The Business Case for Open Systems

Expectations for Open Systems in a Changing Marketplace


A White Paper from The Open Group

During the past decade, the concept of open systems changed dramatically. What began originally as a strategic imperative for vendors became a compelling supply/demand dynamic, as buyers began to flex their procurement muscles by specifying systems based on an "open" configuration.

The momentum for open systems began in the vendor community. Indeed, the original X/Open Company Ltd. was founded in 1984 to remedy the absence of standards in the area of open systems; under its auspices, the open systems product brand was introduced in 1988. For largely competitive reasons, the X/Open sponsors saw the need for, and the value to be gained from, open systems. Consequently, they assigned resources to create standards for the technologies that they considered important. The major role of the user community back then was quite fundamental: to buy the products based upon those standards.

In the subsequent years, however, the user's role expanded significantly. Like the vendors before them, organizations utilizing information technology (IT) began to recognize the power of an open systems procurement strategy. Their focus was on operational efficiencies, not supply-side technology requirements. But their influence was profound nonetheless. Rather than affiliating with the X/Open technical working groups, users worked together on the X/Open user requirements councils and in the Xtra business requirements surveys.

Research has recorded steady growth in the number of organizations using open systems, from 68% in 1991 to an expected 96% in 1997. Similarly, while sales of proprietary systems declined by 2% between 1990 and 1994, open systems sales rose by 37% worldwide in the same period. This growth in market share is expected to continue at more than double the rate for proprietary systems.

What do buyers expect from an open systems strategy? In 1996 EvansGroup Technology carried out research among computer system buyers in the United States, UK and Europe. When asked about the benefits of open systems, the key issues of compatibility, flexibility and cost emerged. The table below shows how respondents ranked the various benefits of open systems.

Benefits of Open Systems %
Flexibility 70%
Freedom to choose IT from different vendors 67%
Products from different vendors work together 66%
Access across multi-vendor environments 65%
Protect investment in existing computer system 61%
Ability to use/share information anywhere in the world 59%
Cost savings 55%
Interoperability/portability across various platforms 54%
Organizational change not constrained by IT system 49%
Cost of ownership 49%

This study and others like it continue to reinforce that for an organization to become a buyer and user of open systems, it must be assured of, if not guaranteed, a solid return on investment. Again, their specific expectations are for interoperability, flexibility, freedom of choice and cost reduction. Interoperability, the capability for systems and applications to work together, is one of the key drivers in the move toward open systems. Buyers want to be able to interconnect any system or software from any vendor without concern for incompatibilities. Ultimately, interoperability provides a greater level of flexibility in the way end-users implement and operate their computing environments.

Customers also want choice. In a proprietary systems and software environment, the customer's choice is limited. The promise of open systems is a world in which a wide range of compatible products are available, enabling customers to make selections based on price, service, support and features, rather than vendor.

Like all consumers, information technology buyers want value when they purchase system or software products. Proprietary products are traditionally more costly and offer fewer alternatives. Open systems products offer a level playing field with competition focused on product quality, service, support and performance, as well as ensuring value pricing.

The Open Group Response: The Open Brand

One of The Open Group's core charters is to license and promote The Open product brand (formerly known as the X/Open Brand), which designates products that are guaranteed to conform to open systems standards. The Open Group develops test suites, ensuring that products claimed to comply with open systems standards actually do so. Vendors of products displaying The Open Brand guarantee that their products comply with the relevant open systems specifications. The Open Brand from The Open Group is the most widely used procurement tool for the purchase of open systems products.

The traditional definition of a "brand" is a set of values ascribed to a product. The X/Open brand has a clear set of values, the focal point of which is the guarantee. The brand constitutes a guarantee, offered by the vendor to the buyer, that the branded product conforms to the specified standard, and will continue to conform, for as long as the product carries the X/Open brand.

