Every year Dave Raspallo, CIO at Textron Financial, found himself having to replace a third of his 1,200 PCs. But he grew tired of the cost of the annual ritual, and he began swapping out his desktops for thin clients. Forty percent of those PCs are now gone, and many more will disappear next year.
"I would consider it a failure if we don't eliminate completely the use of any desktops," said Raspallo, who has a name for his project: STIMI, or "Stop the Intel-Microsoft Insanity."
And he isn't stopping at the desktop. He's giving road warriors handhelds and tablet PCs in lieu of laptops. Total savings will be around 25 percent annually for his Providence, R.I.-based company, most of it in reduced support costs.
In the press for efficiency and cost reduction, data centers have been centralized and servers consolidated. And now attention is increasingly focusing on the PC. There's growing evidence of a determination among IT managers to aggressively cut PC hardware and support costs by centralizing management and minimizing Microsoft Corp. licensing fees.
Jack Klosterman, CIO at Volkswagen Credit, is as determined as any of them.
Three weeks ago, the Libertyville, Ill.-based financing arm of Volkswagen AG began a pilot project using PC blades and thin-client appliances from Hewlett-Packard (HP), with plans to roll out 200 PC blades next quarter. One way Klosterman expects to reduce Microsoft licensing costs is by virtualizing the desktop.
Employees access applications via a solid-state desktop appliance. They can log into a PC blade from any appliance, so they're not tied to a specific desktop. With at least 10 percent of the employees out of the office at any given time, VW Credit can reduce the number of CPUs and, consequently, its Microsoft licensing fees. "It seems to have realistic potential for this," said Klosterman.
The fact that the appliances can last twice as long as PCs while requiring less support also yields cost savings.
Jesus Arriaga, CIO at Key Automotive Industries Inc., an auto parts distributor in Pomona, Calif., expects to cut Microsoft licensing costs by taking a server-based approach. Like Textron, Key Automotive is deploying thin clients from King of Prussia, Pa.-based Neoware Systems Inc., with application delivery software from Citrix Systems Inc.
The licensing savings come from controlled access to applications. Key Automotive has some 3,000 users, but only half of them have a regular need for Microsoft Office. "When you deploy a PC, you have to provide Office knowing that they may be sporadically using it," Arriaga said.
He will have 1,500 Office licenses on his servers and will manage user access from the data center. When his servers hit the Office license limit, he will need to buy more licenses, but until then he's paying only for what he uses. The project is 60 percent complete, and the goal is to move up to 95 percent of Key Automotive's users to thin clients over the next year.
Arriaga expects other CIOs to look at the thin-client alternative as well. "It's on the path to being widely accepted," he said.
John Stingl, chief technical officer at Russell Investment Group in Tacoma, Washington, is moving his 1,000 users to a Citrix environment to cut costs. He's using thin clients from HP's Evo line that run local versions of Windows XP along with a browser and multimedia players. Applications are delivered via a central server.
IT managers say a thin-client move works only if the application environment is standardized. In Russell Investment's case, that has meant reducing its applications from 1,100 to 350. Stingl said he expects to save US$9 million over five years. "The pressure to get more for your dollar . . . is going to dictate that more folks take a look at this environment," he said.
The Linux line
Linux-based desktops that access Web-enabled applications are getting the attention of many IT managers as well. But it may be unrealistic to predict that the Microsoft-loaded PC is facing an imminent threat from either thin clients or Linux.
"There is a long history of people talking about the thin client taking over the world," said Bob O'Donnell, an analyst at Framingham, Mass.-based IDC. O'Donnell said he inherited some "outrageous forecasts" from earlier analysts, who predicted huge advances in thin-client adoption.
In 1999, for instance, IDC forecast 9.5 million thin-client shipments in 2004, O'Donnell said. Today that estimate is 1.8 million, only about 1 percent of total PC shipments. Still, the thin-client growth rate is over 20 percent annually. "The challenge has been to raise the awareness level," O'Donnell said.
But Steven VanRoekel, a director of platform strategy at Microsoft, countered that the Windows-based desktop remains a healthy, low-cost approach. He also cited failed thin-desktop movements of the past. "We've seen this trend, and the waves rise and fall," he said.
Microsoft does offer thin-client options through Web-based applications and its Terminal Server, which is part of the Windows server operating system. The company also partners with Citrix to help companies deliver applications to remote users.
But VanRoekel said the company continues to believe that a "rich, high-fidelity client" is the best course for most users. Microsoft is working to make the client deployment process easier with the release of its next Windows operating system, code-named Longhorn, which is expected in late 2005 or 2006. A new feature, called SuperFetch, will help applications launch more quickly, and ClickOne installation will allow users to install an application by simply clicking an icon or link.
