Open source is software that can be accessed and used, free of license restrictions. The reputation of these products and solutions has increased over the last twenty years to the point that the end product of open source efforts are now accepted as deployable within major businesses throughout the globe. The financial sector is one among many that use these products. However, as with any software from whatever origin, care must be taken in selecting a suitable product to meet the needs of the business. This article looks at open source and the issues that surround its use.
At first glance, the fact that open source is ‘free' software seems to make it an obvious choice for the organisation that is used to building its own solutions. But cost isn't the main reason for its increasing success in the financial sector. Open source has had a reputation for reliability for some time. Many coders have used open source at home or in an experimental capacity. This had led to a high degree of confidence in its efficacy. For the firm, an attraction is the way support can be addressed - open source enables a company to select among a number of providers, often minimising risk by mixing and matching support. This approach helps establish control of the supplier and the support base. It also alters the normal relationship with a software provider, by enabling the purchaser to select support as and when needed, rather than pay for it in advance and through a licensing agreement.
Often known as Free Open Source Software (FOSS), the Open Source Initiative (OSI) sees open source software as an idea whose time has come. After twenty years of building momentum it is breaking through into the commercial world, and changing the rules of software implementation. The OSI presents ‘open source' as a simple proposition: by allowing programmers access to source code, this code can be improved; it evolves at a speed that would be impossible in the world of conventional software development. The assumption is that this environment produces better software than the traditional model. OpenForum Europe, a not-for-profit organisation set up in 2002 to promote the use of Open Source Software (OSS) in business and government notes that the ‘free' in Free Software refers to freedom, not price. But a fuller definition comes from GNU, in 1986, where four freedoms define Free Software:
The freedom to run the program, for any purpose. Normal license and use options are not in place. The freedom to study how the program works, and adapt it to your needs. There are no legal or practical restrictions on the modification of a program. This releases the source code, the heart of the program, open to all. The freedom to redistribute copies so that you can help your neighbour. Software can be copied and distributed according to interest, with no restrictions, though you can charge for it if you choose. The freedom to improve the program, and release your improvements to the public, so that the whole community benefits. Modification can be carried out, for a charge if necessary, but it must be made available to the whole community. For the open source community, these are rights, not obligations. It is also implicit that Free Software does not exclude commercial use. And significantly, Free Software makes it legal to provide help and assistance, although it does not make it mandatory.
How far is open source being used by companies in the financial sector? A recent survey by Actuate, a business intelligence specialist, uncovered some interesting results. It surveyed 600 senior managers across the United States, Canada, United Kingdom and Germany. A summary of its results, in presents a picture of widespread use of open source across the financial sector. The operating systems on which most business applications run, have to be as reliable as possible and well supported. Open source, through its widespread use of Linux and Linux operating system variants, has proved to be very popular. Given this base product, other solutions can operate with confidence as both stand-alone and as networked products. Operating systems here refer to server solutions as well as client platforms. So what are the risks of using free and open source software (OSS) that financial services should be aware of? A key aspect of the use of OSS is easy access to the source code, generally the intellectual property of developer.
Well-known examples of this are Linux, the Apache web server, MySQL and associated utilities, such as network monitoring, diagnostic, and systems testing tools. This powerful combination has enabled many businesses to launch and maintain software services for major customers at very low cost. It has meant that instead of having to invest in expensive platforms because of proprietary operating systems, such as Unix, FOSS runs on cheaper machines. Sometimes the systems that sit at the back of the storage cupboard can be resurrected and made to run business applications because of the light use and robustness of Linux and its applications. However, such an attractive proposition does not come risk free. The use of FOSS should mandate a careful scrutiny of the real costs involved, those over and above straight purchase. Procurement specialists would insist that the fuller costs are not simply capital expenses (capex), but a combination of capex and opex (operational expenses). So significant is the choice that it should be part of a strategic business decision making process. If missioncritical applications are to run on ‘free' software, it should be considered as a longer-term risk and subject to a full risk analysis.
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