Desktop Computing: Who Needs Thin Clients Anyway?

Sure, the vast majority will stick with low-cost, high-powered PCs, but for loan processing workers at Bombardier Capital Mortgage Division and other back-office staff, thin clients do the job just fine

At well under $1,000, standard desktop PCs are so inexpensive today, it seems hard to justify thin clients. Nevertheless, there are times when thin clients can pay off.

In the case of two large financial companies, the IT managers agree that clerical workers processing loans get along just fine with thin clients. On the other hand, employees running customer service apps at branch locations or managers with budget responsibilities need the processing power and flexibility of standard desktop PCs.

For Pete Gentry, IT director at Bombardier Capital Mortgage Division, a unit of $8.5 billion Bombardier Inc., the company's mortgage group is a perfect setting for thin clients.

His 250 users are mostly clerical workers processing loan applications, so they don't need all the bells and whistles of desktop apps or extra storage capacity on their desktops. Processing the loans means creating batches of applications to be sent for approval, querying the databases to check status and routing the loan applications each time the next stage of approval is reached.

"They just route files, essentially, and none of the applications requires a tremendous amount of speed, so the server performs well," Gentry says. "Plus, their jobs are back-office. There are no customers sitting and waiting for the thin clients to process-just in case the server is a little slow when they do have to call up a form to change an address or something. So, the thin clients are ample," he says.

John Joback, president and chief information officer at First Virginia Services, the information services division of $124.8 million First Virginia Banks Inc., uses thin clients, too. In his case, it's to run a mortgage processing operation at 390 branches. But for Joback's customer service reps, who run more complicated apps, he needs PC processing power.

"Customer service needs faster response time," Joback says. "Think about it-the customer is in the branch, sitting with the customer service rep, trying to open an account or something. The last thing you want is for that customer to sit and wait for the computer."

Bombardier's Gentry made the decision to go with thin clients in early 1997. At the time, he had to decide how to network the clerical staffers who keep the company's mortgage financing division running.

Since only seven of his 17 IT staffers are assigned to administer desktop PCs and network servers, Gentry needed to build a low-cost, low-maintenance network. That's why he chose thin clients from IBM. At $600 per seat, Gentry reasoned that installing 250 IBM Network Stations was the most cost-effective solution.

Each Network Station is packed with 64 MB of RAM. The thin clients connect to an IBM ES/9000 server that runs loan origination, servicing and collection software from ALE Systems-applications that let the clerical staff route documents so that loans get processed.

They also use IBM's Workstation Application Facility, an image-scanning app used to scan signatures. And the network has an IBM AS/400 server that stores the main loan document databases. Each user simply downloads a kernel from the AS/400 to run the app; the users work from green screen terminals. "Their tasks are specific-they don't need word processors or e-mail, and the less they have on their desktops, the less maintenance is required," Gentry says.

The Case For PCs
First Virginia's Joback says thin clients can't handle forms-intensive customer apps. This is especially true when employees open up a variety of accounts, all of which require a separate form.

"When I started revamping the customer service departments at all the branches three years ago, my task was big: The reps needed to open and close accounts, and complete documentation for all sorts of new bank products and services," Joback says. "So I knew they'd need to do multiple apps in our longtime OS/2 environment. And we needed an environment where I could easily expand customer service products."

The key was that he needed to install networked PCs that could adjust to expanded apps. "I can't trust that to a thin-client environment because once you start with more and more functions, the [thin clients] cease to be useful," he says.

Joback says deciding between thin clients and desktop PCs simply comes down to the apps: When a company runs an application that generates numerous forms-customer service being the prime example-then it needs the storage and power of desktop PCs. And he's not talking about high-end PCs; a midlevel Pentium processor with 32 MB of RAM and a 1-GB hard drive often will do.

"Where people make mistakes with purchasing PCs is overdoing them," Joback explains. "You do not need a super-duper Pentium processor for every desktop just because you need to add power on the desktop to a customer service department. The $1,000 Penti-ums are fine, plus a little extra for a network card."

What surprises a lot of people, Joback adds, is that the hard costs for these midlevel Pentium PCs have dropped to about $1,100 per seat. When all is said and done, that is how much thin clients cost. If you already have monitors, that PC cost can easily drop to $700 per seat.

"Plus, we save between 15 percent to 20 percent in forms printing by generating our forms electronically and then routing them on the network," Joback says.

Each First Virginia branch also has a local server, which is a simple Pentium with a single processor-costing $5,000 or so-plus a multiple RAID array backing up the server. Customer service reps are encouraged to back up locally what they are working on, but all new account forms are backed up to the server daily.

Lessons Learned
One important lesson Gentry learned about thin clients is that users inevitably require added functionality-and cost. Some users need to run Microsoft word processor, spreadsheet and presentation office applications-and that means an upgrade.

"We'll still use the thin clients-we're not replacing them with Pentiums-but now we'll also run a terminal server NT network to serve the thin clients," Gentry says. "For every 25 thin clients, I'll need three or four processors and hundreds and hundreds of megabytes of memory to run the shared apps properly."

Gentry estimates his server costs at about $12,000 per server for a machine servicing 25 people, increasing the per-person price tag for a thin client by $480 per seat. That means that as soon as some routine office applications are needed on the thin client, the total cost per thin client jumps to $1,080-the initial $600 plus the percentage of the cost for the new server.

Another consideration is an uninterruptible power supply, which costs about $150 per seat. "We're in North Florida, lightning capital of the world," Gentry says. "In July, when the power would go out even for a millisecond, it would take 30 to 40 minutes for all the thin clients to power back up from a dead stop. That happened once or twice a week," he says.

The reason it takes so long to power back up is that all the thin clients have to download an 8-MB kernel to get started. That means all the thin clients are sending requests to the server simultaneously to get the kernel. It takes time for the server to respond to all 250.

"That's a lot of lost productivity if you are located in an area where even a split-second power outage is a common problem," Gentry says. "I can get the UPS at CompUSA or Computer City, but it still adds to the thin-client cost."

The total cost per seat is now up to $1,230. But Gentry says thin clients are still worthwhile because they're easier to maintain than desktop PCs. It becomes a question of total cost of ownership, he says. When the thin clients break, Gentry just throws them out-and it costs only $600 to replace because the monitor, UPS and the portion of the server attributed to the individual client are still intact. "They don't break very often-we've only lost a couple of the thin clients so far-and it's simply much more manageable to maintain with my staff," he says.

Of course, the networked PC route isn't perfect, either. "Hey, I have thin-client configurations running in the bank as well, and I will tell you that hard disk maintenance on PCs is an issue," Joback says. "I think 20 percent to 25 percent of all troubleshooting calls from staff people are about PC hard drives."

But fixing hard drives is minor when running apps that require speed, such as opening a checking account. "Everything is a trade-off, and when you trade off thin clients' easy central administration for networked PCs' speed, the real price is troubleshooting hard drives," Joback says. "So consider the apps you'll be running carefully before making one client purchase or another."

Even the most faithful thin-client advocate would admit that, except for use in very specialized applications, PCs win. Market researcher Dataquest estimates that 92.1 million PCs will ship in 1998, compared with 482,196 network computers. But NC shipments will grow: Dataquest predicts more than 1 million NCs will ship in 2002, which means NCs have some staying power as a niche product.

Who needs thin clients? In proportion to the number of PCs installed, it's not the vast majority of business users. But thin clients aren't going away any time soon, either. The challenge for IT executives is to understand their applications and users well enough to make the right choice.

Rivka Tadjer is a freelance computer journalist based in New York. She can be reached at rivkat@mindspring.com.