On Feb. 17, with a giant laptop providing the backdrop and Grammy-winning artist Carlos Santana playing on stage, Windows 2000 was launched with traditional Microsoft fanfare.
Though skeptics criticized the long wait for its arrival, and rumors circulated about tens of thousands of bugs, analysts generally applauded the new operating system as living up to its promises of reliability, scalability and security.
But how quickly and to what extent the new operating system will make inroads in the financial services market remains to be seen. Banks are major technology consumers, but sometimes slow to migrate to new operating systems, analysts say. The process of upgrading an operating system-the backbone that supports applications-can be costly. And the benefits are less apparent than those associated with technologies that more directly affect consumers, such as voice recognition or customer relationship management.
Some banks are jumping in to test the new product, while others are constrained by purchasing cycles that, barring emergencies, require them to wait a pre-set period of time before upgrading.
"What we have is working. Switching from NT to 2000 would be too costly for us," says Richard Burt, president of Summit Bancservices, a subsidiary of Summit Bancshares, a $565 million-asset bank in Fort Worth, TX. The features are "nice," but not what you would base a purchase deicision on, Burt says. When we are ready to look at a new system, we will look at Windows 2000, or Linux, or Windows 2002, or whatever else is out there at the time."
That sentiment was echoed by a spokeswoman at Royal Bank of Canada, Montreal, who said apologetically that the bank had just completed an NT rollout.
Wachovia Corp., Winston-Salem, NC, however, has been testing the product for months and plans to begin a 12-month process of converting all of the company's NT servers late this year, says Frank Robb, executive vice president and CIO. On the client side, deployment is expected in 2002, since the bank only replaces desktop computers once every three years, and they were recently replaced.
Robb is also awaiting release in late June of the Windows 2000 Datacenter server, the most scalable Windows server yet, and plans to use it to consolidate smaller NT systems.
"On paper," he says "it will allow us to scale more than we do today."
Meanwhile at Wells Fargo & Co., San Francisco, George Cheng, senior vice president for the Internet services group, envisions the NT servers he oversees being switched over at some point, but doubted that the Unix servers, which make up the vast majority of servers in his division, would be affected. Yet, he noted that elsewhere in Wells Fargo, one of the earliest areas to test the product is its local are network and desktop group. Wells Fargo last month announced plans to migrate 120 NetWare servers to Windows 2000 in the bank's Wholesale Banking Group.
Dan Kusnetzky, program director of operations environments and serverware with the information technology research firm International Data Corp., Framingham, MA, not only predicts slow adoption of the product, but recommends it.
"It's a very large product with new capabilities. A prudent staff will want to explore it carefully, try it with different applications before jumping on it," he says. "The impression I have from my own staff who have used it is that Windows 2000 seems to be very stable, very reliable, but it also appears to take a long time to learn, so it needs careful planning."
Sales figures indicate that the new system is taking off. Less than a month after the Windows 2000 launch, Microsoft announced in mid-March, that more than 1 million copies of Windows 2000 had been sold in the "Professional," "Server" and "Advanced Server" versions combined.
Purchasing cycles that can slow down the upgrade process on the server side, may actually speed migration on the client side, says Tom Bittman, vice president and research director with GartnerGroup, Stamford, CT.
"We expect much faster uptake on the client than server side, mainly because a lot of companies are on a two-year replacement cycle for computers, so through the natural replacement of computers the system will be upgraded," he says.
Out of the installed Windows base, across all industries, at the end of 1999, Bittman projects that on the client side, 15% to 20% will have converted to Windows 2000 by the end of this year. That will be primarily through the replacement of desktop and laptop computers, rather than software upgrades, he suggests. By the end of 2001, the migration from that same base on the client side should reach 40% to 45%, he says. For servers, the first year will be slow, with approximately 5% of Windows NT servers converted by year end, GartnerGroup projects. But by the end of 2001, that number is expected to have grown to 45%.
"On the server side, we don't expect a rush. Some may want to wait until the environment might have stabilized. With the Active Directory there will be a lot of planning time involved," he says, referring to a feature of Windows 2000 that lets any object on a network be tracked and located. "The earliest of early users aren't planning large scale deployment until late this year."
Microsoft has poured more than $1 billion into Windows 2000, and is calling the platform its most extensively-tested operating system yet.
"The biggest issue we've had with financial institutions is availability, reliability and scalability, and we've made the biggest strides in those areas," says Bill Hartnett, worldwide director of financial services for Microsoft.
Windows 2000 is more reliable and stable than Windows NT, on which users have already reached "four-nines uptime," Hartnett says, referring to 99.99% system availability. That approaches the industry nirvana of 99.999% uptime. As further testament to Windows reliability, Hartnett cites the fact that Windows NT is used by six stock trading networks-the electronic communications networks, or ECNs, for over-the-counter stocks.
