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Exploring Open Source!

April 2014 Edition
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  Exploring Open Source! 

The market trend in India is undergoing a rapid change as is seen in almost every part of the globe. Today the smartphone has become just like a virtual desktop with a virtual server, with workplaces quickly catching up with this trend. Just like the user can access his desktop from anywhere so can the source of data and application. NASSCOM expects the Indian software industry to clock in revenues of $84-87 billion through exports alone. 

“The penetration of broadband internet and influx of smart phones into the Indian market has given the software industry in India a great spring board unlike anything seen before. The fact that we are an English speaking nation with highly skilled coding expertise is a concept that is widely accepted to be one of the deciding factors for the rise of the software industry,” says Gautam Rege, Co-founder and Managing Director - Josh Software Pvt. Ltd.

Jagjit Singh Arora
Director, Regional Sales Red Hat India
Sunando Banerjee Channel Business Manager, APAC & Middle East, Openbravo
Jim Zemlin
Executive Director, Linux Foundation
Venkatesh Swaminathan
Country Head, The Attachmate Group – India
Gautam Rege
Co-founder and Managing Director, Josh Software Pvt. Ltd. 

Cloud further adds flexibility to this by cutting down on cost, energy consumption, real estate consumption, and making the system grow along with the organization. Sunando Banerjee, Channel Business Manager, APAC & Middle East, Openbravo foresees a tremendous growth in the adoption of Cloud based software. “With workplaces going virtual, I see a great future for Cloud based software. This will enable a very positive change in the Indian Software Industry.” Further with a Cloud perspective and taking an instance of ERP adoption in the country, Sunando says, “What was preventing Indian enterprise or to be more specific the adoption of ERP facing some sort of a roadblock in India is because the industry was skeptical on the ROI.  Any integrated system adoption needed huge investment in infrastructure and often it was stopping the SME organizations to adopt a system. Cloud computing completely changed this concept. Today we are seeing a rapid growth in adopting ERP thanks to Cloud framework where organizations have the option to pay as they go. It reduces the upfront cost of adopting the solution and flexibility in choosing what exactly you need.”

Trends in Software industry…

Enterprise software markets can be broadly classified into two parts – internal facing software and customer facing software. A key trend seen in the software space is the adoption of open source software within the telecom and financial services markets. The trend also points out to the fact of how most companies are moving away from traditional and large scale setups. This is true even for critical software requirements like those in banks. “A lot of banks are even trying to build a custom solution and open source software is filling that need gap. Another good example is companies moving away from enterprise solutions for basic necessities like email, invoicing and adopting flexible open source solutions. While it’s tough to point out the exact composition percentages between open and closed source software in the enterprise market, industry figures state that this segment grew to about $3.92 billion in 2013, a growth of almost 14% over the previous year,” cites Jagjit Singh Arora, Director, Regional Sales, Red Hat India.

“Since in open source the source code is known, it gives flexibility to an enterprise to choose what components of the software or OS it is required to run. You can make an appliance that is so hard coded that it can run only some specific apps. But the platforms we offer are enterprise ready. One can customize it according to one’s need. You are not restricted by the kind of hardware resources that you are using,” explains Venkatesh Swaminathan, Country Head, The Attachmate Group - India.

UCX takes SUSE Linux Enterprise Server Support


UCX at a glance:

Next-generation national-level exchange for the Indian derivatives market across all commodity segments-covering precious metals, crude oil and agricultural products 


Industry and Location

Financial Services, India 


Products and Services

SUSE Linux Enterprise Server 


Challenge

UCX had the opportunity to build a highly flexible and reliable trading platform that would allow it to operate more efficiently and at lower cost-per-transaction than its competitors. It wanted an open, scalable, fault-tolerant operating system with strong local support that would enable very fast time-to-market. IT is a critical element for financial exchanges and IT spend may represent up to 30 percent of its revenues. So technology is a really important strategic decision for UCX. 


Solution

To ensure maximum flexibility, UCX avoided deploying a monolithic architecture; Linux was the answer then. Being the only platform that could be used across all different architectures and based on positive experience of SUSE’s support and engineering resources, it chose SUSE Linux Enterprise Server. Today, UCX is running dozens of instances of SUSE Linux Enterprise Server, both on dedicated physical servers from Dell and IBM, and using the built-in Xen virtualization capabilities.


