Support for Linux's open operating system clearly is growing in the IT community. But insurance executives say they aren't ready to abandon their server software for a system they say is still unproven.By Joseph McKendrick

The insurance industry's reputation for adopting new technologies has been well documented. Carriers' wait-and-see attitude is the reason consumers consider other financial services firms, such as banks and brokerage firms, which are more supportive of Web-based services.

It may be difficult, however, for insurers to ignore the momentum building around Linux, the unlikeliest corporate operating system that has captured the imagination of IT executives from various industries. Although industry observers say it's too early to say whether carriers will en masse dump their current operating systems and adopt Linux, evidence suggests that Linux's popularity has begun to rival that of other major operating systems.

For example, Linux is running on 36% of all Web sites, according to a survey by U.K.-based research firm Netcraft Inc. Furthermore, Linux license shipments jumped from 15% of server operating system boxes in 1998 to almost 25% in 1999, according to IDC, a technology research firm headquartered in Framingham, Mass., while Windows NT declined slightly over the same period, to 37.8% from 38.3%.

Last year, Linux overtook NetWare as the No. 2 server operating environment behind Microsoft Windows NT, based on the amount of new license shipments, according to IDC. Linux server operating environment shipments are predicted to increase from 1.3 million in 1999 to 4.7 million in 2004-an annual growth rate of more than 28%.

Just a hobby

Linux is an operating system that was first derived from Unix in 1992 by Linus Torvalds, who at the time was a graduate student at the University of Helsinki. Torvalds, who currently is an engineer with Transmeta Corp., a Santa Clara, Calif.-based microprocessor developer, dubbed his creation "Linus' Unix," because it was built upon the widely available Unix kernel.

Prior to its release, Torvalds posted details on the Internet about his free operating system for clones of IBM Corp.'s 386 and 486 PCs, indicating that it was "just a hobby" and "won't be big and professional like GNU." The GNU project, launched at MIT in 1984, was a massive rewrite of popular software applications for free distribution to developers.

Torvalds designed Linux as free code that could be used and modified any way the user sees fit. Torvalds and his associates still oversee versioning of the operating system, but the features and functions of the system are added and modified by a worldwide community of independent developers.

While companies such as Red Hat, Angstrom and IBM package Linux with features and support, the operating system itself continues to be freely available on the Internet and can be copied and redistributed on an unlimited basis.

Technology suppliers certainly aren't going to get rich quick under Linux's current distribution model. Linux-related "revenues are a joke," says Al Gillen, research manager for IDC's server infrastructure software program. "There is effectively no revenue associated with Linux."

In fact, Linux server operating environment revenues will barely exceed $85 million in 2004, according to Gillen, "whereas Microsoft's going to grow from a $7 billion operating systems business to potentially upward to $20-plus billion," he says. "Microsoft's operating systems business alone makes more money in about two-and-a-half days than the whole Linux community does on the Linux operating system in a year."

Furthermore, the booming market for e-business technology appears to be large enough for many competing technologies. "As the market is growing, Linux is absorbing a lot of the growth, but it's not necessarily taking away from Microsoft," Gillen explains.

Carriers are cautious

Now that carriers are expanding their channel delivery options to include the Internet, they're making the tough decisions about what operating environments best meet their current and future needs. And, according to some industry observers, it appears that Linux is barely registering on their radar screens.

"I haven't seen anybody adopting it yet," says Cathy Ellwood, development director for agency technology services at Nationwide Insurance, in Columbus, Ohio. "The industry has recently been heavily focused on Y2K, and on recovering and innovatively deploying technology it already has. I don't see Linux on the horizon."

Linux still has a way to go before it's visible within the insurance and financial services industries, agrees Lalit Jain, president of Angstrom Microsystems, a Boston-based provider of enterprise Linux solutions that has several insurance industry clients.

"The entire financial sector is going through a lot of mergers and acquisitions, which is pushing off IT decisions," he says. "Plus, insurance and financial companies tend to be very risk-adverse organizations."

Acceptance by developers

Nationwide's Ellwood echoes such caution. "I haven't seen any compelling reason to go to Linux," she says. "You're not going to reduce costs, because you have to figure out a way to connect everything that you currently have. So what do you do, throw everything out? When you're dealing with a company the size of ours, you can't afford to take that kind of risk. There's no such thing as a free lunch."

Ellwood adds, however, that her company won't discourage its IT staffers from testing Linux systems, or any other new technologies.

"While Linux as a whole is currently not accepted in the insurance and financial sector, it is accepted by technical people," Jain agrees. "If you were to talk to systems and network administrators, they would swear up and down that Linux is absolutely the way to go."

In fact, among developers participating in surveys by Evans Data, Santa Cruz, Calif., comfort with using Linux for mission-critical applications jumped from 9% in June 1999 to 18% a year later. Evans also found that 29% of developers expect to deploy Linux applications over the coming year, compared with 16% who deployed last year.

Cost is another hurdle that may be deterring carriers. The idea that Linux is a "free" operating system fails to account for the services that need to be wrapped around a deployment. "Linux is often touted as being `free,' though in practice, no organization will install software without a support agreement in place," says Ganesh C. Prasad, senior information specialist in the Internet development services group of EDS Australia, and a contributor to the Web site. "Hype notwithstanding, Linux will never be a zero-cost solution."

