This paper was developed to provide general background to assist clients in decisions related to outsourcing IT. Please note that this paper presents professional opinions intended to apply generally and that clients must take appropriate care to evaluate them in light of their specific needs. Technology & Business Integrators, Inc. makes no representations, warrantees or guarantees of any sort as to the applicability of the opinions presented in this paper.
As the platform upon which many of our users have access to their applications and systems, the desktop computer has come a long way since its initial introduction as the Personal Computer (PC) in the early 1980’s. Although still retaining the same name, the Personal Computer is no longer personal. It is a key component of a pervasive information technology infrastructure upon which many business operations depend. Our work in consulting to large organizations in North America and Europe has enabled us to see some of the problems associated with this component of the infrastructure, and support our clients in achieving improvements. We believe that many enterprises are likely to be:
- changing their desktop technology too frequently without considering implications on the rest of the organization;
- not gaining the benefits from the latest thinking in technology management and policies;
- spending too much money as a consequence of their current approaches.
This white paper is based upon our recent work. Its objective is to help Business and Information Technology (IT) managers gain a better understanding of the critical issues associated with the management of the desktop computing environment. It is published to support the development of the body of knowledge in the public domain concerning the best way to manage the desktop component of the information technology infrastructure.
Observations From The Real World
Organizations are facing incredible turmoil in their management of the information technology infrastructure. We are now trying to conduct our businesses in a social and economic climate predicated on the notion of change rather than certainty and stability.
Nowhere is this more marked than in the realm of information technology management. Since the early 1980’s, the whole way in which organizations record, manage and use information has changed dramatically. One of the most difficult areas is the management of the desktop and local area network (LAN) infrastructure.
Some of the issues causing particular difficulty include:
- maintaining a stable, consistent desktop environment onto which enterprise-wide client-server applications can be successfully deployed;
- dealing with the tremendous amount and velocity of technological change and innovation that major vendors such as Intel and Microsoft bring to the marketplace;
- maximizing the opportunity that the web-enabling of applications and products offers for new ways of delivering function to end users and customers;
- handling emerging technical architectures for the desktop, particularly the thin-client option;
- preparing for looming unplanned capital expenditures—a vital issue that organizations will need to address in the short to medium term as it becomes apparent that their aging installed base of desktop devices is unable to support the client-server applications being developed and implemented.
These dynamics cause a high degree of confusion and uncertainty for management at a time when they need to make critical strategic decisions about their investment in the desktop infrastructure.
The Players within Our Organization
In our consulting work we have observed a number of stakeholders with quite different perspectives on the success in managing the desktop. Each of the stakeholders’ perspectives is valid and clearly must be considered in any decision-making process. The task for every enterprise is in creating a balance between the concerns of each of the various stakeholders.
Here’s what we hear the three groups saying:
“Of course, the IT folks who support us can’t keep up. How often have we called the help desk only to find it busy, or when we do get through the guy answering the phone knows less about the problem than we do. No problem, though. We can look after ourselves in the workplace. The computer industry pundits even have a name for how we figure it all out ourselves—they call it ‘the peer-to-peer support phenomenon’. We just get on and do it…”
Business Executives – the people who have to worry about ROI and escalating IT budgets.
“The desktop computer revolution has made managing computer budgets more difficult. No longer is all of the computer expenditure inside a glass house. It’s all over the place; users have some, telecomms have some and we still have the mainframes. Communications are becoming possibly the most critical element in all of the technology expenditures that are made.”
“Unfortunately this thing called ‘the IT infrastructure’ is hard to justify, but seems necessary to support business opportunities that we haven’t yet begun to imagine. Even more bad news about this is that it takes a lot of time to build an information technology infrastructure—more time than we might have to exploit a business opportunity without a Responsive infrastructure”
“People talk about an ‘enabling IT infrastructure’ but most of us business managers see the IT infrastructure as ‘disabling’ since it doesn’t allow us to exploit opportunities, and positively inhibits our business. It’s a kind of ‘You’re damned if you do, and damned if you don’t sort of paradox”
IT Managers – the people in charge of the technology and supporting all those users who don’t really know what they want.