Results

Offering rapid trade settlement is an important benefit for the brokers who use the UCX exchange, helping them to maintain an accurate view of their financial position and to manage margin calls to their clients. With key components of the solution running on SUSE Linux Enterprise Server, UCX has confidence in the reliability and resilience of its settlement services.

As companies look for the best model and technology to support a successful transition to the cloud and implementation of cloud services, open source seems to be the most viable option. This trend is expected to continue as organizations continue to look towards flexible and open ways to move to the cloud.

While there has been a rise in adoption of open source over proprietary software in the last few years, both of these run parallel to each other. Though this cannot be called a threat, there is a shift in the mindset of customers who are adopting open source. They are getting open to the idea of adopting open source in general. There are several reasons for this, primary being the changes that are happening in other industries.  

"Having experienced open source in their set up they are noticing all the ingredients required to run a successful business. To create a successful IT infrastructure for running that business, open source offers a compelling value proposition," says Jagjit.

For many years, open source was a kind of solution used by people who wanted to be out of the crowd. But this perception has changed in the last 10 years. Today leading super computers or high performance computing, Mission critical applications, core banking solutions or even real time analysis seen at the top stock exchanges world over are seen running on Linux. Even ATM machines are seengetting replaced by Linux. It is thus growing to be the backbone of any business. “It is likely that lot many people are going to use open source for enterprise applications, reason being the benefits that they are getting are far more than what is currently being used, whether it be cost, time & efforts to change, flexibility and usability. Solutions on open source are almost similar to the solutions on proprietary system. Even the decision to change to a newer version is also far easier. We see it as a big potential and also as an alternative which was not there before but now present,” says Venkatesh. Where UNIX has been declining by 77% and Microsoft going down by 26%, Linux has been steadily growing at 56%.

Gautam prefers to use the term ‘disruptive technology’ rather than threat for open source. “A game changer like open source software always benefits the industry. It has forced a lot of companies to take notice and change the way they approach software development. While proprietary software comes with an associated cost, it does have the significant advantage of providing support in the long run. There are examples of hybrid business models as well which sell enterprise versions of their open source software along with support and hence offer the best of both worlds. Everyone likes to have adaptable software which can be customized as per requirements. Today databases and operating systems are open source and hence software is also open source. Ruby of Rails really shines out in this scenario because this open source web framework can be used to deploy open web applications on Linux, with a stable, open source stack with can optionally provide support if required which really brings down costs and improves productivity. All this means more choices to the customer and not necessarily a threat to either business model,” compares Gautam between the two.

There are similar trends in the FSI (Financial Services industry) sector as well. Traditionally if we look at the insurance vertical, it was a closed-source and proprietary software environment. Competing with these proprietary software vendors is the biggest challenge. Moreover, the regulatory environment for insurance in India has gone through tremendous changes because of which the revenue of insurance companies is under tremendous pressure. The sector has become more customer-oriented. They are now forced to look at different ways or avenues to reduce cost and as a result are becoming less dependent on proprietary software stacks. Open source can be a big game changer in this regard and can witness a traction. 

As Linux and open source software adoption has become mainstream and are being used today to build new technologies, the need for students and professionals to understand Linux and participate in the Linux and open source community is acute. “The latest Linux Jobs Reportshows that nine in 10 hiring managers are looking for Linux talent this year. The demand for this talent is high. Again, if you know Linux, your job opportunities are endless,” recalls Jim Zemlin, Executive Director at Linux Foundation. “Linux and open source software are the foundations for modern day society. From rail systems and stock exchanges to your phone and car, Linux runs today’s infrastructure. This growth is being met with a shortage of skilled Linux professionals. We hope that our work with EDX and our Linux training program can help build the talent pool of Linux pro’s around the world to propel this growth into the future,” says Jim. 

