NCs: a look behind the numbers

NCs: a look behind the numbers

If you believe what some research firms say, network computers (NCs) will not only be less expensive to buy than desktop PCs, they'll cost significantly less to own and operate. By at least a couple of estimates, the reduction in total cost of ownership (TCO) should hover around $5000 per year - a significant chunk of change by any measure.

This assumes, of course, you're prepared to believe the numbers analysts are coming up with. We, being sceptical reporter types, were not. So we dug around behind the numbers and came to the firm conclusion that nobody can say with a reasonable degree of accuracy or confidence how much, if anything, an NC might save buyers. There are too many variables that have yet to be explored and lots of assumptions, omissions and catches in the data being bandied about.

Nobody, for example, has yet delved into questions addressing factors such as the productivity benefits to be achieved with one device v another, or the integration and migration costs that are associated with NCs. Assumptions are rampant, simply because there is no NC knowledge base to work from; instead, analysts extrapolate from user experiences with X terminals or diskless work- stations. Analysts freely admit this is not an exact science.

"We're not fussy about what the exact numbers are," says Bill Kirwin, vice-president and research director at Gartner Group. "People report anywhere from half to three times what we estimate - it's more important for our numbers to be in the ballpark." This is not to say that NCs flat-out won't save money. They might. On the other hand, they may only transfer administrative costs to a different place, such as from the client to the server. The point is, you can't take analyst estimates at face value. You've got to look behind the numbers, understand how they were arrived at and think about what they don't tell you.

"Each analyst's studies reflect different types of user bases, as well as different choices of what costs to include and exclude," says Greg Blatnik of Zona Research. Zona, for example, focused on workgroups of about 15 users and a single server. Gartner, on the other hand, looked more at large companies with revenues of $US1 billion or more.

"These sorts of studies definitely don't present the entire picture," Blatnik says. "They usually don't take into account factors such as productivity or new application deployment costs." Additionally, he notes, there's a wide variation in costs for the same thing, such as the salary for systems administrators - they simply cost more in most large metropolitan areas.

Proper use of these studies also requires that you understand what you sacrifice by replacing PCs with NCs. If you were a large transport company would you replace your trucks and planes with bicycles because the latter cost less to buy and maintain? Probably not, except in some very specific locations.

What's an NC?

We're using the term "network computer" to refer to any of three types of machines:l Client-oriented NC This is typically a diskless device running a thin-client operating system. Code, such as Java modules, executes locally but resides on the server, so server connectivity is essential. Some types may not inherently support Windows applications, so you may also need a server-based emulator such as NTrigue, from Insignia Solutions. Examples: Sun Microsystems JavaStation, Wyse Technology Winterm 4000, and NC standards from IBM, Netscape, Oracle and Sun. l Server-oriented network computer This is basically a diskless smart terminal with the application executing on a server. Example: Citrix Systems WinFrame used with Wyse terminals. l NetPC Windows-based diskless or disked PC that has no data stored locally; its "identity", meaning user profile and configurations, is server based. Example: Microsoft-Intel NetPC specifications.

The standard against which NCs are compared and contrasted in most analyst studies is a PC running Windows 3.X or Windows 95, attached to a LAN for file and print services, with typical quality of management. "Typical", it seems, translates to anywhere from average to poor; few corporate desktops are being managed anywhere near as well as they could be.

Crunching the numbers

Probably the most quoted TCO figures come from Gartner, which has annualised its numbers. Gartner's assumptions include a three-year cost cycle for hardware and software purchases, and the company has averaged out costs that spike in the first or final years, such as installing and configuring new applications.

According to Gartner's figures, Sun JavaStations, along with similar offerings on the way from other vendors, are likely to be the most cost-effective of the NC choices, saving companies as much as 40 per cent in purchase and support costs as compared to desktop PCs. That might be more than someone would save by simply managing their PCs better, but the numbers don't take into account the cost of migrating to NCs in the first place.

Putting several of the leading market research firms head-to-head in what is admittedly not an apples-to-apples comparison, due to the varying methods research firms use to reach their conclusions, it appears annual TCO savings of $3000 to $5000 for each user station, or 30 to 50 per cent, wouldn't be surprising.

Indeed, judging by analyst projections any NC strategy should offer savings of 20 to 30 per cent, with the Java-class solution doing best. But so can implementing "best practices" with existing systems, according to Gartner.

"We believe you can get a 25 to 30 per cent cost reduction by simply managing your current PC environment better," Gartner's Kirwin says. Better management includes providing adequate technical support resources, applying state-of- the-art systems management, including remote diagnostics and control, doing electronic software distribution, and imposing greater levels of standardisation.

With NCs, standardisation is pretty much enforced, Kirwin says, because you have a standard client configuration, built-in system management technology and centralised management. "Network computers are the embodiment of best practices," he says.

Best practices can include simpler things, as US end user Ryder System has shown. Wilbert Williams, group project manager for Ryder, says his company has centralised the ordering of PCs and reduced the number of vendors and configurations it deals with. "Up-front capital costs of PC hardware and software have been cut by at least 20 per cent," Williams says.

Further, he anticipates reductions in support costs because "with this smaller number of system types, we can now test 100 per cent of our applications on each PC configuration before shipping them to the field."

Equally important, the value of the PC systems to the user and user satisfaction have both gone up because the company can ship bug-free applications sooner.

At present, about 6000 Ryder PCs are involved - Williams anticipates 10,000 to 15,000 PCs will ultimately be deployed under these cost-saving measures. So it's clear that NCs have serious competition in the dollar-savings arena.

Depending on your particular situation, there could be cases where it actually costs more to have and hold an NC than it would a PC.

So how do you decide whether NCs make sense in a situation?

Assume for a moment that a given NC can do the tasks currently being handled by PCs, and that there will be cost reductions as claimed. You've still got to get from here to there, meaning migrating applications, buying new equipment and staging everything over.

To determine whether it's worthwhile, Kirwin says users have to compare estimated migration costs to the anticipated savings over time. For example, if it will cost $5000 per system to migrate and you can only expect $1500 per system per year in reductions, it's a raw deal. "If you can't recover your migration costs within two years, skip it," he says.

Dumb does as dumb is

Consultant Theo Forbath says you should pick your spots for NCs. "If you live in a world where dumb terminals play a vital role, you will do well with an NC," he says.

Similarly, according to Forbath, for supporting workers, such as receptionists, support people or administrators, who rely on a relatively fixed desktop, companies may see lower TCO with NCs.

On the other hand, "a lot of folks will still need notebook computers, which can't currently be replaced by NCs."

You've also got to consider whether TCO estimates measure enough of the problem to be a useful guideline.

"The NC folks would like to have you believe support costs of existing PCs are the only thing that matters," Hutchinson says. "I haven't seen discussions with clearheaded assessment of the 'benefit of ownership' for each approach, such as worker empowerment and work teams, and whether employees are still able to be as productive, mobile, flexible and creative for the business."

If the value of the employee goes down because, say, that person can't plug in while on the road, he says any savings may be negated.

"What we tell our clients is that this is a real horse race," Gartner's Kirwin says. He recommends a three-step course of action. First, clean up your existing PC installed base, implementing best practices. Second, look to places such as branch offices that can benefit from server-based offerings that deliver Windows-based applications, such as Citrix's Winframe.

And third, target specific-function NCs, such as JavaStations, for highly structured environments. "There's a place for all these technologies, and none will be a clean sweep of the market," he says.

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