Open Source Goes Corporate

Financial firms including ABN Amro, E*Trade and Fidelity Investments are among the big businesses opening their doors to the Linux software stack.

One line of code at a time, application by application, Web server by Web server, the data centers of a growing number of major companies are taking on a new personality, one that smells of the ocean and waddles when it walks. The trend is open-source software, the motivation is added flexibility at lower costs, and the long-term ramifications--well, those aren't entirely clear. From ABN Amro Bank NV in the financial industry to Yahoo Inc. on the Web, billion-dollar companies are expanding their embrace of the Linux operating system and other open-source components for a wide range of purposes. The Linux penguin has hit the big time.

Opening Up

ABN Amro Bank NV Financial services 2004 revenue: $24.3 billion ABN Amro has used open-source tools to help create some of its banking applications, most prominently its Mortgage.com Web-based service. The company is running some mission-critical applications on Linux and is considering the use of open-source business-intelligence and reporting tools.

Cendant Corp. Travel services 2004 revenue: $19.8 billion Cendant Travel Distribution Services has saved about $100 million since 2001 when it began moving to Red Hat Linux. The company uses open-source Apache Web server and Tomcat servlet engine to run its CheapTickets.com operation.

Continental Airlines Inc. Air travel 2004 revenue: $24.3 billion JBoss application server and MySQL database are key components of Continental's homegrown Ticket Reissue and Traveler Alert applications. It used open-source Zope and Plone applications to create the Traveler Alert System's portal.

E-Trade Financial Corp. Financial services 2004 revenue: $1.5 billion E-Trade's migration from Unix to Linux began in 2001 and saves $13 million annually while improving the IT infrastructure's performance. The company plans by early 2006 to move from BEA Tuxedo middleware to Common Web Services transaction-messaging software.

Fidelity Investments Financial services Privately held, with managed assets totaling $2.3 trillion Fidelity Center for Applied Technology, founded in 1999 to find technologies and tools for Fidelity's business units, has developed Struts Plus, a set of proprietary-code enhancements to the original open-source Apache Foundation Web application framework.

If you missed the announcement of this industry-changing development, that's because it never went out. The deployment of open-source software is happening a project at a time, and many of them are never publicly discussed. So InformationWeek set out to find out just how large corporations are using the stuff, conducting interviews with 10 big companies that are beyond the dabbling stage. We wanted to know not just why they're embracing open source, but how, where, and to what extent. What we found is that open-source adoption is growing rapidly in these companies, even though some of the issues involved in using software that no one owns haven't been completely worked out.

Consider the changes underway at UPS Inc. By the end of this month, the package-delivery company will finish migrating its Tivoli systems-management software, used to monitor and distribute software to 6,000 servers, from RISC-based machines running Hewlett-Packard's Unix operating system to about 50 Intel-based computers running Red Hat Inc.'s Enterprise Linux. The UPS.com Web site is being migrated from Sun Microsystems' Solaris to Red Hat Linux on Advanced Micro Devices-based HP servers, and UPS estimates Linux servers will handle all of the site's traffic by January 2007. "You don't have to buy industrial-strength software to support all areas of the business," says Nick Gray, UPS's director for architectural services. "You can use an open-source application to support a project rather than building one, buying a lower-end application, or not doing the project at all." As a next step, Big Brown has begun testing Red Hat's 64-bit Enterprise Linux 4 as an option to run its Oracle data warehouse.

Or look at how the Walt Disney Co.'s enterprise application services architecture team is quietly contemplating the deployment of the open-source Tomcat servlet engine in its portal environment. The portal consists of packaged applications, including Vignette Application Portal, IBM WebSphere, and DB2, all running on Sun Solaris e480 servers. Disney is upgrading to the current version of the Vignette portal software and migrating to Tomcat, which will likely run on Intel-based Linux servers, a move expected to reduce the portal's hardware and software licensing costs. By the time the migration is completed by year's end, Disney's Enterprise Application Services Architecture team will have its entire Unix farm of more than 200 servers running on Linux, says Jonathan Chaitt, director of enterprise application services architecture.

