ANTenna Blog -- Hardware & Software

Many financial institutions today are surviving by the skin of their teeth. So what can their embrace of open-source software teach other companies forced to make the most of shrinking IT budgets?

It is no secret that many of the world's biggest financial institutions are now fighting for their lives. Banks, brokerages, and other organizations accustomed to investing billions of dollars in new IT projects must now ensure that every dollar they spend on technology is a dollar spent wisely.

Financial services firms, however, must also address two other massive challenges: cutthroat competition and a regulatory environment that allows little room for error.

Here is how a recent Wall Street & Technology article explains the role that open-source software plays in the financial industry's fight for survival:

"With the financial meltdown eroding IT budgets, large investment banks, hedge funds and other financial institutions have been forced to rethink their attitudes toward open source technology. Use of open source technology is quietly booming in the capital markets because of increased cost pressures, and analysts predict the current economic conditions will drive further industry adoption. . .

"While banks and brokers have been running open source applications in the back office, including Linux and the free Apache Web servers, open source solutions now are finding their way onto the front-office trading desk. "What the crisis has done is shattered the orthodoxy in what is [accepted as the correct way to build out systems, and it has allowed people to think more creatively about how their software works," comments Graham Miller, co-founder and CEO of Marketcetera, an open source platform for building automated trading systems."

Most small businesses have very little in common with the mega-corporations that rule the financial services industry. Or do they?

In fact, most companies -- including smaller firms -- face the same IT concerns that make open-source software such a compelling solution for financial institutions. They must deal with shrinking IT budgets, yet they can't afford to surrender the competitive edge they gain from their IT operations. They demand flexibility without sacrificing security or reliability.

They must manage the risk that accompanies any significant new IT investment without sacrificing their ability to innovate. And they must accomplish all of these goals without exposing their data or their systems to potential security threats.

Given those constraints, what can Wall Street teach Main Street about the benefits of Open Source? Quite a bit, as it turns out.