“When I started in this business it was a lot simpler. Today, the business guys really get in the way of our work in getting a great technology solution designed and implemented. Why do these business managers always seem to want more while at the same time reducing our budgets? We know that in IT, everything has to be flexible, secure, and never break, and yet a lot of the new technologies that we’re using are just not mature enough for us to have this kind of expectation”
“It’s a real problem managing this stuff, and of course the amount of change that we face in just responding to the users’ demands means that we’re shooting at a moving target. I’m not sure that we stand still long enough to ever get our arms around all this and get it under control. It’s relentless.”
Dealing with Conflicting Stakeholder Interests
Decision-making surrounding the management of desktop computers is most often made by two groups within the organization — business managers and IT managers. Business managers are often confronted with the need to make decisions about technology for their departments when their own IT groups are overwhelmed with other priorities. IT managers may be faced with making strategic decisions concerning the management and replacement of their desktop computing infrastructure.
In order to make informed decisions a number of critical questions must be addressed, including:
- Should continued investments be made in traditional personal computers?
- Is the advertising and media attention, which has been given to new technologies such as Network PCs and Thin Client technology worthy of consideration?
- Is the apparent Total Cost of Ownership (TCO) of desktop technology out of control?
- We have seen many organizations operating in a vacuum of knowledge of how to deal with the pitfalls and currently available potential solutions to these issues.
The Total Cost of Ownership
The Total Cost of Ownership (TCO) of desktop computers is a frequently mentioned model for analysis. The most recent published figures suggest that the TCO of every desktop device in an organization is as much as $40,000 over a three-year period, or more than $12,000 per year.
How many organizations are actively working to manage these huge on-going costs?
Most enterprises that we have had contact with that have tried to ascertain their TCO have been disappointed with the results. So what if you can determine that it costs on average $12,000 per year to keep a desktop device?
We believe that the TCO, although valuable conceptually, is of little use for management decisions. It is a lag measure, being the result of activities that are impacted by management decisions. The key to reducing overall costs is the development of an understanding of the lead measures and drivers of TCO.
Although the TCO model is widely accepted and acknowledged, there is precious little understanding of what drives these costs. If we knew these drivers, we could begin to manage the costs downward.
Since 1995 we have focused our work on developing the knowledge of these drivers, and have worked with large enterprises to implement management programs that both reduce the costs associated with owning desktop computers and increase the service levels that are necessary to support today’s business goals. Others have also begun to explore these avenues of understanding.
A recent study showed that some companies spend 10 times as much as others per employee on IT because of inefficiencies, not because of intense IT needs.
The study found four major patterns among high spenders:
- Lack of centralized control leading to duplication and complexity;
- Weak business cases for custom development;
- Failure to strategically manage IT deployment;
- Poor human resources management in terms of training, recruitment and mitigation of related stress.
A recent survey carried out among 400 PC users in medium-sized and large companies in Europe, discovered that every employee who uses a personal computer can lose the equivalent of three weeks’ working time per year because of problems with the technology. The lost time was chiefly due to new systems’ implementation, malfunctions with the machine or desktop and personal misuse.
The survey identified that the most commonly experienced reasons for computers failing are related to network and software upgrade problems. Our work supports these conclusions.
Dealing with Rapid Technical Changes
The industry is living up to Moore’s Law. Former Intel chairman Gordon Moore predicted the trend that transistor counts in processors would double every 18 months. Today, this law can be applied to many other technologies.
There is also Metcalfe’s law. Bob Metcalfe, founder of 3Com and inventor of the Ethernet networking standard, has said “As users become connected, the opportunity to do business differently rises exponentially to the number of users.” We would expand this to say that the difficulty in managing the investment rises exponentially at the same time.
There are a number of extraordinarily exciting technical breakthroughs that offer huge potential for the future:
Web-enabling technologies have made corporate Intranets a reality. They also offer the opportunity for enterprises to reach out to customers and allow them to let their customers look into corporate systems. Home banking through the Internet is just one example of this. The Thin Client or Network PC is a real alternative in a time when access through common communications protocol is a key driver for some of our new, cutting-edge applications. The rapid emergence of the Internet Protocol (IP) standard for communicating.