As large companies move in this direction, they've got some issues to deal with. First and foremost, they must find a way to integrate open source into their commercial software environments and support it on an ongoing basis. They want reassurances that open-source code won't be subject to intel- lectual-property lawsuits. They need procedures established to avoid violating licensing terms that are different from what they're used to. And, as they move up the open-source "stack" of operating systems, databases, and application servers, they have to decide where to draw the line. Are open-source applications in their future?

Much of the work companies are doing with open source revolves around their key Web-site applications and increasingly around those applications' underlying databases. There are no sales figures for software that can be downloaded for free and is often introduced into organizations by developers acting on their own rather than going through purchasing departments. But open-source usage clearly is trending up. Online brokerage E-Trade Financial Corp., for example, has moved its customer-facing Web applications from several dozen Sun Solaris servers to twice as many single-processor lBM Linux servers, and travel reservations specialist Sabre Holdings Corp. now runs the MySQL database on 200 four-CPU servers, with each server holding 50 Gbytes of data.

"People are using more open source than they realize," says Michael Gallagher, manager of architecture strategy at ABN Amro, a financial-services company that has used open-source tools to create some of its banking applications, most prominently its Mortgage.com Web-based service. The company continues to look for new areas to apply open source, and it's considering the use of open-source business-intelligence and reporting tools based on Eclipse, an open-source development environment. "It's hard to characterize the level of reliance on open source," Gallagher says. "The best I can do is say that I can't imagine a world where we don't use open-source-based technologies."

Yahoo uses open-source software and development tools to build and support the services that customers have come to love about the company, such as E-mail, music, and search. About a dozen of Yahoo's Web-page templating systems were designed using the PHP programming language and help define how Web pages will look. "There aren't a lot of commercial products out there that meet our needs, so over the past few years open source has become the technology we consider when there's something we need," says Jeremy Zawodny, a member of Yahoo's technology development team.

Licensing is one of the biggest challenges for open-source users, Yahoo's Jeremy Zawodny says.

When Yahoo needs a new database, the open-source MySQL database is its first option. Already MySQL is part of the Yahoo Finance Web site's core infrastructure for large batch operations and is used for real-time data-feed processing and serving of content directly on the site. When Zawodny joined Yahoo in 1999, he worked in the area responsible for posting news feeds to the Yahoo Financials Web site. "The data-management part of that system was crude and written internally, and one of the first things I did was replace that with MySQL," Zawodny says.

Manage The Risk
In many cases, businesses are putting open-source technology to work in new projects. That can create problems when it comes to accounting for open-source software the same way they do for commercial apps. "If developers aren't using open source to replace an existing application, nobody really knows about it," says Michael Goulde, senior analyst with Forrester Research. Companies may be putting themselves at risk, because the core code for the most popular open-source software projects is generally the product of thousands of contributors scattered around the world, and the intellectual-property ramifications have never been fully tested in court.

Large businesses have much to lose if they should get caught up in any legal entanglements from using the software. "We want to make sure we wouldn't be a target of a lawsuit down the road," UPS's Gray says. The company's legal department scrutinizes the usage rights of open-source software before deploying it.

Licensing is one of the greatest challenges for open-source users. "The fact that software is open source doesn't mean a company can use it in the way they want to use it," Yahoo's Zawodny says. Different licenses have different requirements in terms of distributing and modifying code. Yahoo has designated an employee to manage open-source licensing terms and legal issues. "It shouldn't be scaring people away; people just need to know what they're getting into," he says.

Continental Airlines Inc., which turned to open source when it needed to build its key Ticket Reissue and Traveler Alert applications on the cheap, has its legal team review the terms of an open-source license agreement and offer feedback to the technical team, says Jack Wang, managing director of Continental's technology group.