The use of the brand by the vendor is supported by a legal contract, actually a trademark license, between the vendor and The Open Group, and legally commits the vendor to correct any conformance deficiencies should they ever become evident throughout the life of the branded product. Customers find assurance in this guarantee, that the product does what the specification says, providing value to both buyers and vendors.

Also important for customers is the fact that the X/Open brand is deliberately neutral. The Open Group product standards favor no hardware or software technology or vendor. They intentionally make no assumptions or prerequisites of technology, hardware or architecture. This allows implementors to innovate in any way, providing they conform to the standard.

The X/Open brand - the embodiment of The Open Group - provides a market delivery mechanism for open systems products and services. The brand represents a benchmark for vendor selection, ensuring customers of quality, guaranteed products.

Identifying the Benefits for Buyers

As we approach the new millennium there is a growing conviction that information technology can, and should, make a significant contribution to the success of business and government. Users are increasingly vocal in their conviction that to achieve the benefits of improved management, customer service and profitability, information systems must enhance, rather than restrict, the flow of information.

In this regard, the users' collective voice is being heard in their purchasing policies. Increasingly, organizations are building IT strategies that promote compatibility, portability and interoperability as central components. Their open systems-based procurement policies address these requirements by allowing users to communicate and share data across different platforms. Thus, one of the most fundamental benefits of this strategy is the ability to select the products that best meet functional requirements from a variety of suppliers. By enabling organizations to accept bids from a range of vendors, an open systems strategy allows procurement professionals to evaluate suppliers on a wide range of criteria. With the issue of system compatibility largely eliminated, other issues such as functionality, price, support and service can then be given their due weight.

Government and commercial organizations worldwide increasingly look for the X/Open brand when selecting products because it assures them of the highest degree of standards conformance in IT products. For example, the purchase of a branded UNIX 95 product will automatically ensure that the following standards are implemented:

No other mechanism available offers that guarantee to IT buyers.

Identifying the Benefits for Vendors

Vendors benefit from the X/Open branding program as well. The brand is a tangible mark that they can show to customers, demonstrating guaranteed conformance to open systems standards. It also demonstrates the vendor's commitment to stand behind its product and emphasizes the effort invested by the vendor to meet the stringent requirements of the brand. Additionally, the brand enables the vendor to compete in the market that requires the brand in its product procurements - to date worth over $20 billion - and sets vendors apart from those that are not prepared to guarantee their products.

Vendors seeking to brand their products must go through a stringent process. The Open Group offers an extensive set of tools and services to help vendors bring their products into conformance with the standards, from specifications on CD-ROM to test suites, guides and more. Once a product conforms to the standard, vendors enter into a trademark licensing agreement that commits the vendor to guarantee to buyers that branded products will continue to conform for the life of the product - even through product revisions and updates.

Documenting the Benefits

The open systems "movement" is far enough along that promotion of its purpose is no longer an issue. Rather, with maturity has come a new generation of measurements designed to justify the expenditures of implementation. In addition to standard metrics like cycle time, quality, and return on investment, managers are also employing measures of a more qualitative nature: How is the IT investment be aligned with the organization's overall strategic goals? To what degree is the new framework adaptable to future changes in the organization's business requirements?

On the adoption of open systems, there are a growing number of documented successes for organizations worldwide.

NASA

In the early 1990s the world's foremost scientific space organization - NASA - faced serious problems in its technology and procurement strategies. A review of its information system needs revealed a complex, protracted procurement cycle and dominance by a single supplier and architecture. For users this meant their work was constrained by sometimes inappropriate and dated systems that offered little choice or power to meet their varied and changing IT needs.

For procurement managers, reliance on proprietary technology caused an additional problem. Federal procurement regulations require agencies to secure multiple bids for all purchases over a certain value, but because NASA was so closely tied to a single vendor, this was not possible. Not only was IT constraining its business, effectively, NASA was breaking the law.

As David Howell, Chief of Data Systems of the Technology Division at NASA's Goddard Space Flight Center said:

"We needed to break away from vendor-control and we needed solutions with high growth and networking capabilities. Open systems are best for that purpose."

