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Management Strategies

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Linux Q&A with Microsoft

Microsoft responds to questions on TCO, indemnification, and the value proposition of Linux.

For an upcoming feature story on the adoption of Linux in financial services for the January 2005 issue, BS&T contacted Microsoft (Redmond, Wash.) to elicit the company's views on the topic. The following is a partial transcript of the resulting exchange between BS&T's Ivan Schneider and Microsoft's Martin Taylor, general manager, platform strategy, on the topics of TCO, indemnification, and flexibility in IT deployments.

BS&T: What strategies can an enterprise pursue to reduce TCO [Total Cost of Ownership] and increase performance?

TAYLOR: When customers ask me about TCO, I tell them to look at the research and the data out there but ultimately to run the numbers themselves. Customer scenarios are unique and cost is such an important issue that it is essential to do the TCO analysis and make the decision based on the facts. Many companies are looking for research information, analysis and company experiences to evaluate the TCO and performance of Microsoft and Linux based technologies. Through the "Get the Facts" campaign, we offer factual, third-party information and evidence to companies who are making those key decisions about their IT solutions -- giving them a baseline to move forward and do their own analysis.

What we keep finding, though, is that the TCO evidence on multiple fronts points back to an advantage for customers going with the Microsoft platform. For example, independent research done by the Yankee Group appears to be consistent with Microsoft's own TCO research results that indicate continued market leadership of the Windows server and desktop operating environments based on long-term business value. Yankee notes that a major Linux deployment or switch from Windows is four times more expensive and takes three times as long as a Windows upgrade. They also call out the premium paid for Linux system administrators and Linux applications. Yankee's findings provide insight into trends in Linux customer perceptions, intentions, inhibitions and activities, and showcase the industry focus away from OS acquisition costs to an examination of benefits, reliability and legal liability. Customers, too, support the TCO findings. Take Equifax for instance -- it selected Windows over Linux to enhance the speed and performance of its marketing services and saw a 14 percent lower TCO on Windows while realizing a six-months-faster time to market.

BS&T: Are there any "intangibles" a bank should consider with regard to the choice of an operating system?

TAYLOR: Absolutely. We believe that we offer customers the best platform at industry leading Total Cost of Ownership. In addition to that, Microsoft is a company that has over 25 years of experience in the business of making software for enterprises and understanding all of the needs that go beyond the technology such as viable support policies, product roadmaps, and investments in R&D that are unparalleled in the industry - these are the strengths that Microsoft as a company brings to the mix.

While Linux has found some success in specific areas, there are key challenges to Linux achieving broad success in this space: In many cases, Linux is no design by design. The Linux model may offer customers unlimited options in terms of custom development, but it pushes cost and complexity to the end user--or consultant--to implement. Products that deliver broad business value are the result of our approach to developing a product architecture that delivers testing, regression analysis and overall project coordination while moving complexity out through an integrated stack.

One other key intangible is the degree to which your software vendor stands behind its products. Intellectual property protection, commonly referred to as indemnification, is a topic that has become more important to users of software over the last several months. It's important to know that not all software companies provide IP protection while some offer less comprehensive coverage than you might assume. Microsoft wants our users to be confident that they are not unnecessarily exposed to IP problems by using our software. As announced just last month, Microsoft has extended IP indemnification to all licensed end-users of its indemnified software --- from the biggest to the smallest.

BS&T: Please comment on the ability of Linux to use a single operating system across different hardware configurations and chipsets, thus preserving legacy investments in hardware.

TAYLOR: To start, it is important to note that while with Linux there may be the ability to use a single kernel across different hardware configurations and chipsets, using the same Linux distribution (operating system) is not always possible. I should also mention that we've found it rare for companies to move off of an older operating system without upgrading hardware as well.

That said, IT environments -- especially in financial services -- are inherently heterogeneous. It's essential to take into account the incorporation of proprietary and legacy systems with the best, new technology and give your company the best possible IT roadmap. That is why we are enormously committed to making our products compatible, backwards and forwards but also compatible with other vendor technology through the use of open standards. Today, more than ever, Windows provides greater business value and lower long term costs for customers than competing platforms, including Linux. Lower total software lifecycle costs result from scenario-based design, rigorous engineering, and thorough testing.

Microsoft takes a multifaceted approach to addressing the broad interoperability needs of customers operating in mixed environments, supporting industry standards when appropriate. Microsoft engineers its products to enable the Windows platform and applications to work well in both Windows and non-Windows environments. Jupiter's research shows that IT professionals view Microsoft as the industry leader for helping companies achieve their interoperability goals.

BS&T: Please comment on the potential for companies to reduce their reliance on a single vendor for operating systems.

TAYLOR: Choice, flexibility and interoperability have been and continue to be important issues for our customers. We recognize that our customers are operating in mixed IT environments and we want to understand how we can better work with them. To help identify customers' needs and priorities around interoperability, we commissioned Jupiter Research to conduct an independent research study to identify the preferences, interests, and requirements of IT professionals with regard to systems interoperability within their corporate infrastructures. This study clearly shows IT professionals believe Microsoft is the leader in supporting their interoperability needs. Conversely, the results indicate that only 12 percent of the IT professionals surveyed cited vendor lock-in as an interoperability concern.

The January 2005 issue of Bank Systems & Technology will include a feature on the adoption of Linux in financial services. Look for it!

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