Browser technology is rapidly giving us a standard means by which users can interface with almost any system anywhere in the world.
Mass-media advertising by the giants of the industry has stimulated demand from users that break all the rules from other industries. Users are asking for (or even demanding) the newest, fastest, storage richest platforms, not because they understand the potential of this new technology, but because they have seen slick, exciting TV ad campaigns. This is the “stuff” of business school marketing cases.
Has there been any other industry where components manufacturers have advertised directly to end-users? We don’t care who makes the water pump in our cars—we trust the major automobile manufacturers to deliver a vehicle that works. The processor and operating system of a desktop computer are just components. Yet, through the power of mass marketing and advertising, users are concerned that the machines we use must have the latest hardware and software releases.
We have observed that organizations can be either technology-driven or business driven when responding to these external influences. The technology-driven enterprise is one where the predominant influence on management decisions is tracking and reacting to the technical changes presented by the industry. The business-driven organizations we have worked with relegate the technical developments behind their users’ well-being and business objectives.
There needs to be an orderly balance between the technology and business. Unfortunately, we see the stakeholders with the most to offer this balance not playing nearly such an active role in these decisions. What happens when an enterprise steps off the technology merry-go-round can be equally damaging for its capacity to exploit new business opportunities, as this case illustrates:
A world class financial services organization went through two major business acquisitions in the late 1990’s. Unfortunately, for a 2-year period, the focus of their IT management was on achieving economies of scale in their integrated systems operations. The desktop infrastructure was not considered as important as their mainframe processing centers.
Service levels to users began to decline as they attempted to continue to use their disparate desktop computers across a newly integrated business through this period. The IT department lost credibility in the eyes of their business executives.
Ultimately, management realized that the aging desktop asset was in need of standardization and replacement if front line staff were going to be able to do their jobs successfully.
The board approved a $60 million capital expenditure request to replace the desktop and related assets. Unfortunately, the scale of this replacement (over 8,000 users across almost 100 locations) meant that this project was scheduled for over two years to complete. This delay closed the door on a number of business.
Opportunities that depended upon a consistent desktop technology for all users. Had our client not lost focus on their user’s needs during the period of business combination, their user dissatisfaction and consequential business loss would have been significantly reduced.
Being reactive or proactive to outside forces is a choice that many enterprises are taking unconsciously. We believe that the proactive stance is likely to offer better returns for management in terms of lower costs and higher service levels than the reactive approach. The only winners when reaction to technology change drives management decision-making are the stockholders of high-tech industry players.
Thin Clients or Traditional Personal Computers?
The industry has presented us with the new options of thin client and the network computer as a means of reducing costs. What are they?
Thin clients and network computers are general terms for computing devices that rely on centralized or network-based resources to operate. These devices typically do not include hard drives and other components found in PCs. Because they are not complete computers, their overhead associated with administration, including configuration, maintenance and support, and installation is said to be lower. However, a higher dependence is placed upon network connections and services than in the more traditional PC device. They promise greater productivity and a corresponding lower TCO for the enterprise.
The impact of these technology developments upon TCO is not clear at this stage. Labor is, and will remain, a major contributor to overall costs. This factor is driven more by management practices and techniques than the choice of technology. But that said, there are a number of simple, easy-to-understand and easy-to-do-something-about factors that can reduce the TCO.
Companies can reduce the TCO of existing PCs by at least 25% by following sound desktop-management practices.
- standardizing hardware and software to the degree possible;
- centralizing software distribution and management;
- putting asset-management programs in place;
- deploying desktop management suites;
- improving training programs—untrained users require two to six times more technical support than trained users do.
- Studies show that reduced capital and administration/support due to the use of Network Computers can be as much as 35% of the TCO. Of this, one-fifth relates to reduced lower capital expenditure while the balance comes from operational and administrative savings in both the technical and end-user areas.