Midtier Banks Report Plans to Increase Usage of Linux By Susan Cournoyer The emergence of the Linux operating system as an alternative to more widely used operating systems (OS) in midtier banks poses as much of a business question as a technical question. Midtier banks recognize that the performance and cost of operating systems may not be top of mind to banking customers, yet decisions about operating systems can potentially impact customer satisfaction and bank profits.

Evolving preferences around operating systems in midtier banks are taking place across the backdrop of OS preferences across all midtier companies. Microsoft Windows continues to be the dominant operating system used by midsize businesses (MSBs), as Windows-based technologies present the broadest selection of business packages and market-leading development tools. It is also the most widely supported solution in terms of skill availability and costs.

Linux, however, has matured and has become successful in infrastructure roles especially — Web serving, file/print, e-mail, and communications (VPN, proxy, remote access, etc.) across midtier enterprises. Increased interest in Linux tends to originate in its usefulness in infrastructure roles, and a continued focus on total-cost-of-ownership that is driving consideration of Microsoft alternatives. However, though becoming popular for many MSBs, acceptance of Linux has been slowed due to the comparatively lower availability of Linux-related skills in the market and its perceived complexity.

One other major inhibitor to Linux adoption has been the lack of industry-specific applications that can be deployed on the Linux operating system. In banking, though, application vendors such as Sanchez and Eontec have begun to offer industry-specific systems that can run on the Linux platform. And right now, branch automation and branch systems are major priorities for midtier banks that are looking at Linux as the means to stretch IT dollars.

Major hardware vendors in the midtier banking sector are also pouring resources into supporting the operating system and partnering with the major distributors of Linux. IBM has been supporting Linux since December 2000, and in an effort to raise the profile of Linux among the financial community, IBM in mid-2002 opened a million-dollar Linux test center in New York City. The facility offers financial services firms the resources for testing applications to run on the open-source operating system. Technical staff from IBM Global Services helps customers evaluate and test applications on Linux, while SuSE provides ongoing installation and technical support for the center.

In February 2002, Sun also announced its intention to expand support of the Linux operating system with a general-purpose Linux server. In the past year, Sun has been targeting the midtier banks, signing some contracts, and offering them support for the Linux platform.

Operating system purchases in midtier banks cannot be taken for granted given the business implications of the decisions. IT buyers at midtier banks will find that they need to conduct more due diligence around operating system options to choose the best match for technical and business goals.

Susan Cournoyer is Principal Analyst, Verticals and Business Strategies, Gartner, Inc. You can discuss this, and related topics, with Ms. Cournoyer at Midsize Enterprise Summit. Click here for event details.

References

Gartner Technology Overview
Linux: What Major IT Vendors are Doing
Publication Date: October 9, 2002
Authors: Mary I. Hubley, Nathan J. Muller

Gartner Research: User Wants and Needs
Midsize Business: Infrastructure Investment Plans and Priorities, North America 2002
Publication Date: October 7, 2002
Authors: Jim Browning, Mark Margevicius, John Pescatore, Jay Pultz, Tom Bittman