As the financial world went into shock on the infamous Lehman Brothers Monday of September 15, 2008, finance chiefs across North America and Europe struck a line through billions of dollars' worth of technology spending. Major vendors, including SAP, Intel and Microsoft, felt the squeeze almost instantly, and warned investors to expect huge declines in revenue in coming months.
But just as quickly, marketers and sales reps were on the phone spruiking the power of potential cost-saving technologies. Cloud computing, open source and even green IT took on the shades of a new austerity.
Since September last year, anyone who has even a passing association with information technology purchasing has probably heard technology touts promising to save precious capital and squeeze the bejesus out of operating costs.
Few are convinced that cloud computing is mature enough yet to deliver on these promises - in the corporate situation, at least. But when it comes to power-sipping green information systems and open source, the potential for savings is real.
An established alternative
Open source offers an experience that online travel booker Wotif.com has enjoyed for several years and one that the company's chief architect, Greg Luck, says takes on renewed importance in lean economic times.
"There's an interest in open source right now because there's less money to go around," Luck says. "Information technology budgets are being slashed.
"By open-sourcing technology, rather than keeping it internally, you actually lower your ongoing costs."
Open source isn't a particularly new idea. Information technology departments (sometimes known as shops) have for years tinkered with and deployed open-source software, such as the Linux operating system.
Linux is widely recognised as a viable alternative to Microsoft's Windows technology, Apple's OS X and the venerable Unix platform, which has powered big and small organisations for years.
Because the heart of an open-source application - its source code - is freely available, businesses can escape the costs associated with licensing software from proprietary technology vendors, thereby reducing operating expenses.
There are trade-offs, however, including a greater dependence on the intellectual property locked inside tech-savvy workers' heads and often a lack of support from a major supplier should anything go wrong.
For businesses that want to make the most out of moving away from costly proprietary systems, Luck says, there's also more to the equation than simply deciding to switch to open source.
For instance, Wotif.com uses Linux to underpin some of its websites but the company pays supplier Red Hat a service and support fee, which means the cost of running the platform doesn't differ much from the cost of using Microsoft technology.
Instead, Luck emphasises open standards over open source.
Anyone who has used the internet has encountered open standards, in the form of the technical architecture of the worldwide web and the HTML (hypertext markup language) that forms the foundation of most web pages.
In the case of software, vendors that work to open standards can make it easier for their customers to integrate different information systems, a process that in turn can lower operating costs.
The cost of entry for new vendors is also lower in a world of open standards, so pricing is often more competitive.
Luck also points to one other big benefit: the ability to avoid becoming dependent on any one technology supplier.
A superior approach
"Using Linux is not a pricing issue [for us] ... Some shops do Linux and then they don't buy any support, so they claim that it's free.
We'd rather have the comfort of being on a supported platform," Luck says.
"The reason we use these systems is that we believe it's a superior approach. The central idea that we have here is not really open source, it's actually open standards. With proprietary technology, you can actually write to a platform that then declines and dies under you, which is very unfortunate when you've got a business that lives on."
Luck says concerns about vendor longevity have come to the fore as the global economy slows, threatening the viability of numerous businesses, both in Australia and overseas.
Luck says Wotif's IT operations manager, Janet Sutherland, pays particularly close attention to this problem as the online operator works to ensure it doesn't get caught out.
That's not to say the company is guaranteed it won't experience one of its suppliers failing. In fact, Wotif is a heavy user of software from one-time information technology heavyweight Sun Microsystems, which has developed a reputation for posting fat financial losses in recent years.
The stream of red ink has led to much conjecture about the future of the company, which in the heady days of the internet boom marketed itself as putting the dot in dotcom.
Wotif recently signed a three-year support deal covering open standards Sun software, such as the database MySQL and the GlassFish enterprise server platform, indicating that it's not particularly sold on the idea that Sun might fall. But, Luck says, in any event, the fact that it uses open-source software from the vendor offers it all the risk mitigation it needs.
"Because most of what we do here is open standards, it gives us the ability to swap out one vendor for another, so we don't have a huge amount of concern," he says.
"Even if Sun were to fail, all of the software we use is open source.
There's a lot of valuable software there. There'd be support available in the marketplace for that platform, and the platform would continue on."
For Wotif, then, open standards offer a degree of protection from the harsh realities of the global financial crisis, as well as savings that stem from lower operating costs. In good times, the flexibility to move from one supplier to another with ease can also help keep vendors on their toes.
Luck says there are other benefits to be had as well, depending on how deeply an organisation wants to immerse itself in the open-standards world.
benefit from engaging experts
For starters, he argues that users of technology with open standards will get more bang for their buck if they participate in the communities of technical experts that are constantly talking online and refining the platforms on which their respective businesses run.
Taken to an extreme, businesses with particularly adept IT departments can have an opportunity to take part in the development of a software system, which leads to the creation of software closely matched to a user's needs.
"You have to be a member of the open-source community, but that's as simple as making a contribution," Luck says. "To me, a contribution is a question on a forum. It's raising a bug."
In the case of one project that Wotif's technical team became involved in last year, several of the travel company's developers worked with an open software project's lead developer, making suggestions and having features added to the package as it was built.
"When the system was released in October, it was just what we wanted," Luck says.
For a company such as Wotif, which is extremely technology dependent, the ability to participate in open-source and open-standards projects with a community of developers can pay enormous dividends.
However, companies need to consider a number of factors before they decide how fully they're going to commit to open standards, Luck warns.
"Online internet companies have huge technical problems to do with scalability, availability and even content distribution around the world," he says. "There's a whole class of problems you face in being a successful online business that other businesses don't face.
"If you look at the architectures of each of the big online companies, you'll find they're almost invariably based on open source. When you drill down into it, you find those companies [are] very involved in the maintenance of the open-source projects they use.
"It's because the needs that we have are not well serviced by the vendor community."
Because of that, Luck says, not every business needs to commit as deeply to open-source communities as Wotif.com. Many small and medium-sized businesses won't have the depth of technology development skills needed for heavy involvement, anyway.
But a weaker commitment won't stop businesses from generating savings if they make the move to using technology built on open standards, rather than those with proprietary software code, he says.
Based on Wotif's experience, the use of open standards also gives an organisation greater control over its costs, whether the economic environment is good or bad. When money is freely available, choices may tend towards more fully developed platforms, while in tighter times, lower cost options abound.
"On the continuum of quality versus cost, you have the ability to put the slider where you want," Luck says.
"So when a company has less money to spend, it just moves the slider along. What you want is something cheaper, that you can afford. That's the right way of looking at it."
© Fairfax Business Media
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