Linux-based and Unix-based apps are becoming commonplace in the enterprise, but some sectors are still holding out. IDC and Info-Tech explain why our financial institutions are reluctant to take the plunge. Also: a consultant tells us where they could be missing out
Despite the performance and price advantages offered by open source applications, financial institutions in Canada remain hesitant dive into non-proprietary solutions, according to a recent survey.
In a poll of more than 1,600 IT managers in the U.S. and Canada, Info-Tech Research Group, found that Canadian firms are more likely to open to using non-proprietary software than their American counterparts.
The survey, however, revealed that Canadian financial firms do not share this level of confidence, according to the London-Ont-based consultancy firm.
About 60 per cent of Canadian businesses are willing to consider open sources software (OSS) compared to 40 per cent of American companies. Only 40 per cent of Canadian financial services organizations support OSS use.
“Financial firms see OSS as products of acceptable value and a low cost alternative to proprietary applications but not a killer app that will drive performance,” said Michelle Warren, analyst for Info-Tech.
Another technology analyst, however, disagrees.
The local retail banking industry remains “neither bulls nor bears” mainly because of migration issues, according to David Senf, manager of Canadian application development and infrastructure software research for analyst firm IDC Canada.
“I don’t think performance or security is an issue, but rather, it’s the cost of moving from a UNIX or mainframe base that’s causing some hesitation.”
For instance, Senf said, all five major Canadian banks have OSS “deployed throughout the organization from low-end Web servers to high performance computing.”
He also dismissed previous concerns that corporations switching to OSS suffered support problems. “Support issues have long been addressed by the entry into the open source environment of vendors such as IBM, HP, Novell and Sun.”
While at least 20 per cent of servers in the financial services are running Linux, proprietary applications still have a strong hold in core systems, Senf said.
There appears to be a growing move in the banking industry to shake off the proprietary chains, says Jim Magahey, client director for HP Canada‘s department that services the TD Bank Financial Group.
“Migration to open standards and open source is driven by the need to get away from the dependency issues of a single vendor solution,” he said.
He said the interoperability offered by open standards and OSS products “provide significant cost savings and performance advantages.
“When your system can talk with a larger diversity of machines and applications it becomes easier to deploy new technology and reduces the need for retraining staff.”
Proprietary applications lack in innovation and often do not allow users the flexibility to modify the software to meet their specific needs, according to Reuven Cohen, co-founder and chief technologist of Enomaly Open Source Consulting in Toronto.
“New things are coming out of basement labs and these cutting edge technologies are not available in the proprietary space,” he said.
Corporations that deploy vendor sold applications, Cohen said, often find themselves “locked into restrictive contracts or proprietary codes.”
He also said OSS supporters find it helpful to be able to test applications at minimal cost “without obnoxious sales team hounding them.”
Enomaly was formed in 2004 by a group of open source developer and consultants. Over the years its client base of large financial companies has grown to include Manulife Financial, Deutsche Bank and Oppenheimer Funds.
Cohen agrees with Senf that traditional technology continues to exercise a hold on large Canadian firms. “There’s definitely an interest in open source, but Canada still lags in adoption compared to the U.S. and Europe.”
Among the emerging trends in Canadian companies is the use of Linux-based software in grid-enabled systems to run distributed applications and the increasing use of OSS in Web applications.
Firms looking to deploy OSS should check out three key concerns:
- Licensing agreements – There are a variety of licensing contracts available from ones that essentially give the users carte blanche on any modification to GPL’s that require that changes be sent back to the development community. Find one appropriate for your security needs.
- Community base – Communities provide a research and development base. Applications with larger communities often mean more developers.
- Support and training – Investigate the support and training your staff will need to move over the new system.