Why is Red hat happy with slowing economy

Not everyone is unhappy about the slump in global economy. Red Hat, an enterprise Linux company, is hoping that the slowdown in the US and the crisis in Europe will help it to gain greater traction with corporates who are struggling with cuts in discretionary spending.

“In a happy situation, Red Hat does well, but when the economy is in bad shape, we do even better,” Mr Harish Pillai, Global Head, Community Architect and Leadership for Red Hat said.

The advantage of using Linux for enterprises is that, unlike proprietary software, there is no licence to pay. Linux, as open source software, is free and companies like Red Hat make money on a subscription model by offering various services like certifications and support to their enterprise customers.

Discussing how Linux can help companies, Mr Bruno Georges, a Director with Red Hat, said that companies that use proprietary operating systems have to spend a lot of money just to keep the lights running – something that could account for around 75 per cent to 80 per cent of the IT budget of a company. “Many times, the cost of maintenance on a proprietary model can cost more than our subscriptions.” He said that reducing the amount needed to keep the systems running would increase the amount of money available to a company for discretionary projects.

These thoughts were echoed by Mr Falgun Shukla, Senior General Manager - IT, Hikal. “We have been using Red Hat since 2004 for ERP, mail servers and for clustering. We calculate the cost of implementation against actual licences and we have found savings to be in the range of 15 per cent to 20 per cent.”

Savings are high for large corporations, said Mr Manik Surtani, who works with Red Hat's R&D division. “We do really well in banking,” he said and pointed out that since most proprietary software is charged based on the number of servers, the potential savings for a large bank, which has several thousand servers, are potentially huge.

Mr Manoj Arora, Global CIO, Bilcare, said that Red Hat has proved beneficial to his organisation. “Our core systems, like ERP and customer facing systems, run on Red Hat.” He said that his company virtualised on Xen, which is bundled with Linux. “Using Linux has lowered our total cost of operations and has provided security and agility,” he said.

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