general manager, IBM Global Insurance Industry. "Everyone is experimenting with it; of my top 10 customers, every single one has a pilot," he comments. Few major implementations have appeared so far, Pieroni acknowledges, but he insists that "it's slowly creeping into new development, and certainly into the long-term strategies of clients."In addition to more a more obvious value proposition related to the lack of licensing fees, Pieroni pitches Linux as a bridge between last-generation legacy platforms and emerging technology that doesn't require exhaustive reconfiguration of the legacy portfolio. For example, "moving from a mainframe-centric environment that leverages MBS or other flavors of Unix in the server farm to Linux is not easy-nothing is-but it's certainly a lot easier than historically available options that insurers have had around emerging technologies," Pieroni argues.

Microsoft (Redmond, Wash.) has taken a less-enthusiastic view of Linux, at a time when both its own and the Linux operating system are gaining ground in the server operating system market. According to IDC (Framingham, Mass.) statistics released in October, Microsoft's share of the server operating system market jumped to 55.1 percent in 2002, from 50.5 percent in 2001, while Linux's share grew to 23.1 percent, compared to 22.4 percent a year earlier. Microsoft customers who also wish to run Linux fault Microsoft for refusing to be more accommodating to the open-source platform. An InformationWeek survey of 400 business technology executives found that 88 percent of respondents believe Microsoft hasn't done enough to support Windows-Linux interoperability. A nearly equal number believes it will be the Linux community that works out the interoperability problems.

Josh Lee, Microsoft's global technical strategist, insurance enterprise and partner group, disagrees. Lee opines: "Interoperability is a two-way street. Since Linux is open-source and largely an ABM (anybody but Microsoft), it stands to reason that (the Linux community) wouldn't be that interested in making interoperability a priority."

Microsoft's hostility and IBM's enthusiasm are equally understandable, according to George Weiss, vice president and research director of Gartner's (Stamford, Conn.) server platform group. "IBM can play both sides of the field-they deliver products with Windows as well as Linux," he remarks. "The push to make Linux even more important is one attempt by IBM to increase sales of software products and professional services, and enable a broader choice of operating systems and platforms for the user." By contrast, Microsoft has taken a position where it sees any move toward the open-source world as a slippery slope toward the destruction of its intellectual property-based business model. The software vendor has made a compromise gesture by launching a shared-source program, "but it has a very anti-open-source mindset right now, (believing) that the open-source movement could potentially destroy the entire software industry," Weiss says.

But it's not just a philosophical or legal issue for Lee. While saying he "can't think of any good reasons for anyone to put in Linux," he does acknowledge that the open-source system "is a way that an IT shop can leverage Unix skill sets, as well as freeing them somewhat from heavy Unix licensing or support infrastructures." But apart from "hardcore hobbyists," IT professionals looking to implement Linux are going to encounter serious burdens, according to Lee. "The one path is to get it from IBM, and with that comes an army of Global Service employees, because the Linux kernel itself is not customized to an individual hardware suite," he claims. Those who forego the consultants will face "all the pain associated with the learning curve to get on Linux, spending a lot of time on user groups getting patches and freeware to basically get things up and running-it's a very complex environment to have to program against and to try to implement," Lee adds.

IBM customer ING Canada (Montreal, a division of Amsterdam-based ING Group, $467 billion in assets) managed to develop a Linux-based solution without an army of consultants, according to Isabelle Valois, director, technical services.The P&C carrier was planning to roll out new IBM WebSphere and J2EE applications to face both internal and distribution partners during a time of significant growth in the business. The carrier's existing infrastructure underneath the applications was insufficient to support a large group of users, which necessitated a decision. "We had two choices. One was to grow the current (IBM) pSeries-based infrastructure, requiring installing more and more boxes-and facing greater management challenges related to configuring them," Valois recalls.

If ING Canada stuck with the pSeries solution, it projected it would need 32 servers to handle anticipated growth by the end of 2003. By the end of 2004, that number would have jumped to 48. "That meant looking at the costs of the servers themselves, as well as the cost of other components, such as hubs, switches and routers," Valois explains. Given those costs, the carrier went with the second choice: to invest in an IBM zSeries mainframe. That option was made possible because "Linux enables us to put the Web applications on the mainframe," according to Valois.

The appeal of the mainframe solution-which Valois refers to as "forward consolidation" as opposed to "consolidation after the fact"-was that "with this type of infrastructure, we're greatly reducing the number of components-physical servers-because we can create virtual servers internally in the z900 machine. It's less basic infrastructure to manage, and also fewer hubs, switches and routers."

IBM led the 12-month initial phase of the implementation, beginning in January 2003 with delivery of the machine and installation in ING Canada's environment. By the end of February, the carrier had installed Linux and began deploying applications. The first was ING Funds, which Valois describes as "a very small finance distribution application." Next in line was an e-commerce application used for direct quoting and sales of policies. "It's a very large and complex application; it's got a back office internally residing on this platform and it interfaces with our legacy systems and some external systems, also." ING Canada will round off the year's work with its home-grown CRM application, used by about 600 internal customer service representatives, which is due to go live in December.

During 2004 ING Canada plans to roll out two more applications onto the mainframe platform: its commercial lines policy, sales and service (CLPSS), and its personal lines policy, sales and service (PLPSS), both currently under development.Lower TCO

The mainframe solution requires a greater initial investment than an interim pSeries solution would, according to Valois. "But the minute you install this kind of solution, you have very large capacity," she says. "We're looking at a return on our investment in 24 months-you don't have that kind of ROI with the pSeries because you're continually installing new machines as required. The total cost of ownership is also less because you don't have to acquire more people, more process and standards to control your infrastructure."

Regarding Microsoft's Lee's reservations, Valois comments that "we migrated our applications without having one IBM person in the loop. And on the Linux VM [virtual machine] part, we already had internal expertise, so the Linux was not that complex for us to work with." In addition to the CLPSS and PLPSS installations planned for 2004, ING Canada will work on increasing availability of the applications on the mainframe platform, as well as working on disaster recovery-related initiatives. Given the challenges that might represent, Valois says she appreciates the warnings about the complexity of the Linux environment. "It's a worthwhile comment and something we will want to think about. But right now we don't have that type of complexity."