Betting Big On Linux

With its package of bread-and-butter accounting software, AccPac is not the kind of ISV one normally describes as cutting-edge. Yet there it was, several years ago now, jumping headlong aboard

April 8, 2004

12 Min Read
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With its package of bread-and-butter accounting software, AccPac is not the kind of ISV one normally describes as cutting-edge. Yet there it was, several years ago now, jumping headlong aboard the Linux bandwagon. At the time, it was highly unfashionable for midmarket ISVs to unhitch from Microsoft's Windows juggernaut, let alone embrace open source. Still, AccPac began crafting a serious Linux strategy. And while it didn't completely sever ties with Microsoft--that would have been suicide from a market-reach perspective--the company ported its C-based applications to Linux.

"Basically, we were uncomfortable making our customers choose what to run our software on," says Craig Downing, vice president of product management at AccPac, which was recently acquired by rival Best Software.

That sentiment is growing in appeal--strong enough to keep the folks at Microsoft checking its rearview mirror for signs of Linux. Propelled by an expanding roster of supportive ISVs and major platform-backers, such as Novell and IBM, Linux is accelerating quickly into the next phase of market acceptance: securing a place as a mainstream business-applications engine. Beyond midtier stalwarts like AccPac, Linux can lay claim to small upstarts like Austin, Texas-based Journyx and giants like business-intelligence specialist Hyperion and PeopleSoft, which is in the midst of porting its entire suite of software to Linux, a nontrivial task to be sure. These are just a few software companies that are exploring Linux on a list that is pretty far-reaching; in February, research firm Evans Data released a report saying that 1.1 million commercial software developers in North America are now spending a portion of their time working on open-source projects, including Linux.

In the sea of players big and small, no one, perhaps, has made a bigger splash of late than Novell, whose Linux gambit is viewed as bold and, to some, last-ditch. By snapping up SuSE Linux for $210 million last year, Novell instantly thrust itself into the commercial Linux arena as one of two major distributors of the OS. This greatly boosts the opportunity for ISVs and hardware OEMs like IBM and Hewlett-Packard because SuSE is generally considered the second distribution of Linux in a universe of two, competing against Red Hat's product line.

"People didn't want to relive the Unix wars, where there were many competing distributions," says Novell CEO Jack Messman. Two major distributions, as opposed to just one or a plethora of choices, suits the market best, he contends.

For Novell itself, the embrace of Linux and other open-source technologies, such as Ximian and the MySQL database, marks a serious attempt at reinvention--one not without risks. It has meant a new management team, a new strategy and a new market, according to Messman. "And it is our one shot to prove that we can do it," he says. "But we have to be more customer-focused and revamp our engineering teams so they aren't producing great products that no one wants."One of the ways Novell plans on innovating is to help put more of an enterprise spin on Linux and provide better support for both customers and ISVs. Support is a critical issue to enterprise CIOs, who aren't likely to bet the farm on Linux in terms of mission-critical apps without the backing of a major vendor. To achieve his goals, Messman has reduced the number of overall products on Novell's dance card from 161 down to 64, deepened its channel program to cover Linux offerings and increased the payouts for demand generation to its partners. Along the way, NetWare is taking a back seat to Linux. It is both an opportunity and a challenge. "We have to migrate that NetWare base to Linux," Messman says.

That migration work presents a great opportunity for existing Novell partners, who should focus on tuning their Linux skills, according to Gartner analyst Mary Hubley. "Novell has deep pockets and they will support SuSE Linux really well," Hubley says. "This will be really attractive to VARs who have experience with Novell's background."

Critical MassNovell joins a formidable cast of heavy-hitter infrastructure companies, led by IBM, that have pushed Linux as a lower-cost alternative to Windows and Unix for both the enterprise and SMB space. To date, IBM claims more than 6,300 Linux engagements and 15,000 new Linux applications written by ISV partners. Through various discount programs, it incents ISVs to write Linux apps. Meanwhile, commercial Linux pioneer Red Hat is turning a profit and garnering accolades for its rigorous certification program. HP, Oracle and Sun Microsystems are all putting skin into the Linux game on the systems side of things.

