Bringing in Linux, for a Fee

By Joshua Weinberger Print this article Print

As large companies awaken to the potential savings inherent in Linux deployments, professional-services providers are looking to supplement their licensing revenue with consulting fees. Why is progress so slow?

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The reception may not be so chilly for Linux vendors these days—no more blank stares, at least—but they still have to find a way to profit from selling "free" software. Convince a company it can reduce its complement of servers from, say, 50 boxes running HP-UX to a single IBM server running Red Hat Linux, and you may score a sale (and one very happy client). But maintenance fees and back-end support on a single server don't amount to much. How is a Linux vendor supposed to grow its recurring revenue?

The hard part—at least, until recently—had been to convince corporations that Linux was a viable option at all. For years, large companies sat on the sidelines, happily twiddling their Unix thumbs (or crossing their Windows fingers), waiting to be convinced that Linux could "provide carrier-class infrastructure," as VeriSign's Vice President of Business Development Marshall Behling puts it. When a company is going to expand, Behling says, it has to know it's doing so "without sacrificing service." Most of the heavy lifting in that regard fell on the shoulders of Red Hat, which, as the popularity of Linux skyrocketed, went from Chicken Little to Pied Piper in just a few short years. Now, it seems, deploying Linux in the enterprise is no longer a matter of 'if,' or even 'when'—but 'how extensively.'

It wasn't always like this. IBM, for example, didn't immediately warm to the idea of Linux in the enterprise. IBM's Vice President for Linux Solutions John Sarsgard said as much at a January conference: "We could not have predicted the force and rapidity with which Linux has changed the landscape." Now, he said, in every new systems deployment, "You have to answer, 'Why can't you do this on Linux?' "

When one of the biggest players starts nosing around, people notice. Malcolm Fields, chief information officer for furniture maker HON Industries, certainly did. As with many other companies, it was only "when IBM started putting that kind of energy into this open-source thing" that HON began to take Linux more seriously.

Linux vs. Platforms chart Though the growth in the number of servers running Linux is best described as ballistic (see chart at left), revenue from hardware and software sales isn't enough to keep any pure-play Linux provider afloat.

With that in mind, IBM, HP, Red Hat, Dell and other Linux-product vendors all now have in-house consulting divisions. To prove these are more than glorified marketing teams for the parent company, they truly have to identify potential savings, in hardware, operations, development and maintenance from Linux systems. Beyond that, if a company has accepted the basic wisdom of deploying pre-packaged, pre-configured, straight-out-of-the-box hardware and software, the question becomes: Who needs a consultant?

It's a question that often sends consultancies packing—for good. Over a year ago, Linux provider VA Software "adopted a plan to exit the professional services" market, according to an SEC filing—essentially admitting that there was no significant revenue to be realized there. Another former services vendor, Linuxcare, recently came to the same conclusion, deciding to focus instead on its Linux server consolidation products and its partnership with IBM. For those firms and others, specializing seems to be the path of least resistance.

That leaves a very thin field of people to turn to when you want to evaluate competing Linux offerings, especially if you're looking for truly independent voices. So technology users find themselves opting for their own path of least resistance. It may be easier to go with the people you know—and who already know you. As Linuxcare President and CEO Avery Lyford notes, "Corporate customers tend to make a services choice based on existing relationships, not just the Linux platform." When the dust settles, Lyford expects to see three categories of Linux consultancy left standing: the local shop, geared toward small businesses; the niche player, specializing in the particular needs of a single industry; and the big players, offering scale and scope to multinational firms.

On the other hand, open source, by its very nature, defies brand attachment. "The world of the open source doesn't belong to one person," says Unilever Chief Technology Officer Colin Hope-Murray. (Unilever, in fact, is working with both HP and IBM Global Services for Linux services.)

Many Linux users, though, are finding they don't need any services at all. When Milwaukee, Wis.-based Grede Foundries, for example, decided to deploy Linux on IBM hardware, it opted not to enter into a services contract—with anyone. "We're doing it on our own," says Thomas Brockman, Grede's technical support manager. Simply because they can.

Wide-scale acceptance of Linux for office software and data-center applications may not be far off. When that day comes, there may be enough continuing business for all the consulting divisions—and perhaps even for a few stand-alone consultancies, as well.

In the meantime, as far as HON Industries' Malcolm Fields is concerned, Linux in the enterprise means one thing most of all, and it has nothing to do with consulting: "Linux is going to give us the ability to keep Microsoft from pushing us around."

This article was originally published on 2003-02-13
Assistant Editor
After being on staff at The New Yorker for five years, Josh later traveled the world, hitting all seven continents in a single year. At Yale University, he majored in American Studies, English, and Theatre Studies.

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