That said, users are unquestionably buying thin clients. Indeed, some vendors offering desktop PC alternatives have fared much better than other technology companies over the past couple of years.
Neoware, for instance, reported a 68 percent revenue gain for its fiscal year that ended June 30. And Fort Lauderdale, Fla.-based Citrix reported a revenue jump of 21 percent year over year for the third quarter, which ended Sept. 30. The vendors say a key driver of sales is security, as well as regulatory requirements such as Sarbanes-Oxley.
Many of the thin-client vendors, like ClearCube Inc., are privately held and don't report their revenue. But the Austin-based maker of of PC blades claims that it has about 500 corporate customers.
And those HP PC blades that are being piloted by VW Credit will become generally available in March. HP claims that the blades have the capability to replace half of all desktops in medium-size and large companies.
The Linux desktop is a different story. In the U.S. market, vendors see more opportunities for Linux in call centers, point-of-sale systems and technical workstations than for replacing so-called knowledge worker systems used for office productivity and business functions. But that's not to say IT shops aren't examining Linux alternatives on the desktop.
In particular, many IT managers say they're keeping a close watch on Sun Microsystems Inc.'s StarOffice productivity suite. The Mayo Clinic, for instance, has 10 machines loaded with StarOffice and OpenOffice, a free open-source office suite, as part of a study of Linux and thin clients. Ken Bobis, chief technical officer at the clinic's Scottsdale, Ariz., location, said he knows those office products work. "Clearly, we may have pockets where we want to deploy them," he said.
The Mayo Clinic, which already uses Citrix for some of its 4,200 desktop clients, is investigating replacing more stand-alone desktops with thin clients as a way to cut licensing and support costs. It plans to continue using Office as well, but if the clinic deploys Office only on desktops where it's really needed, it could reduce the number of Office licenses by a third, said CIO John Cranmer.
Although Sun says StarOffice is compatible with Microsoft file formats, some IT managers remain concerned.
"People who have struggled through the maturing of the Microsoft products, I think, are reluctant to go back to being in the minority again," said Dennis Biederman, vice president of global IT services at APW Ltd., an electronics parts maker in Waukesha, Wis.
And while there's plenty of interest in Office alternatives, it's not enough to prompt a switch for Cornell University's S.C. Johnson Graduate School of Management.
"As a business school, we can't consider products that the companies who hire our students don't use," said Larry Fresinski, the school's CIO. "We suspect that Office will be the mainstay for Fortune 500 companies for some time to come. However, if there's a shift, we would shift as well."
Some IT managers clearly prefer to control costs through improved desktop management rather than by moving to thin clients.
Bruce Blitch, CIO at Tessenderlo, Kerley Inc., a Phoenix-based chemicals maker, is concerned about the performance of server-based computing with remote locations. Controlling desktop support costs is accomplished through "tyrannical control" of desktop systems through the use of Windows 2000 lockdown policies that prevent users from installing applications on their PCs, he said.
One problem facing thin-client adoption is user resistance. Jeff Skeen, CIO at Gold's Gym International Inc. in Falls Church, Va., said 30 of the company's 37 corporate-owned locations now run thin clients, and the remaining seven will be converted in March. He said over 650 franchisees will be offered the system in its current format in July.
"The big challenge we have with the corporate staff is that employees are used to having their own way with their systems," Skeen said. "What we've tried to do is keep a real close eye on the administrative staff and how they're using their PCs, so when we put the thin client in, it's not a huge loss of freedom."
Overseas users pioneer desktop Linux
Sun Microsystems recently announced the sale of 10,000 seats of its StarOffice productivity suite to United India Insurance Co. in Chennai. It's Sun's largest StarOffice contract to date.
Sun sees its desktop strategy, which includes its SunRay thin client, as a means to a very specific end: more server sales. But the company expects most of its initial desktop business to come from overseas.
"(Cost) sensitivity dictates that the majority of market opportunities will be in geographies outside of North America," said Jonathan Schwartz, executive vice president of software at Sun.
Last month, Sun reached an agreement to sell up to 1 million seats of its Linux-based Java Desktop System annually to the China Standard Software Co., a government-backed consortium. And just last week, the U.K. government signed a five-year agreement with Sun to evaluate the cost and usability of the Java Desktop System and Sun's Java Enterprise System. It is also testing open-source software from IBM.
