March 25, 2005

Linux emerges as a force in enterprise resource planning

Author: Paul Korzeniowski

Enterprise resource planning (ERP) is one of the last application areas in which Linux has little or no impact. The Peerstone Group, a market research firm, found that only two percent of corporations relied on Linux to support their ERP applications in 2004. Yet, recently, a growing number of Linux ERP vendors have emerged. Although obstacles remain, the future of Linux in ERP looks promising.

An early pioneer in Linux ERP was Pharma Nord, a Danish pharmaceutical company that has 300 employees in more than 20 countries. Prior to 2003, the firm relied on the Globus ERP system. However, Globus's MS-DOS foundation could not easily support the new virtual private network functions that Pharma Nord was deploying. Instead, Pharma Nord chose Compiere, an open source ERP system that runs on Linux.

"We were looking for a complete, platform-independent solution where we could also have control of the source code," explained Jacob T. Pedersen, systems programmer at Pharma Nord. "We did not want to risk putting a lot of effort into setting up an ERP system, which then could suddenly be taken over by a competitor and might no longer be supported on a Linux platform. During our evaluation, the Danish ERP software company Navision was taken over by Microsoft, and that transaction confirmed our worst fears."

Since then, a growing number of vendors have added features that prepare Linux for the ERP space. IBM made Linux a key part of its utility and grid computing initiatives. It also added redundant storage and cluster-management software to its Linux implementations. Similarly, Hewlett-Packard unveiled Secure Linux 2.0, which exploits features in Intel's Itanium line of processors to perform high-speed cryptographic calculations and protect instruction sets from unauthorized users. Meanwhile, storage vendor Veritas Software developed a Linux version of its clustering software so companies' high-availability systems switch over to other servers in a cluster if one server fails. In addition, the open source community has delivered a more scalable, multithreaded version of Linux in the 2.6 kernel.

As these improvements were being put into place, ERP vendors were also lining up in support of Linux. SAP AG, which started supporting Linux in 1999 when it added the operating system to the SAP Kernel software framework, moved to exploit the latest hardware features. "We now support 64-bit processing rather than 32-bit processing in the Linux versions of our R/3 software," says Alexander Hass, a member of SAP's Linux laboratory. By contrast, Oracle has focused on improving Linux's performance, exceeding the one million transactions per minute mark on a 16-node HP Integrity server cluster running Oracle Database 10g and Oracle Real Application Clusters.

As a result of such changes, Linux has seen a groundswell of support in the ERP space. "We are clearly at a tipping point where a growing number of enterprises are ready to move their ERP applications to Linux," says Scott Crenshaw, senior director of product marketing at Red Hat. "Enterprises have moved from using Linux on the periphery of the network into the core of the network, and from using it to support point applications to supporting mission-critical applications."

"ERP applications require a great deal of redundancy, security, and a high degree of vendor support," says Jeff Gould, CEO at Peerstone Group. Peerstone predicts that the percentage of ERP applications running on Linux will increase from 2 percent in 2004 to 15 percent in 2007.

Already, a growing number of enterprises have recently made commitments to Linux as the foundation for their ERP applications. The city of Munich, Germany, has begun migrating from a Windows environment to SAP R/3 applications running on Linux. Similarly, Villeroy & Boch, a German manufacturer of ceramic products, selected Red Hat Linux Advanced Server as the platform supporting its SAP business applications. Other companies now relying on Linux-based ERP include Acuity Brands, a worldwide lighting fixture manufacturer, which uses a Linux cluster to support its Oracle E-Business manufacturing and warehouse systems, and the University of Technology in Sydney, Australia, which runs its Oracle E-Business Suite on Oracle Real Application Clusters supported by Dell Computers PowerEdge servers running Red Hat Linux.

The growing use of Linux as the foundation for ERP applications has come at the expense of Unix. "After listening to all of the heated debates comparing the benefits of Linux to Microsoft's Windows that has taken place the last few years, we were a little surprised that almost all of the firms migrating to Linux were replacing Unix, not Windows," says Peerstone's Gould. "We see Windows' share in the ERP market remaining virtually the same -- there will be a one percent market share dip -- during the next five years."

The migration from Unix did not surprise Torsten Geers, head of SAP's global Linux office. "Linux has a Unix heritage," Geers says, "So it makes sense that companies would view migration to it as a natural progression. By installing Linux, companies are able to move away from expensive, proprietary operating systems to less expensive, open systems."

While there has been movement to running ERP applications on Linux, some roadblocks still hinder its use. "Putting in an ERP system is a major undertaking," says Evan Quinn, vice president of application development research at market research firm International Data Corp. "Once a company has its applications running on a platform that it is comfortable with, it usually is not real interested in changing it."

In addition, Peerstone listed a handful of potential problems in its survey. Respondents placed finding and paying experienced Linux personnel at the top of the list. "Microsoft has developed a number of training programs, so companies can find Windows support personnel fairly easily, but there hasn't been the same level of support in the Linux community," says Peerstone's Gould. Red Hat understands the challenge, and is meeting it. According to Crenshaw, "We now have trained more than 100,000 individuals worldwide in the use of our operating system and more training is planned for 2005."

Despite the roadblocks, Linux has a bright future in the ERP space. "In a few years, I expect that about one-third of all ERP applications will run on Linux, with the other thirds evenly divided between Unix and Windows," concludes Peerstone's Gould.

Paul Korzeniowski is a freelance writer in Sudbury, Mass., who specializes in technology issues.


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