What's new to note is the growth in applications support for Linux, which is quietly becoming one of many proof points that the OS is evolving from an edge-of-network novelty to a can't-ignore server environment for business software. As the number of ISVs porting or outright building their apps to Linux rises, their solution-provider partners and integrators would be wise to put Linux deployment skills training on their to-do lists. Done right, you can make some money in the open-source universe by appealing to more customers,as long as you navigate some technical and business challenges and partner wisely.

"You've got a mix of applications, proven results of open source coming from the maturity of the operating system, and a vast body of people looking at Linux as a way to save money, space and have more control over source code," says Jeffrey J. Hewitt, principal analyst at Dataquest. "Linux isn't stealing share yet, but there is quite a bit of replacement happening out there."The statistics don't lie: Gartner reports that Linux-based server shipments grew from 425,000 in 2002 to 660,000 in 2003, a whopping 25 percent of the server OS market today. The analyst firm predicts that number to rise to 1.5 million shipments by 2008. Technically, Linux's core developers have made its source code kernel more enterprise-palatable. A new release, version 2.6, sports key enhancements around database support, performance and clustering that will appeal to CIOs who want assurances that the OS is robust enough to run mission-critical systems.

"A few years ago, when we said that Linux was ready for the enterprise, it was considered a joke," said IBM chairman and CEO Sam Palmisano in his recent keynote speech at PartnerWorld. "Well, things have changed."

ISV OpportunityMicrosoft has made a fine living signing up ISVs in its own variation on the '80s credo on greed, "He who dies with the most toys, wins." In its case, the toys are applications. With thousands upon thousands of desirable Windows business programs in the marketplace, customers have almost no choice but to turn to the Windows infrastructure that runs them.

But make no mistake. As mainstream Linux apps such as ERP, human resources, accounting and CRM become more available, customers will respond in kind. And the platform players are well aware of the opportunity to expand their own universe through the proliferation of Linux applications. IBM, Novell and BEA are courting ISVs heavily to write to Linux and then ride on top of their respective stacks of middleware and services. Cornelius Willis, vice president of developer marketing at BEA and a former Microsoft executive who contributed to the development of Visual Basic, says that Linux "changes the whole game for developers" in terms of giving them a deployment choice in the J2EE environment that is as affordable and potentially widely distributed as Microsoft's platform.

Meanwhile, on the other side of the ISV equation, software companies that sell business applications say they are getting nudged by customers that are eager to kick the Linux tires for much more mainstream uses than today's typical deployment in a standalone firewall appliance."For the first time, I have started to see major enterprises asking us to push Linux from a typical border role to something more strategic and inside the network," says Benson Miller, a managing consultant at Logicalis, a Largo, Fla., solution provider and IBM partner that builds custom applications for clients in industries such as telecom.

Indeed, Gartner says more companies are using Linux to run business applications, databases and app servers, evolving beyond the single-purpose usage of the past, such as Web servers and security appliances.

That said, Linux isn't for everything and it isn't going to bump Microsoft off its perch anytime soon. But for ISVs and integrators, it is emerging as a platform not to be ignored. Some things to consider as you move down this road: As an ISV, it is far easier to port to Linux from a basic C or C++ or Java code base than from Visual Studio, Visual Basic, C# or .Net. So if you are considering a new app from scratch, choosing from cross-platform tools in terms of your development strategy leaves the Linux option wide open. As a solution provider, Linux should be viewed as more than a Microsoft alternative. In fact, the biggest opportunity abounds in migrating Unix to Linux, an attractive proposition for customers seeking hardware savings and overall consolidation. The Linux code base shares many similarities with Unix, making the migration easier, and partners can take their customers off expensive Unix hardware and onto Intel.

