Financial institutions are concerned with security and sustainability when it comes to implementing open source software, despite its potential to deliver lower costs of ownership through elimination of licensing fees.

“I wouldn’t say I’m an open source skeptic, but for smaller firms in our portfolio, and Blackstone Corporate falls into that, we actually don’t use it much,” Bill Murphy, chief technology officer and head of Blackstone Innovations and Infrastructure at Blackstone Group, said during a webinar on Tuesday. “The cost element in a small environment is less of a driver.”

Some of Blackstone’s portfolio companies, such as Weather Channel, which run massive data centers, do make extensive use of open source. “I think the decision is always on a case-by-case basis in our portfolio,” said Murphy.

Richard Peter, head of algorithmic eFI trading at Credit Agricole CIB, said the biggest concern with open source software is “security, and any regulatory implications that would have on us. When choosing any software, we’re looking for wide usage, preferably with established organizations, and a very large community, something that is still going to be around when the next new thing comes out. We tend to be wary when it involves critical data or applications.”

In addition to security, one of the biggest concerns with open source software is sustainability. “Just because it’s the flavor of the day, or the hot new thing, is it going to be around in three years? Is it going to be something that we want to make a bet on for our organization?” Murphy said. “While some of the bigger software companies have their warts too, you know that they’re investing a certain amount in pushing a product forward. I’m often betting on products’ future state, rather than their current state, when we’re buying them. We want to build upon something with a future, and not just something that’s hot today.”

“These questions come up all the time,” said Bill Weinberg, director of open source strategy at Black Duck, a provider of open source management and consulting. “These are very common themes. In terms of longevity, individual open source projects, like Linux and MySQL, have been around, for 20, in some cases even 30 years.”

Most of the large software companies that are supplying the financial services sector themselves make extensive use of open source. “There really is no such thing as 100% proprietary software anymore,” Weinberg said. “Even companies that are presenting entirely closed source, branded software are running on open source platforms.”

Featured image by Petr Ciz/Dollar Photo Club