Scott Handy, vice president in charge of desktops at IBM Corp., said U.S. businesses' interest in Linux desktops is limited. That's partly because software licensing fees represent only 20 percent of the total cost of ownership of desktops, he said, which IBM estimates to be between US$5,000 and $7,000 per PC per year.
But Handy predicted a gradual movement to Web-based applications deployed through portals. "We are multiple years into a decade-long shift" to using Internet-based technology as a more cost-effective way to deploy an application, he said, adding that a shift to server-based delivery of applications can cut the cost of a desktop in half.
Sun expects the shift to be toward simplicity. Schwartz cited devices such as Java-enabled phones as an example and maintained that CIOs want the same kind of simplicity on their desktops. "They want to reduce expenses; they want to manage it centrally," he said.
Sun has clearly emerged as a Linux desktop leader in a relatively short time. But next month Novell Inc. is expected to finalize its purchase of Linux vendor SUSE Linux AG, a move that follows Novell's August acquisition of Ximian Inc., which makes a Linux desktop environment.
Charlie Ungashick, director of product management and marketing for Novell's Ximian Services group, said the company will focus on technical workstation users and inventory and point-of-sale workers -- not the general office worker.
Early adopter stands firm on Linux desktop
Burlington Coat Factory Warehouse couldn't turn to any of its retail peers for advice five years ago when it began deploying Linux-based desktops.
At the time, the Burlington, N.J.-based company made one of the largest commitments to Linux to date, rolling out more than 1,000 Linux PCs. It was the largest Linux retail installation ever announced by a U.S. company. The pioneering move was an outgrowth of Burlington Coat's Unix heritage.
Looking back, CIO Mike Prince said Linux has proved to be a "good, reliable" operating system, and the move was "absolutely" worth it. The company has even substantially increased its Linux deployment since the operating system first crept into its development labs in 1998, when college interns insisted on using it.
A year later, Burlington Coat Factory began rolling out a half-dozen Linux-based desktops to each of its stores for managers and inventory clerks to use, and last year the company completed its migration of an average of 15 cash registers in each of its 350 stores to Linux. So Burlington Coat Factory is now deploying about 7,000 Linux-based clients, according to Prince.
Prince said the move has been economical because of the thin-client approach that the company has taken to deliver key business applications over its frame-relay network. Users access the applications through Web browsers, so when changes are made to the software, they don't have to be installed on thousands of desktops, he noted.
The reduction in licensing costs wasn't a major issue for Prince. He said the company's total cost of ownership declined because the systems were easy to administer and to lock down so users couldn't install applications on their own. He said that keeping the store systems running requires only one or two workers in his network group.
"We have more people supporting a handful of Windows users than roughly 7,000 Linux systems," Prince said. He added that the Linux systems "just sit there and don't break. They run and run and run. People can't mess them up. They don't get messed up on their own. Unless there's a hardware problem, we almost never have to do anything with them."
Prince said that if the company needs support for its Linux desktops or servers, he has found plenty of options through partners such as IBM, its Linux vendors (Red Hat Inc., and SUSE Linux AG, which Novell Inc. recently announced plans to acquire) and third-party support providers.
"We've had far fewer issues getting resolution with Linux than we've had with any other operating system we've ever used, including all of the Unixes," Prince said.
But Linux has yet to gain traction with the knowledge workers at Burlington Coat Factory's home office. Prince said many of them have relied on Windows desktops for years, and initially there were "real compromises and issues of compatibility with documents passed from Windows to StarOffice."
Prince, who uses StarOffice, said compatibility issues haven't been a problem for at least a year. But he sees no immediate business gain in forcing the company's knowledge workers to make a switch to StarOffice on Linux. He said he's convinced that it would save costs and streamline support, but he would also "have people up in arms."
"Resistance is natural. People don't like change in their tools. Carpenters are used to their hammers," Prince said. "You're not just going to go in and change these things unless you have something terrific to offer. For everything they give up, you have to offer some new thing that's appealing to them."
Prince said the main limitation of the Linux desktop is the lack of consistency in the user interfaces produced by the various vendors and open-source camps. "It keeps it from catching on," he said.
The CIO said he expects his company will always have some Windows desktops, but he plans to offer a non-Windows environment to his associates and possibly switch some workers as they get new PCs.
"To me, if the company were to completely change over to Linux, I think we would have an easier time in IT supporting everyone. There would be fewer viruses. There would be fewer things people would do to screw themselves up with their computers," Prince said. "On the other hand, as an IT manager, that's not a very big priority for me. I have enough major strategic issues to deal with. Changing desktops isn't one of them."