Other things to think about: Decide the distribution you will support, Red Hat or Novell SuSE, by carefully examining their support services, certification programs, channel models and technical capabilities. Red Hat's certification programs are being heralded as iron-clad as Cisco's vaunted program, for example--a big plus for VARs. Novell is still working out its training plan for SuSE Linux as it begins absorbing the new company and its channel partners. Last, be aware that the specter of legal action by SCO, which is claiming patent rights to the Linux source code, may render some customers skittish. That's why Novell has taken the extraordinary step of promising to pick up the legal tab if its customers or partners get zapped.

All things considered, many ISVs are taking the leap. Take a company called GroupLink, which develops customer contact- solutions software. GroupLink had been a Windows-only proposition until a year ago when it started to explore Linux. Its customers wanted better TCO, and GroupLink CEO Dave Turner saw open source as a way to kill two birds with one stone by placating customers and expanding his own market reach. What tipped the scales was Novell's launch into the market.

"Honestly, if it weren't for a company like Novell coming into this and taking responsibility for managing the underlying network services, there would still be a big question about Linux in the marketplace," says Turner, adding that IBM can also be thanked for creating mindshare.Today, GroupLink's apps run on Linux as well as the open-source database MySQL and no application server, so "we can take nearly all the licensing out of the picture and beat our rivals on cost," Turner says.

Licensing looms in the Linux debate. Cost isn't the be-all, end-all around Linux, but the fact remains that many customers have grown frustrated with Microsoft's licensing policies. "Some of my customers have developed edicts that say, 'We will get Microsoft out of our business because of what the licensing is doing to our budget,'" says Fred Palmer, a senior systems engineer for Gulfcoast, a solution provider based in Largo, Fla.

Microsoft, however, will happily argue that the days of Linux as a no-license proposition are over now that the two major distributors require some kind of user license. Yet there are nuances to consider. Being open source, the Linux upgrade cycle is much less stringent than Microsoft's, and there's no requirements for client licenses or maintenance contracts like Software Assurance. Linux proponents will also argue that the OS is cheaper, not just in acquisition cost, but in terms of greater uptime and less security maintenance over time.

Curt Finch, CEO at software vendor Journyx and a participant in IBM's SpeedStart your Linux program, says the cost-savings argument vis-a-vis Microsoft is no joke. Journyx develops Web-based time-sheet applications for SMB companies that it gives away free for the first 10 users and also offers in a hosted version. It runs Linux in its hosting center, but for its sales over the Web will support customer environments on Windows and Linux. Finch says his support costs are much lower for Linux than the Redmond platform, it's more secure and is easier to write industrial software on top of it. "It's just better. It takes more effort, energy and TCO on Windows," he says.

As an example of the headaches he faces, Finch says Journyx recently discovered that 40 percent of its downloads were failing to install properly, often resulting in a lost sale. The reason? Microsoft had issued a new patch to its IIS server product, which is a requirement to run Journyx's apps. Changes like that, frequent at Microsoft, force Journyx to update its own code."Our customers call up our support line and go, 'It's all broken, your software sucks, we hate you,'" Finch says. "But when you dig in, you find that the failure is Windows and the fact that someone installed a video game on the machine."

Freedom of ChoiceAt the end of the day, many ISVs simply cite choice as driving their Linux decisions. By adding Linux to their repertoire, they expand their footprint while affording customers the option of running applications on any type of hardware or app server. So, if the small business grows and needs to scale up from Intel servers to, say, IBM iSeries, they can do that quite painlessly when the boxes run Linux. Not so simple if you run .Net apps on top of Windows Server 2003 and decide you need mainframe power.

At AccPac, Downing says they couldn't ignore the business appeal. Today, 20 percent of AccPac's customers run their accounting suite on Linux, and the number is continuing to grow. Notably, he says AccPac's applications perform better on Linux, too.

"Linux done right requires an investment from you in terms of services and support," he says. "But what you get in the end is a more secure, stable environment and applications that are not controlled by any single entity."

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