Open Source in banks?

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25 March 2009
Bart Narter
I’m at the Open Source Business Conference: Taking Open Source to the Enterprise. Do banks use open source? The answer is at least that some do. HSBC is a SUSE Linux user. Bank of America has a team of people responsible for open source. Their job is to push open source throughout the organization, so it is on an equal footing with traditional commercially available enterprise software. Tim Golden, SVP of Open Source Management and Compliance at Bank of America stated, “People are fine with open source here at Bank of America. We have a strategy and policy. My role is leveling the playing field with open source.” Linux is one of the core applications at the bank. When moving up the stack to application servers and databases there is a religious war. It is much more acceptable to the bank to have open source in the web tier. One of the disadvantages of open source in the purchase process is that independent software vendors (ISVs) can do a proof of concept (POC). Open source vendors generally can’t because they don’t have the margin and budget to support such activities. Their solution is to offer free downloads and let engineers create their own proof points. Traditionally open source vendors have brought 80% of the functionality at a fraction of the cost. Now open source has in some cases out-innovated traditional vendors. Firefox serves as a powerful example. Tom Berquist, CFO of Ingres, had an interesting take on open source in these tight economic times. As IT budgets are cut, CIOs have limited choices: *Cut new investments *Cut existing operational expenses (usually people) *Some combination of both. The former eliminates innovation at the firm, loses corporate value on existing projects that are terminated, and leaves the business units frustrated. The latter leads to loss of people with valuable skills and puts SLAs at risk. Using open source software is another way to cut costs without presenting either of the downfalls of the other options. He compared an open source stack of eclipse, JBoss, Ingres database and RedHat Linux versus a stack of Oracle JDeveloper, BEA Oracle, Oracle database, and Oracle Linux for a 4 CPU 8 Intel core system. Three year costs for open source were $118K versus $964K for the Oracle stack. For a new project, this is real savings. For an existing project there would be migration costs and training costs associated with moving things to open source. In times of shrinking budgets, open source software allows IT to avoid the pitfalls of the other two options: cutting new projects or cutting heads.

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