Jagjit of Red Hat put up a very exciting scenario that clearly speaks of how the road to Open Source finally opened in India. In 2003, when the government rolled out licenses for telecom providers to come into the market and start providing mobile services, every operator who wanted a license wanted to quickly launch their operations to book their first customers. In that mad rush of creating the infrastructure, they followed something known as the ‘Cut and Paste’ or ‘Copy and Paste’ approach. “They looked at traditionally successful telecoms in the west and replicated the same stack or IT infrastructure in India. So the entire stack was proprietary. But in the last 10 or 11 years of telecom in India, the scenario has become intensely competitive while the average revenue per user proceeded to shrink. Telecom providers began looking at new avenues of growth for making money. So they entered into Value Added Services and started engaging the customer in order to get more revenue from them. But they soon realized they had the aging infrastructure that was created way back in 2003-2004, and began asking what they could do in terms of pensioning that. Now, more of them are looking at open source and in the process, making their systems more open, agile and reliable.”

Organizations are also engaged in cloud sourcing - getting customers tuned away from paper use. Open source software has a dense adoption in terms of the cloud, and some of the most successful clouds are built on open source. For companies like Openbravo, open source is a boon. “We offer a complete Open Source ERP solution, which is 100% cloud ready. The overall cost of ownership is going down with the availability of Cloud Based ERP, which is only going to help organizations like ours. I see more and more proprietary software also adapting to Cloud Infrastructure. This is a paradigm shift and it is difficult to oppose,” observes Sunando.

If we look at the next-gen cloud environment, app developers are exploring a hybrid environment that allows them to post certain apps outside their environment and onto the cloud. And not every proprietary software vendor has an answer or a clear distinct policy to support this. Open source does have the references and architecture to support most of the applications on cloud. “We are observing a spectacular growth in our business, which enforce the belief that the market is growing in favor of Open Source Solution. Coming back to Cloud computing, it is benefiting almost every segments of India’s economy including SMEs, Education system and the Government. The Adoption rate of the cloud technology in the Indian public sector is on a fast pace. We are observing some large enterprises also tending towards cloud infrastructure. The benefits are very similar in Open Source and cloud computing - low cost of ownership, quick deployment, pay as you go and lower maintenance,” says Sunando.

However…

Though the market is adopting more open source solutions, there are still some areas where customers, especially in India, are taking a cautious approach. They want to know more, look at more references, new cases, and best practices, and really see how they can deploy open source in a way that works for them. 

There are major transformations happening in open source and this journey will not be complete without the hardware ecosystem partners. The hardware ecosystem plays a very important and pivotal role because hardware developers have to provide reliable hardware with all the capabilities to really run the open source platform. 

“Hardware vendors are probably going to have to adjust to these transformations. The buzzword today is “Internet of Things” - integrated devices and not individual hardware. Consumers are shifting seamlessly across devices – not just interoperating between phones, tablets and computers but also between devices like watches, bands (FitBit, Nike Fuel, Jawnone etc.), music devices, intelligent refrigerators, smart homes and even spectacles (Google Glass). Companies are going back to the drawing board to redesign how hardware and software merge to provide the best experience and functionality. This scenario suits open source developers the best as no one can keep pace with these transformations as a whole community can,” replies Gautam. 

Gautam also points out how the progress of proprietary software is way behind the developments happening in the hardware space. “While hardware offerings have kept evolving (think Moore’s Law), how many languages and software are well positioned to truly leverage this hardware advantage? The same applies to distributed computing and cloud computing. Software infrastructure grows fastest in the open source domain. That’s not to say that proprietary software cannot evolve but with constraints of licenses and Intellectual Property, this progress remains painfully slow.” 

What the future holds…

Open Source is one of the most interesting areas of developments today. Languages like C#, Java, PHP, Python and even Ruby are already considered to be traditional languages, with newer languages like Go for example entering the market. The recession in the recent past has necessitated changes throughout the system and that’s when customers are also forced into prioritizing their needs. The end of Support for Windows XP has hampered and raised many challengesto a CIO, CEO and CFO – thetime taken to do this refresh - probably a year and a half, the realigning of finances, resources and ability to migrate to a new platform. Post this, it is likely for them to look for an application which is not specifically dependent on any OS or proprietary system, but is web based and one that works on any platform.

However, notwithstanding the bottlenecks and the strengths ofopen source and proprietary, both these models give each a set of unique challenges. The key challenge for all software developers is to stay relevant to the ever evolving needs of their consumers. “This requires a tremendous amount of foresight coupled with strong talent to reach your vision in the shortest possible time. Compared to closed software, we can definitely use more skilled talent in the open source domain than what the current supply provides at present,” sums up Gautam.

samrita@varindia.com

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