Red Hat and Santos Offer Up Case Study on Linux Cost Savings

by Sam Dean - Jun. 14, 2011Comments (1)

A funny thing happened to Red Hat--the poweful purveyor of support and services surrounding Linux--over the past couple of years as large open source-focused companies such as Novell and Sun Microsystems became acquisition targets for big software companies: It became the only viable, U.S. publicly traded company focused on open source. While many people understand Red Hat's business in parts, a really big part of the company's strong performance over the past several years comes from poor economic times, and the cost savings that Red Hat can offer businesses. Now, the company is out with a useful case study illustrating how the savings work.

Santos, a leading supplier of oil and gas for Australia and Asia, has announced that it has achieved cost savings of $2.5 million with Red Hat Enterprise Linux. It's not alone. Gap Inc. has standardized on Red Hat's Linux software and support, as have many other big companies. As Red Hat reports:

"Santos was tasked with finding a new application delivery system that would improve performance and reduce cost. With a complex environment to manage, an increase in data, mounting licensing costs and a deficiency in support, Santos sought out a direct replacement for its main proprietary thin client system in order to avoid the license outlay and the cost of replacing its workstations."

Red Hat Enterprise Linux was Santos' answer. The choice means lots of cost savings in license fees when compared to deploying Windows or the Mac OS. And, Red Hat's subscription fees for support and services are extremely low compared to what vendors such as Microsoft and Apple charge. Santos also noted that a number of geoscience applications that it runs are more suited to Linux than any other platform.

From Santos' case, it's clear that Red Hat has identified a multi-tiered way to compete in poor economic times. The combination of low license fees, inexpensive support, and elimination of the need to replace expensive hardware deployments all contribute to Red Hat's increasing adoption.

The other often misunderstood aspect of Red Hat's business is that the company has moved aggressively toward virtualization and cloud computing goals, as we noted here. These can, in the long run, allow Red Hat to run its platform alongside other platforms, and help businesses deploy applications that reside in the cloud--not locally. 

We noted Red Hat's moves in the direction of virtualization all the way back in 2008, and it has only intensified its efforts since then. It's just one more way that the company is ensuring that total dependence on its own platforms isn't necessarily the whole game. Through virtualization, Linux can run alongside Windows and legacy deployments that are in place in many organizations.

The full statement on Santos' cost savings and how they break down is found here.  It's a powerful example of how Red Hat has capitalized on harsh economic realities, emphasizing open source software, with an eye on platform diversification.


Shailesh Patel uses OStatic to support Open Source, ask and answer questions and stay informed. What about you?


This economic crisis we're in is gonna show people that Linux does save money and if what we hear is true i.e that this slow growth is gonna stay with us in the next 5 years or so, then small bizs have to realise that Linux is the only way to go and in that sense Red must also come back to Desktop/Server Linux and go after those small biz instead of running after big Enterprise because it's those small bizs that create most jobs and will bring the growth back.

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