Having realized that open systems were vital for its future, NASA's solution was the development of a set of open systems procurement contracts to provide high-performance UNIX operating system-based workstations and support equipment, including servers, printers and networking equipment.

Known as SEWP (Scientific and Engineering Workstation Procurement), these contracts provided NASA with a whole new procurement methodology. SEWP increased the availability of equipment to users, promoted an open computing environment, broke the cycle of reliance on proprietary technology and reduced the high cost of software conversion. In short, NASA's open systems strategy provides an effective future-proof platform to support change and innovation.

An important result of the program has been the shortening of NASA's procurement cycle from as much as two years to approximately 45 days.

The Boeing Company

The Boeing Company's migration to open systems began a decade ago. The cost of computing company-wide was doubling every two years. But that cost was not driven by increased functionality or increased capabilities; it was the lack of an open systems-based infrastructure.

Functions were isolated and pockets of computing existed throughout the company. Individual groups were making their own decisions about computing needs without regard to the need for connecting all users, applications and different business processes together, resulting in a nearly endless variety of systems and software. Older legacy systems with closed environments were posing similar challenges to communication and information flow among groups and departments.

Boeing's future depended on connecting people and systems. "The move to open systems was a straightforward business case," according to John Warner, president of Boeing's Information and Support Services Division. "We needed to put disparate systems together so that we could do projects like the 777 airplane, and we needed to make sure we could get the most value for our investment in computing systems."

Boeing developed a computing standard that defined the Boeing open systems direction for heterogeneous computing environments. A statement of direction was distributed; it included all aspects of providing a computing environment to support the business process of The Boeing Company.

The scope of the standard was company wide. All operating divisions incorporated the open system philosophy and developed vision statements that included elements unique to their products and customers. The specifications are now used for all requests for equipment throughout Boeing.

Open systems has removed many of the walls that added cost and slowed communication at Boeing. The 777 project became a real proving ground for open systems. Boeing's computing environment met the challenge, allowing unprecedented cooperation and communication between myriad teams of engineers, manufacturing planners, tool designers, suppliers, and others.

Open systems has helped streamline a number of processes. Once, maintenance manuals were laboriously produced, printed, and shipped to customers. Today, Boeing can provide maintenance information quickly and efficiently to customers electronically, eliminating the time and expense of manually producing and distributing mountains of paper.

The training and support functions within Boeing are sporting a more streamlined look as well. A plethora of proprietary systems and software requires more training and support than the more heterogeneous, open environment. The open systems environment has reduced duplication in these activities for both end-users and support personnel, leading to significant cost savings without reduced levels of support and training.

Boeing set out on the path to open systems to tie business processes together and to control costs. In the process, the company has become more competitive. The move to an open systems-based infrastructure is an ongoing process at Boeing. The transition from legacy systems to a new, distributed environment will continue as budgets allow, and open systems will play a major role in the procurement process. Boeing has not set specific goals or timetables, however, for achieving an open computing environment. Instead, it establishes goals based on capabilities and the related cost to provide those capabilities.

UK National Insurance Recording System

In 1996, the UK National Insurance Recording System, known as NIRS2, was commissioned by the Contributions Agency, part of the UK Department of Social Security (DSS). The project is seen as proof positive that a government-mandated open systems policy can indeed be justified on purely business and technical grounds.

National Insurance in the UK is an income-related payment collected by the Contributions Agency to pay social security and retirement benefits for UK residents. Payments are unique for each individual, so NIRS2 must record accurately the cumulative national insurance contributions of every single UK resident.

NIRS2 is the first major IT project being built under the British government's new financing policy, the Private Finance Initiative (PFI), under which suppliers plan and build IT systems at their own cost. The suppliers recoup their investments and running costs solely through charging for the system on a per-use basis; for example, charging for each transaction or query. Under such schemes significant risks are transferred to the supplier, including development, financial and technology risks.

