Open Source Goes Corporate

Big business has opened its doors to the Linux software stack, with many major companies expecting to deploy entirely on Linux servers in the near future.

September 26, 2005

15 Min Read
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One line of code at a time, application by application, Web server by Web server, the data centers of a growing number of major companies are taking on a new personality, one that smells of the ocean and waddles when it walks. The trend is open-source software, the motivation is added flexibility at lower costs, and the long-term ramifications--well, those aren't entirely clear. From ABN Amro Bank NV in the financial industry to Yahoo Inc. on the Web, billion-dollar companies are expanding their embrace of the Linux operating system and other open-source components for a wide range of purposes. The Linux penguin has hit the big time.

Opening Up

ABN Amro Bank NVFinancial services

2004 revenue: $24.3 billionABN Amro has used open-source tools to help create some of its banking applications, most prominently its Web-based service. The company is running some mission-critical applications on Linux and is considering the use of open-source business-intelligence and reporting tools.

Cendant Corp.Travel services2004 revenue: $19.8 billionCendant Travel Distribution Services has saved about $100 million since 2001 when it began moving to Red Hat Linux. The company uses open-source Apache Web server and Tomcat servlet engine to run its operation.

Continental Airlines Inc.Air travel2004 revenue: $24.3 billionJBoss application server and MySQL database are key components of Continental's homegrown Ticket Reissue and Traveler Alert applications. It used open-source Zope and Plone applications to create the Traveler Alert System's portal.

E-Trade Financial Corp.Financial services2004 revenue: $1.5 billionE-Trade's migration from Unix to Linux began in 2001 and saves $13 million annually while improving the IT infrastructure's performance. The company plans by early 2006 to move from BEA Tuxedo middleware to Common Web Services transaction-messaging software.

Fidelity Investments

Financial servicesPrivately held, with managed assets totaling $2.3 trillionFidelity Center for Applied Technology, founded in 1999 to find technologies and tools for Fidelity's business units, has developed Struts Plus, a set of proprietary-code enhancements to the original open-source Apache Foundation Web application framework.

If you missed the announcement of this industry-changing development, that's because it never went out. The deployment of open-source software is happening a project at a time, and many of them are never publicly discussed. So InformationWeek set out to find out just how large corporations are using the stuff, conducting interviews with 10 big companies that are beyond the dabbling stage. We wanted to know not just why they're embracing open source, but how, where, and to what extent. What we found is that open-source adoption is growing rapidly in these companies, even though some of the issues involved in using software that no one owns haven't been completely worked out.

Consider the changes underway at UPS Inc. By the end of this month, the package-delivery company will finish migrating its Tivoli systems-management software, used to monitor and distribute software to 6,000 servers, from RISC-based machines running Hewlett-Packard's Unix operating system to about 50 Intel-based computers running Red Hat Inc.'s Enterprise Linux. The Web site is being migrated from Sun Microsystems' Solaris to Red Hat Linux on Advanced Micro Devices-based HP servers, and UPS estimates Linux servers will handle all of the site's traffic by January 2007. "You don't have to buy industrial-strength software to support all areas of the business," says Nick Gray, UPS's director for architectural services. "You can use an open-source application to support a project rather than building one, buying a lower-end application, or not doing the project at all." As a next step, Big Brown has begun testing Red Hat's 64-bit Enterprise Linux 4 as an option to run its Oracle data warehouse.

Or look at how the Walt Disney Co.'s enterprise application services architecture team is quietly contemplating the deployment of the open-source Tomcat servlet engine in its portal environment. The portal consists of packaged applications, including Vignette Application Portal, IBM WebSphere, and DB2, all running on Sun Solaris e480 servers. Disney is upgrading to the current version of the Vignette portal software and migrating to Tomcat, which will likely run on Intel-based Linux servers, a move expected to reduce the portal's hardware and software licensing costs. By the time the migration is completed by year's end, Disney's Enterprise Application Services Architecture team will have its entire Unix farm of more than 200 servers running on Linux, says Jonathan Chaitt, director of enterprise application services architecture.

As large companies move in this direction, they've got some issues to deal with. First and foremost, they must find a way to integrate open source into their commercial software environments and support it on an ongoing basis. They want reassurances that open-source code won't be subject to intel- lectual-property lawsuits. They need procedures established to avoid violating licensing terms that are different from what they're used to. And, as they move up the open-source "stack" of operating systems, databases, and application servers, they have to decide where to draw the line. Are open-source applications in their future?Much of the work companies are doing with open source revolves around their key Web-site applications and increasingly around those applications' underlying databases. There are no sales figures for software that can be downloaded for free and is often introduced into organizations by developers acting on their own rather than going through purchasing departments. But open-source usage clearly is trending up. Online brokerage E-Trade Financial Corp., for example, has moved its customer-facing Web applications from several dozen Sun Solaris servers to twice as many single-processor lBM Linux servers, and travel reservations specialist Sabre Holdings Corp. now runs the MySQL database on 200 four-CPU servers, with each server holding 50 Gbytes of data.

