Who's Afraid of Linux? (Part 1)

While Oracle and other ERP vendors hesitate to use the open source operating system, SAP has proven a more enthusiastic backer. Will Linux work for small and mid-sized companies?
BJ Havlik is not afraid of being on the bleeding edge. Two months ago, Havlik, the IT manager of Menasha Corp., a $1 billion packaging and forest products company in Neenah, Wisc., swapped his company's SAP applications from Hewlett-Packard servers using a Unix operating system and onto Dell servers running Linux.

Havlik's motivation was simple: he figures moving to Linux has saved his company about $700,000. It has also propelled Menasha into the brave new world of enterprise resource planning on Linux, a world that, so far, only a handful of companies have ventured to explore.

The H-P servers had served since 1997 as Menasha's home for a number of applications handled by SAP R/3 software, including its financials, shop floor management, human resources, sales, and distribution services to 1,500 users at more than 30 locations.

At a Glance

Company: Menasha Corp. of Neenah, Wisc., makes packaging, plastics, and materials handling items. It also has a forest products group which harvests and sells timber from the northwestern United States. The privately-held firm had 1999 revenues of nearly $1 billion and has 5,700 employees.

Problem: Upgrade Menasha's SAP installation from version 3.1 to 4.6, without adding expensive new hardware.

Solution: A shift from H-P 9000 Unix servers to four-processor Dell systems running the Linux operating system.

But last year, when the company wanted to upgrade to R/3 version 4.6, SAP told it the new version would require more hardware. While all five of Menasha's H-P 9000 servers had been completely reliable, Havlik says, one look at the cost of adding more sent him scurrying to find a less costly approach.

Menasha replaced the H-P boxes with what Havlik calls a "dramatically less expensive" solution: 10 four-processor Dell servers running Linux. The company's Oracle database continues to run on an H-P Unix system.

While Menasha is not the first company to run SAP's R/3 on Linux -- a few companies in Europe, like Munich chip distributor Consumer Electronic AG, have been running SAP on the open source operating system for more than a year -- it is a pioneer in the United States.

It's hard to know exactly how many companies are running enterprise-wide applications on Linux. The number is clearly small but appears to be growing. SAP, which first released a version of R/3 for Linux early last year, now claims to have 400 Linux installations. Not all those, however, are actual production instances. One of them, for example, is an R/3 test system which Siemens Business Services in Canada has been running for several months at the its Toronto data center.

Siemens, which hosts SAP applications for clients, has recently suggested to a couple of clients that they consider shifting to Linux, says David Paish, a team leader at the Toronto data center. While Paish isn't convinced that Linux is ready yet for a high-volume application such as SAP Retail, he believes Linux is well suited to hosting R/3 systems for small to mid-sized businesses. For a company with under 500 users, "running SAP on an Intel platform is cheaper," he says.

Lukewarm, at best
While SAP pushes ahead with Linux, support for the open source operating system from other ERP vendors has been lukewarm, at best.

PeopleSoft of Pleasanton, Calif., has a handful of customers running Linux, but only on the client side. An official from Lawson Software, of St. Paul, Minn., says the company supports Linux on the desktop but does not know of any customers running it. And up-and-coming Swedish vendor IFS, whose North American headquarters are in Schaumburg, Ill., says it has one German customer running Linux but has yet to see much demand for it.

That's not surprising, says Dennis Byron, vice-president of enterprise applications research at IDC, a Framingham, Mass, consultant. "Linux is just not on the radar screen" of most IT shops looking at ERP applications, he says.

That doesn't mean that companies aren't using Linux for enterprise-wide applications. In fact, an IDC study published in February showed that the number of Linux users using Linux for enterprise applications such as ERP and customer relationship or human resources management jumped to 10 percent, up more than three times from a year earlier. But Byron said most of these applications are probably being built in-house.

As Linux matures, it's likely that more companies will consider it for business-wide applications. Linux has always been a highly reliable operating system -- an important attribute for enterprise-class applications -- but until recently, it has lacked key features for enterprise computing.

The most recent release of the Linux kernel, version 2.4, remedied some shortcomings by increasing the amount of memory Linux can use and boosting the number of CPUs a Linux box can manage from four to eight. A version of Linux featuring the new kernel was released by Red Hat in April. The release of Intel's new high-powered Itanium processor, which will run Linux as well as other operating systems, will probably make Linux more appealing for the high-end market as well.

So why does Oracle Corp., the ERP market's other major player, remain ambivalent about Linux? We'll explore that it tomorrow in Part 2.

Dan Orzech is a Philadelphia-based writer specializing in technology. His work has appeared in the Los Angeles Times, the Philadelphia Inquirer, and many computer industry publications.






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