When it goes live in the first quarter of 1997, NIRS2 will have some 60 million national insurance accounts requiring a database of 400 gigabytes. The system will have approximately 5,000 users in the Contributions Agency at the National Insurance administrative headquarters in Newcastle, England, and in field offices around the UK. NIRS2 will have to cope with some 200 transactions a second, for both batch and on-line processing. By the time the initial seven-year operating contract ends in 2004, the database will contain an estimated 800 gigabytes of data.

In April 1995, the Contributions Agency awarded the NIRS2 contract to Andersen Consulting, after running a large procurement. For their part, Andersen Consulting considered a range of solutions including proprietary mainframes. In the end, they chose to build NIRS2 using an open systems architecture.

In the NIRS2 installation, central processing is based on a cluster of open application and database servers from Hewlett Packard. The eight application servers have four processors, and the four database servers have six processors, all running under the Single UNIX Specification. The client workstations are industry-standard PCs which communicate with the servers using the DCE communications standards.

HP and the relational database, Sybase, were chosen by Andersen Consulting after a competition with other vendors.

Security, which is often seen as a weakness for UNIX-based systems, is ensured using dedicated communication lines and secure communications protocols, along with strict authentication procedures.

The architecture designed by Andersen provides the processing capacity by partitioning the database across several database servers and by splitting the application load across several application servers, effectively creating a virtual mainframe. An open transaction processing monitor, Encina, is used to manage the transaction integrity between the application and the database servers.

"If you drew a line around the central processors, it would look like we had a mainframe. But we haven't paid mainframe prices for providing that functionality, and we have more control over the design and upgrading of the system by using this architecture," explained Guy Morgan, an associate partner at Andersen responsible for the NIRS2 architecture. "The architecture is very scaleable; we can add more disk, RAM, and processors to the individual servers; and if even more capacity is required, we can introduce another application or database server. This scalability is achieved at a much lower cost than if we were adding new mainframe nodes. The architecture was designed to be inherently scaleable to cope with the changing business volumes over the duration of the contract."

Andersen has taken the open systems approach a stage further by avoiding proprietary fourth-generation languages (4GLs) and instead using industry-standard third-generation languages (3GLs), such as C and C++, to develop the NIRS2 applications.

"When we looked at price performance, development effectiveness, flexibility, and scalability coupled with the skills available within the firm, open systems was a natural winner," adds Morgan. "We can provide the security, availability, and performance of traditional mainframe systems using an architecture based on UNIX and open systems."

LittonPRC

Litton/PRC, one of the leading U.S. systems integrators, has been building and reengineering information systems for its federal government and commercial customers based on open systems standards since 1984. PRC turned its open systems development skills to its own internal proprietary mainframe-based systems five years ago. Today, PRC's open client/server environment has streamlined the process of accessing information and empowered its employees.

The decision to migrate from a proprietary, centralized computing environment to one that was open and decentralized was the function of a combination of factors.

PRC had evolved from a highly centralized organization to one with a more departmental structure, reflecting the needs of its increasingly diverse customers. The mainframe environment had become awkward, inflexible and expensive. Hard-copy report distribution required the generation of volumes of paper that was physically shipped to various locations each week.

But it was federal accounting changes in the early '90s and continued growth in PRC's business that brought the need for change to a head. Rules governing timecards and payroll for federal contractors were undergoing dramatic changes, impacting PRC's accounting systems. To keep up with these changes, the company would have to add to the mainframe population - a significant capitalization cost. Because they had an older, proprietary "stovepipe" accounting system, the need was to replace, not upgrade. The cost of the physical hardware highly favored an open environment.

The highest priority for change involved those areas impacted by the new federal acquisition rules. PRC identified human resources and finance as the first systems to migrate to the new open client/server environment. The firm selected PeopleSoft's human resource and finance modules containing employee benefits, general ledger, and asset management applications.