Long-Range Commitment"People are using more open source than they realize," says Michael Gallagher, manager of architecture strategy at ABN Amro, a financial-services company that has used open-source tools to create some of its banking applications, most prominently its Web-based service. The company continues to look for new areas to apply open source, and it's considering the use of open-source business-intelligence and reporting tools based on Eclipse, an open-source development environment. "It's hard to characterize the level of reliance on open source," Gallagher says. "The best I can do is say that I can't imagine a world where we don't use open-source-based technologies."

Yahoo uses open-source software and development tools to build and support the services that customers have come to love about the company, such as E-mail, music, and search. About a dozen of Yahoo's Web-page templating systems were designed using the PHP programming language and help define how Web pages will look. "There aren't a lot of commercial products out there that meet our needs, so over the past few years open source has become the technology we consider when there's something we need," says Jeremy Zawodny, a member of Yahoo's technology development team.

When Yahoo needs a new database, the open-source MySQL database is its first option. Already MySQL is part of the Yahoo Finance Web site's core infrastructure for large batch operations and is used for real-time data-feed processing and serving of content directly on the site. When Zawodny joined Yahoo in 1999, he worked in the area responsible for posting news feeds to the Yahoo Financials Web site. "The data-management part of that system was crude and written internally, and one of the first things I did was replace that with MySQL," Zawodny says.

Manage The Risk
In many cases, businesses are putting open-source technology to work in new projects. That can create problems when it comes to accounting for open-source software the same way they do for commercial apps. "If developers aren't using open source to replace an existing application, nobody really knows about it," says Michael Goulde, senior analyst with Forrester Research. Companies may be putting themselves at risk, because the core code for the most popular open-source software projects is generally the product of thousands of contributors scattered around the world, and the intellectual-property ramifications have never been fully tested in court.Large businesses have much to lose if they should get caught up in any legal entanglements from using the software. "We want to make sure we wouldn't be a target of a lawsuit down the road," UPS's Gray says. The company's legal department scrutinizes the usage rights of open-source software before deploying it.

Limited UseLicensing is one of the greatest challenges for open-source users. "The fact that software is open source doesn't mean a company can use it in the way they want to use it," Yahoo's Zawodny says. Different licenses have different requirements in terms of distributing and modifying code. Yahoo has designated an employee to manage open-source licensing terms and legal issues. "It shouldn't be scaring people away; people just need to know what they're getting into," he says.

Continental Airlines Inc., which turned to open source when it needed to build its key Ticket Reissue and Traveler Alert applications on the cheap, has its legal team review the terms of an open-source license agreement and offer feedback to the technical team, says Jack Wang, managing director of Continental's technology group.Open source gets vetted for other reasons. At E-Trade, proposed software implementations undergo an architecture review to evaluate how the new software will fit in with the current environment and an engineering review where the company determines whether it can support the technology and integrate it into existing systems. An optional third step is for the company's technology-investment committee to determine if the new software's contract terms are compatible with other software contracts, says Greg Framke, E-Trade's executive VP and head of technology.

Nielsen Media Research Inc.

Media research2004 revenue: $4.7 billionOpen-source JBoss application server serves Java and HTML pages and acts as a JavaBeans container for Nielsen's MarketBreaks, a Web-based system that allows clients to analyze TV ratings. Nielsen runs Red Hat Linux on Intel-based hub servers.

Sabre Holdings Corp.Travel services

2004 revenue: $2.1 billionSabre in 2000 initiated a $100 million project to move its air-travel shopping and pricing services off mainframe technology and onto HP servers running the open-source MySQL database on the Red Hat Enterprise Linux operating system. It also uses The Ace Orb, a Corba 2.5-compliant C++ object request broker, as well as JBoss and Tomcat.

UPS Inc.Shipping and logistics2004 revenue: $36.6 billionUPS is completing the migration of Tivoli servers to Intel-based servers running Red Hat Enterprise Linux 3. The company is also moving its Web-site applications to Red Hat. It's using Apache, the JBoss application server, and MySQL at its Atlanta supply-chain solutions group.

The Walt Disney Co.Entertainment2004 revenue: $30.8 billionDisney will by year's end upgrade its Vignette software-based business-to-business and business-to-employee portal and migrate it to the open-source Tomcat servlet engine running on Intel-based Linux servers. It also is using open-source JBoss to host Java-based Web services.

Yahoo Inc.Internet services2004 revenue: $3.6 billionThree of its primary open-source technologies are the Apache Web server, PHP programming language, and MySQL database. The open-source MySQL database is part of the Yahoo Finance Web site's core infrastructure.

