IDC: Linux Becoming Entrenched in Capital Markets
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Linux is well on its way to becoming entrenched in capital markets, with leading edge firms turning to the platform for mission-critical applications, according to a new report by IDC Financial Services (the fruit of IDC's acquisition of Meridien Research).
The report's authors, IDC Financial Services analysts Deborah Williams and Damon Kovelsky noted that in addition to mission critical apps, most firms are also turning to Linux for more fundamental applications like basic infrastructure, e-mail and printer servers.
"Future wide-scale implementations of Linux-based, mission-critical business applications may get less press, but they will continue to happen at all of the largest global financial institutions," Kovelsky said. "Critical to this migration will be the ongoing support of the large hardware vendors, especially their ability to provide support tools and services for porting and new development. We believe that within the next 18-24 months, installing a Linux-based software package will become as normal as installing a Windows or Sun Solaris system."
Kovelsky said they predict the real move will come within 18-24 months because the current macroeconomic conditions don't yet support it.
He added, "The hardware vendors and providers are set to go. It's really just the demand-side."
The analysts noted that Linux has become an attractive platform to many firms because it has demonstrated that it can be a less expensive alternative to Unix for some workloads, but still provides many of Unix's core features, like stability.
"It's currently a less expensive alternative to what's currently being used on Wall Street," Kovelsky said. "It's just as good. Since we are in a time of cost-cutting, cheaper is better."
Initially, Kovelsky said he sees Linux-based solutions capturing a larger slice of engines and applications that are transactionally based, and don't require a lot of processing. For instance, he said Linux makes a good platform for matching engines and trade order management solutions.
However, currently at least, he doesn't see Linux getting much play in areas that have heavier processing and database usage requirements.
"[Right now] a lot of the databases that are being used on Unix are not really demonstrating that they can be ported to Linux," he said. "I think we'll start seeing that change next year."
But the market still has growing up to do, and the major players need business experience before they will be able to fully leverage their offerings, according to Kovelsky.
"Linux providers' lack of capital markets expertise and inability to bring in independent software vendors will make them important but fringe players in the capital markets over the next 18 months."
"Your pay scale is going to have to exceed what they're making on Wall
Street," he said.
, which already has a heavy presence in the financial
services market, and Hewlett-Packard
-- especially with
its Compaq relationships -- are in the best position to capitalize on
Linux's increasing penetration of capital markets. Kovelsky said the
software vendors could enter the market, but they will have to invest in
personnel with business expertise, and that's not a cheap prospect.
"Your pay scale is going to have to exceed what they're making on Wall Street," he said.