Analysts, while calling Windows 2000 Microsoft's most stable operating system out-of-the box, warn potential users that maturity in the marketplace is one of the most important ways for systems to grow more stable and reliable.
As a security boost, the new system boasts 128-bit encryption, the highest level available. The company has demonstrated its commitment to security by relaunching its Security Response Center, which issues security patches and information bulletins, and responds to every report of a security breach within 24 hours, seven days a week, notes Hartnett.
Need for management
Despite security criticism that previous versions of Windows have received, a large percent of security and reliability problems stem from mismanagement, Bittman says.
"What companies need to do is improve (their employees) skills. The biggest challenge with security and stability will be to make sure people are trained," says Bittman. "It's easy to find entry level skills for NT, but if you want a security-critical system or a mission-critical database system to run on Windows 2000 you have to be careful. Windows skills are in high demand right now and they are very portable, you can spend the money to train people and they could go across the street."
Indeed, training might be particularly important with Windows 2000, since it contains more code than most systems. "It has between 30 and 48 million lines of programming," says Kusnetzsky of IDC. "To put that in perspective, Unix has 18 million, and IBM's OS 390 for large mainframes has 24 million lines."
Microsoft counters that the large amounts of lines of code make the system easier, not more difficult, to maintain. "The fact is that a million lines of code is not a bad thing, it's bigger because there are extra features to make the system more stable," Hartnett says. "The software is being designed to take care of itself. It's a self-healing operating system. We are constantly lowering the bar for development and training. It's easier to use, faster to deploy and it takes less talent to build applications on it."
2000 allows a new server to be automatically configured when added to a system, it also automatically balances the processing load between servers, he says. Furthermore, the operating system has also been designed for interoperability and includes all the Internet standards needed for Web functions, he says.
In power and scalability, Windows 2000 recently helped set a processing record. A Windows 2000 operating system running on a Compaq ProLiant 8500 server, acted as the platform for a system that processed 227,079 transactions per minute, a new record for the Transaction Processing Performance Council's TPC-C benchmark, an industry-standard test that measures transaction processing system throughput.
In addition, Hartnett claims that for many companies Microsoft's clustering approach to scalability, which involves connecting several computers together in such a way that they behave like one computer, is very practical.
"If you have a large Sun (Microsystems) server, when you run out of room - to get another large server is like a board-of-directors level decision. With the PC model of clustering of servers, you can keep scaling up to bigger and bigger boxes," he says.
While receiving high marks as an upgrade to Windows NT and 98, its still debatable whether Microsoft can overthrow Unix and other vendors.
"While Microsoft boasts about strengthened reliability, scalability and security, we've built our reputation on all of those features," says Graham Lovell, group marketing manager for Solaris, Sun's Unix operating environment. Microsoft's operating system has made good progress in scalability, Lovell acknowledges. Yet he notes that the forthcoming Data Center version of Windows 2000 will scale to just 32 processors, whereas Solaris regularly runs systems that scale to 40, 50, 60 processors. In Internet technology, Sun uses IPv6, the name for version 6 of Internet Protocol, which is designed to support more addresses and more levels of addressing hierarchy. "If you want to be a major player, you have to be able to process more Internet addresses," Lovell says.
Sun's platform has a more open architecture than Windows, claims David Littlewood, Sun's director of banking and payment systems in worldwide financial services, adding that openness is particularly useful in the financial industry.
"There is a huge legacy environment in the banking industry and lots of software products have been developed on that," Littlewood says. "The only way to integrate is through the open approach. They have lots of different solutions for different things and they're not going to throw them away. They want to be able to Web-enable them."
But perhaps the most frequent argument for why Unix and Windows will remain in separate spaces is that independent software vendors seem to create different types of applications for the different systems.
""I would say what is developed for Windows is generally for the single-user desktop environment or for the front-end Web server. Large, back-end databases and mission-critical applications run on large Unix systems," says Lovell.
Some analysts see this as a critical difference in the systems.
"If we look at what applications banks put on Unix and what they put on NT, they are doing different functions," says Kusnetzky. "How people use (Windows) is different from how they use Unix."
Indeed, Robb of Wachovia noted that he expected to continue to maintain separate Unix and Windows systems primarily for that reason.
Yet in an IDC survey of where new applications were expected to be hosted, 80% of the time respondents said on Windows NT or its successor Windows 2000, said Kusnetzky.
And Bittman of GartnerGroup expects Windows 2000 to help Microsoft make headway over Unix.
"Today (application) vendors take two routes. Their high end products are offered on Unix and their lower end products are offered on 2000," he says. "But where before you may have seen products for NT (being designed) for under 200 users, vendors will now start raising the bar, so that Windows 2000 solutions are for under 300 or 400 users. All vendors want to play here. They see this as a growth opportunity."