The overall review process is critical in an organization like E-Trade, which prides itself on using technology to innovate in the financial-services market. Open source has proven to be a good fit with its vision. The company's migration from Unix to Linux, which began in 2001, is saving $13 million annually while improving IT infrastructure performance, Framke says. More savings may be on the way: The company plans next year to move from BEA Systems Inc.'s Tuxedo middleware to Common Web Services transaction-messaging software, and it's looking for open-source software to replace Computer Associates Netegrity security software for central access control, distributed management, and single sign-on for intranet and extranet sites.

Similarly, every open-source application at UPS must pass the scrutiny of the company's technology-standards committee, which considers factors such as how important the software is to a given project, before it can be used. If an open-source application is approved, it's then downloaded to a software repository where it's made available to use for internal projects. ABN Amro likewise is in the process of creating a repository of company-approved open-source applications that have been tested and vetted for use. Sabre's IT department also works from an approved-products list that governs what open-source software can and can't be used.Despite the advantages open source delivers, few multibillion-dollar companies are throwing out the commercial software in which they've invested millions of dollars just to make the jump to open source. ABN Amro has yet to adopt open-source databases as a standard, primarily because of its heavy investments in Oracle and IBM DB2 databases. "It doesn't make sense to replace Oracle with MySQL at this time," says Gallagher, whose company primarily runs new--sometimes mission-critical--banking applications on Linux. "We don't do a lot of going back to rip and replace."

Yahoo won't replace its core search technology, its customer-billing system, its system for managing online ads, or several other central systems with open-source software anytime soon, either. "There are cases where we've made significant investments in our business," Zawodny says.

It's a different story at Sabre, which five years ago embarked on a $100 million project to move its air-travel shopping and pricing services off mainframes and onto 13 HP NonStop servers and a cluster of 45 HP Itanium database servers running the open-source MySQL database on Red Hat's Enterprise Linux. The move was calculated to help the company keep up with growing customer demand for online services.

The initial success of Sabre's migration toward open-source technology spurred further adoption. Over the past 18 months, the company has migrated more of its services off mainframes to run on 48 Intel Xeon-based HP servers and 177 AMD Opteron-based HP servers running Linux. Sabre's experience with open source extends to The Ace Orb, or TAO, a Corba 2.5-compliant C++ object request broker, as well as JBoss and Tomcat. Sabre now considers open source whenever it has an IT project up for review.

Good experiences with JBoss, Linux, and other open-source apps have reinforced the company's strategy. "We put our biggest, most important application on it and it held up," says Bob Offutt, senior VP and chief architect of strategic architecture, pointing to Sabre's air-travel shopping and pricing services application.Server RolloutOnce a big company decides to deploy open-source software, it also must figure out how to support and maintain it. Without access to qualified help, a company might lose the cost advantages that make open-source software such an attractive proposition in the first place. "You're always weighing the value of having a company like Microsoft behind you or relying on an open-source community you have no control over," says Larry Kinder, CIO of travel conglomerate Cendant Corp., which has saved about $100 million since 2001 when it began moving its airfare-calculations and ticketing apps to Red Hat Linux. The Apache Web server and Tomcat servlet engine run its operation.

But Cendant isn't going overboard with open source. "I don't think [it's] the panacea of low-cost computing that people thought it was," Kinder says. "We're not going to bet the farm on it" and move the whole company to open source.

Others are treading cautiously in some areas for different reasons. E-Trade's Framke says his company is taking a close look at emerging open-source databases, but he believes the technology is a few years away from replacing Sybase Inc. for E-Trade's site, which manages 3.5 million accounts and averages 50 million Web hits daily. Still, he's interested. "We're seeing that open source is moving much more rapidly than commercial software," Framke says. "Maybe there are four people in a garage that will break open the database market in this way."

Declining SupportNielsen Media Research Inc., a division of information and media company VNU N.V., has come to rely on open-source application-development tools such as Hibernate, which is part of the JBoss Enterprise Middleware System, to act as a bridge to send information among the company's NPower minute-by-minute ratings-reporting system and MarketBreaks Web-based ratings-analysis application and their relational databases. But Linux adoption has been hindered, in part, because the IT staff's expertise is with Sun Solaris, VP of IT strategy Kamal Nasser says.

In other cases, open-source applications simply aren't mature enough to be worth a swap. "The challenges get greater and greater as you move up the software stack because of the need for customization within the company where that software is used," says Charlie Brenner, senior VP of the Fidelity Center for Applied Technology at Fidelity Investments. Fidelity established the center in 1999 to explore emerging technologies, and Brenner and his team investigate open source in a number of areas, including desktop Linux, departmental databases, and application-development platforms. Says ABN Amro's Gallagher, "When you get to more user-oriented applications like CRM and content management, we're not at the same level of comfort as with Linux. They've only recently come to a maturity level where they can be considered."

Still, more than one webbed foot already has wedged its way through Big Business' door, and waves of new and diverse applications are sure to add to open source's appeal. For corporate America, the march of the penguin seems unstoppable.

Illustration by Dale Stephanos

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