SILVER CITY, N.M.-Credit unions are throwing money at Microsoft instead of using free, open software and giving the savings back to members, according to Bill Stites, CIO at $27-million Chino Federal Credit Union here.

"Microsoft Office, at $470 a pop per license, gets expensive," Stites explained. "I could return that license money to the member instead of 'feeing' them to death. Credit unions should not be paying large fees to software vendors when more affordable alternatives exist."

A completely free alternative to Microsoft Office is OpenOffice, Sites said. A reasonable alternative to the Microsoft ISS Web server to run websites is the open LAMP environment-a Linux operating system, Apache Web server, MySQL database software and PHP Web scripting language, he said. "With the LAMP stack, you get the exact same functions as ISS for almost nothing."

Chino FCU has run LAMP and OpenOffice for the past four years, Stites said. "Years ago, I looked at Microsoft Office and got major sticker shock. I made a commitment not to go that route."

"Open source" refers to software that is made freely available to the public to download or modify. The source code for open software is published for anyone to use. But open software like Linux is hard to find at credit unions.

Most credit unions run the pricey Microsoft products simply because the giant has a "much better marketing campaign than Linux," suggested Stites. "And a lot of people aren't familiar with what Linux has to offer. They think it seems nerdy. It's a shame because the total cost of ownership is much lower."

Perhaps more importantly, open source software has been "hardened" by years of input from the user community, Stites continued. "Anyone can change open software because back-end coding is easy to access. The entire Internet community gives feedback. That kind of collaboration makes for a more stable, robust, secure system than the Microsoft world, which is proprietary and secretive."

Open software suffers from fewer viruses and presents no hard-drive fragmentation issues, unlike Microsoft, Stites said.

Chino FCU built its own open-source website, but the three-branch CU also partners with vendors who run open source, he said. Homebanking, SMS text banking, audio response and electronic statements operate on open-source architecture provided by Boise, Idaho-based Database Management Services. "The price point is appealing," Stites said.

Core systems vendors should take advantage of open source, as they could pass "phenomenal" cost savings on to credit unions, he added. "There's room for core processors to offer more affordable technology."

Open source could be critical in capturing Generation Y members, said Stites. "Gen Y wants to log on to a computer instead of visiting brick-and-mortar. So technology will become more prevalent at the credit union as we seek to deploy services that meet Gen Y needs. The cost-effective way to deploy technologies is open source."

Stites said he is satisfied with the results open software is delivering. His primary caveat is that CUs should thoroughly test open source for security vulnerabilities before deploying. Of course, the same goes for Microsoft software, he said.

"Just because Microsoft writes the program doesn't mean it's secure," said Stites. "Whether Microsoft or open source, you have to test for security holes." For example, IT administrators need to change default passwords and apply security patches to office productivity software. Look for Statement on Auditing Standards (SAS) 70 reports to confirm controls and safeguards for any software you implement, he said.

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