During a presentation at the Enterprise Linux Forum, Mark Snodgrass, vice president of Merrill Lynch's in-house technology provider, the Global Technology & Services group, said that the company has found that re-architecting its information infrastructure using Linux can reduce administration costs dramatically.
In fact, Snodgrass found that, while the software licensing costs of Windows was higher than Linux, the highest cost was in managing traditional Windows infrastructure.
"It's the people that cost the most," he said.
Merrill Lynch's new plans for its information infrastructure call for running much of its Linux applications not on their own physical machines but in virtual machines running on high-end servers. Such a scheme simplifies management and allows for rapid deployment of new Linux "servers" by activating a copy of a stored pre-configured image in as little as 2 minutes 14 seconds.
"We are not trying to promote Linux," Snodgrass said. "We are just trying to reduce the cost of ownership."
Using such virtual Linux servers to store files could cut costs dramatically, he said. Keping their file systems on Windows servers would have cost the company US$600,000 in hardware and five times that to pay for the personnel to manage the servers.
"We know that Linux is not for everything," he said. "But there are not many applications that require more than Linux can give us."
Snodgrass's group proposed replacing the company's Microsoft Exchange servers with a Linux-based solution that would have all the same collaboration features and have a cost savings of 70 percent to 80 percent. However, for other reasons that Snodgrass wouldn't discuss, the company's executives decided to stick with Exchange but outsource the management of the groupware to save money.
Not everyone agrees that Linux saves money, however. Last year, market researcher IDC released a report, heralded by Microsoft, that indicated that the five-year cost of ownership for four out of five applications would be lower if Microsoft software was used. The sole Linux winner was Web server software, according to the report.
Snodgrass said he wasn't familiar with the study, but his own data indicated that running virtual Linux servers saves a lot of money compared with running those same services under Windows.
"We've done our numbers, and we are a bank, so we know our numbers," he said.
Other companies apparently have crunched the numbers and come to the same conclusion.
Telecommunications provider Verizon disclosed that it saved nearly US$6 million in equipment costs by moving its programmers to Linux from proprietary-Unix and Windows workstations. In October 2001, Amazon.com revealed that it had replaced Web application servers running on a proprietary-Unix platform with Linux, saving millions of dollars.
Snodgrass said the next target for deploying Linux could be on the desktop. The company plans to do a pilot project that will allow thin clients--computers with minimal hardware requirements--to be used as workstations. The applications would actually run on Linux and Windows terminal servers. To the user, the result would be the same, but to the company's administrators, all of the user's data would be centrally stored and thus, much easier to maintain.
The irony that companies may be moving toward an infrastructure that resembles the mainframe-and-terminal set-ups of several decades ago didn't escape Snodgrass.
"It's interesting when Solaris and Windows are the 'legacy' and mainframes are the new big thing," he said.
The IDC report was funded by Microsoft and is bogus. This is the _only_ report which shows that Microsoft is lower on TCO than Linux. Every other report shows the opposite. Go figure.
Further, read the following comments from BusinessWeek:
http://www.businessweek.com/magazine/content/03_09/b3822610_tc102.htm
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To prove the point, Microsoft commissioned a study by market researcher IDC that was released in December. The study concluded that because Microsoft had created more software tools for managing and updating Windows, the operating system would be 11% to 22% cheaper to run than Linux over a five-year period in four out of five different common computing tasks, such as sending files to printers and running security applications. Windows was more expensive when it came to serving up Web pages.
Yet even this tactic seems to be backfiring. One of the study's authors accuses Microsoft of stacking the deck. IDC analyst Dan Kusnetzky says the company selected scenarios that would inevitably be more costly using Linux. Also, he believes Windows should be cheaper to operate, since it has been around longer, giving Microsoft more time to develop software to manage the operating system. "Microsoft has had a lot more time to work on this. I wonder why the win wasn't bigger," Kusnetzky says.