As the HR and finance systems were being developed, the network was being prepared. High-speed fiber optic circuits were added and servers were put in place to handle the distributed computing.

The first operational release, consisting of time card and budget reporting, was prevalidated in the third quarter of 1994. The full operational release, which included the general accounting system, was introduced during the first quarter of 1995. The change-over from a mainframe-based system to a fully open environment was completed within a six-month period.

The changes were clearly worth the effort. Despite the fact that PC, Mac and UNIX platforms and HP, DEC Alpha, Sun and Silicon Graphics servers are connected to a hybrid network, communications and connectivity have been enhanced significantly. As noted by Cora Carmody, Chief Information Officer for PRC, "Because of open systems and the underlying standards, it is much easier to connect. Most of our users don't sense the hybrid network situation. It's transparent to them."

By replacing its accounting and human resource systems, PRC also sidestepped another concern - the Year-2000 problem. With so many older legacy systems subject to arithmetic paralysis when the year 1999 becomes 2000, thousands of corporations are expecting to spend millions of dollars to rewrite software code. PRC's new software was developed with the next century in mind.

Another benefit, PRC has greatly reduced the distribution of hard-copy documents, which are now printed only when and where they are needed. And a large percentage of "paperwork" is completed on-line without ever being printed out. That reduces cycle time.

Since implementation of the HR and finance systems, PRC has continued to enhance its open systems environment. In 1996, the firm migrated Microsoft Mail, PC Mail and cc:Mail users to Exchange mail to allow easier communication among employees and external clients worldwide.

Also in 1996, two electronic data interchange (EDI) connections were established with Staples, the office supplier, and FedEx to streamline the ordering of goods and services from these vendors. PRC is currently implementing another EDI link that will enable its federal government customers to access PRCís services more easily.

During 1997, Carmody plans to begin establishing standards for desktop platforms, and implementing PeopleSoft's Manufacturing module. Although PRC is not a manufacturer, as a system integrator it must bring together large numbers of components, track them, process orders and bill clients for them.

Other Open Brand Procurements

There are many other instances of open systems procurement policies, as evidenced by the increasing number of conformance requirements to The Open Brand being issued by government and commercial entities worldwide.

For example, in 1996, after several years of study and system demonstration evaluations, the U.S. Internal Revenue Service published the comprehensive Open Systems Standards Profile, essentially a handbook on how to implement the standards and how to seek help in using them. The document includes a Target Standards List (standards obtainable within the next three to five years) and Interim Standards List (standards available today). The first resulting implementation, a U.S. Treasury Department distributed processing system contract, is scheduled to begin in July 1997.

Also in 1996, the U.S. Air Force announced its mandate of the The Open Brand in its $1.2 billion Desktop V procurement. This project comprises a number of systems, including notebooks, desktops and servers, with the total number amounting to 360,000 computers and 10,000 servers.

Other procurements that have named The Open Brand as a minimum criteria for bid include the U.S. Air Force's ICARDS procurement for $932 million and Workstation procurement for an estimated $800 million, the UK National Health Service procurement for $375 million, and NASA's SEWP II procurement for an estimated $829 million.

Investing in the Future: Open Systems

The Open Group has worked diligently for over a decade to bring interoperability, freedom of choice, flexibility and greater value to buyers of open systems. The Open Group has succeeded in creating a broad range of product standards, under The Open Brand, that guarantee to buyers that they are receiving absolute standards conformance in information technology products.

Through the brand, open systems vendors have been able to deliver tangible value to their customers, demonstrating their commitment to stand behind their product by investing the effort to meet stringent requirements of the brand. Vendors and buyers have benefited from this partnership between end-users, system and software suppliers and The Open Group.

The experiences of government agencies and commercial organizations worldwide, several of which were summarized here, reinforce the business return of an open systems strategy. Similarly, the current spate of emerging open systems procurement releases further confirms the long-term benefits of such a strategy.

Further Information

More information on procurement tools and procurements using The Open Brand can be found at http://www.opengroup.org.