However, Linux still provides significant savings in terms of licensing, Prasad notes. For example, a fully configured Microsoft Windows NT Web server installation may run about $4,500 in licenses, compared with a $50 Red Hat license.

As with any new technology, it's important to separate fact from fiction. And when you begin to strip away the hype surrounding Linux, it's clear that Linux has yet to widely prove itself as something a high-profile e-commerce operation can bet its business on.

Still experimental

Although some analysts say that Linux is becoming a viable option for enterprise operations, the fact remains the operating system is still in the experimental stages at most organizations. In fact, most IT managers and developers are still playing around with the technology, says IDC's Gillen. "In most cases, our survey data indicates when people deploy Linux, they're most frequently going to be deploying it as a functional server, or another server appliance, or some kind of a very limited-function purpose," he says.

Linux is being deployed for specific applications, such as simple firewall, mail or Web services. The operating system needs to be more scalable to enterprise-level servers, as well as PC desktops. Most likely, initial applications for Linux consist of Web servers and print and file servers, rather than mission-critical corporate enterprise applications, Jain says.

"Once there's a comfort level with nonmission-critical applications, you'll see more mission-critical applications introduced," he predicts. "Insurance companies are used to working with vendors such as Sun and IBM. So they're used to getting high levels of commercial service that currently don't exist in the Linux community."

However, concerns about a lack of service and support for Linux are beginning to dissipate as most major technology suppliers are hedging their bets and rolling out Linux-based solutions.

IBM, for one, has thrown its considerable weight behind Linux. The Armonk, N.Y.-based computer giant has announced plans to make Linux available on all its major operating platforms, including its System 390 mainframe, AS/400 midrange system, Netfinity Intel-based server, NUMA-Q servers, and RS/6000 Unix servers and workstations.

Company insiders even suggest that Linux may supplant AIX in some of IBM's Unix hardware and software offerings.

IBM is also aggressively pushing Linux-based solutions to its network of 45,000 independent software vendors, as well as 45,000 resellers and solution providers.

Industry observers note that Linux may soon begin to offer some compelling value propositions for many insurance industry operations.

Eventually, they say, Linux will support more mission-critical applications, and, they contend, the insurance industry is a good fit for Linux. For starters, many insurance operations tend to be highly distributed between branch offices and agent networks, says Angstrom Microsystems' Jain. Also, the information-intensive nature of the industry requires a flexible, open-systems environment.

Data collection

"The insurance industry is built upon the collection of huge amounts of data for the purpose of risk management in one form or another," says Jain. "Much of this data is trapped in legacy mainframe systems." Linux-based enterprise-wide data warehouses will open up this data to customer relationship management systems, he says.

One of Linux's advantages is that it will run on any type of processor-IBM, for example, supports Linux running as a logical partition within its System 390 mainframes, and plans to soon provide the same support to its AS/400 midrange servers.

In addition, Linux runs on any Intel-based server or workstation, opening up the possibility that it could grow along the same lines of Microsoft Windows. The widespread availability of Intel-based servers-a commodity of hardware that fueled the PC revolution-is now fueling the proliferation of Linux-based servers.

Experts say it's relatively inexpensive to set up server farms of Linux/Intel processors that can scale as an e-commerce site grows. "You have a larger number of smaller systems, and you can afford online spares to build redundancy into those system," observes Rob Ferber, chief technologist with OpenSales Inc., San Mateo, Calif. "You can have one machine backing up nine others. For any processes that involve stateless machines that are easily replicable-such as the Web server layer-this is the native territory of Linux."

Collaborative model

Linux's collaborative development model is one of its greatest assets, industry experts say.

"Hundreds of thousands of people can both deploy a Linux solution and contribute source code," says Paul McNamara, vice president of products and platforms for Red Hat Inc., Durham, N.C. "When they solve a particular problem, they can make the source code available for others. There's now an absolute wealth of code available for various functions."

In contrast, problems with a commercial vendor's operating system require an IT manager to contact technical support and wait for a software patch to be issued. With Microsoft Windows NT, for example, users often have to wait until the next service pack release, which could take months after a problem is first uncovered."

Another plus for Linux is that the software-which only takes up a few megabytes of disk space-can run on hardware unable to support newer variations of Windows.

Although Linux doesn't necessarily perform better than other operating systems, this ability to rejuvenate older hardware is a compelling value proposition for many companies, IDC's Gillen says.

"It is a smaller operating system and it will run with less system resources. Given that, it's a great operating system to deploy on a piece of hardware that might otherwise be retired."

Each subsequent release of Windows requires upgrades to existing hardware as well, says EDS' Prasad. "Faster chips constantly appear, but are saddled with increasingly bulky software, neutralizing their speed advances."

Ultimately, Linux is built by and for the Internet. "Companies want a system to be reliable. They want the system to be secure. They want to create a trusting relationship with their customers," says Angstrom Microsystems' Jain. "Linux allows them to do that. It enables them to go from handling 5,000 clients a day to a million clients a day.

They want a solution that's highly functional, with shopping cart solutions, or business-to-business XML solutions integrated from one company to another. That's something that Linux already has built into it."

Joe McKendrick is a freelance writer based in Doylestown, Pa.

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