January 07, 2005

Banco Popolare Milano (BPM; Italy; $42.5 billion in assets) has been using Linux in its production environment since 2002. Initially, the open-source operating system was used as the platform for hosting the bank's institutional Web sites. Now, Linux has been moving into mission-critical applications in both the front office and the back office.

"We're currently migrating our old OS/2 platform in the branch offices onto a Linux platform," says Clive Whincup, CIO of BPM. "By the end of the year, we will have about 4,000 workstations with the Linux desktop running." Next year, BPM will begin to migrate its call center and Internet applications onto the Linux operating system, a project that it hopes to complete in 2006.

BPM has 340 people in its internal IT staff and draws upon an equal number from external providers. To some extent, an investment in training for Linux was necessary, but that would have been an issue anyway due to the OS/2 changeover, points out Whincup.

Compared to Windows, installing Linux is a hands-on exercise. "You have to build your environment piecemeal," says Whincup. "You have to select individual components, put them together, see how they work together, and then manage that yourself, as opposed to the Windows approach, which tends to have everything in the same box."

Nevertheless, the resulting desktop systems have been easier to maintain and manage, Whincup claims. "The support issue has not been a critical issue at all," he says. "Once the operating system is installed and configured, there's very little to actually support."

That makes for a more secure system, according to Whincup. "We consider security to be one of the major plus points right now for the Linux desktop," he says. "The fewer elements that are on there, the easier it is to manage and the easier it is to maintain system security."

The perceived security of Linux could be chalked up to the theory that virus authors go for the biggest target: Microsoft. "Maybe it's a question of time," Whincup concurs. "But right now, we consider [Linux] to be a relatively much safer environment than the equivalent Windows infrastructure."

In the back office, the bank has a mainframe running IBM z/OS and Sun Microsystems machines running Solaris and AIX. However, the Sun machines are scheduled for replacement over the upcoming fiscal year, notes Whincup.

Overall, from its Linux initiatives, BPM has avoided the need for software licenses and has reduced its management costs. "It has been a significant reduction in costs with respect to the Microsoft Windows alternative," says Whincup. "We have made savings running into the millions of euros, quite easily."

These savings are helping the bank to reduce its cost-income ratio, which Whincup admits is on the high side. "The [Linux] initiative is part of the many initiatives we have in our three-year plan to reduce cost-income, and increase ROE and ROI," he says.

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