Earlier this month, Rachael King at BusinessWeek ran a story, “Cost-Conscious Companies Turn to Open-Source Software.” The story compares our current recession-driven IT budget crunch to the tech bubble burst, and examines how some large businesses have, and continue to, test out and implement various flavors of open source software to work around shrinking tech budgets.
One of the companies adopting open source is E*Trade. The article kicks off:
“In 2001 and 2002, the online stock trading company shrank its tech budget by one-third. “We had to go through and figure out every penny that we were spending…and make alternatives to reduce those costs,” says Thompson, vice-president and chief technologist of E*Trade (ETFC). So he began using software that can be downloaded at no cost via the Internet. By the end of 2002, he was saving $13 million a year thanks to use of these freely available applications known as open-source software, and the fact that he could run that software on less expensive hardware.”
Thompson continues, with open source software, “Your engineers spend less time on contract negotiation and more time on the technology, which is really what you want them to be doing.”
The funny thing about open source: the Linux operating system spread through financial services more than a decade ago, but open source applications haven’t really been widely adopted for financial tech. Until now?
We recently conducted a survey of both buy-side and sell-side firms, and 100 percent of the respondents said they would recommend the Marketcetera open source automated trading solution to a friend or colleague. Why? The financial market meltdown is affecting financial institutions at all levels, and it’s clearly time for change.
We believe the same thing that happened to business technologies during the dot com bust will make its way to financial services. After all, as trading volumes and regulations continue to grow, how will buy- and sell-side firms wait around for a year to implement costly proprietary technologies when open source can be up and running in a week or two?