Information Processing: PERSONAL COMPUTERS
DO YOU KNOW WHERE YOUR PCs ARE?
For Mandeep Khera, the saying "the customer is always right" just doesn't apply. Typically, they're wrong--and usually by a lot. Khera runs a Hewlett-Packard Co. service that manages all the desktop-computer needs of big corporate customers. One client, Khera recalls, swore the company had 700 personal computers and 15 users per printer. But when an audit was finished, Khera and his people discovered 1,200 PCs and one printer per computer.
Another major corporation called in help when the computer managers realized they had lost track of $20 million worth of PCs. "They knew they were purchased," says William O. Bray, an executive vice-president at Comdisco Inc., the computer-leasing giant hired to find the AWOL machines. "They just didn't know where they were."
NO CLUE. Khera and Bray are part of a fast-growing segment of the computer-services business offering so-called desktop asset management--sort of a cross between a high-tech lost-and-found and efficiency experts that specialize in PCs and related equipment. There's plenty of business: Not only does Corporate America have no idea how many PCs it has, who's running them, or where they are but it also hasn't a clue what's inside them--Doom II or Lotus 1-2-3. "It's a huge problem," says Michael Vargo, an analyst for market researcher Gartner Group Inc. "Organizations have been afraid to go to top management and say: `Over the past five years we've spent $100 million in PCs, and we don't know where it is.' It's not a career-enhancing move."
Those expenses sneak up on you. The typical corporate PC, complete with software, costs about $4,000 to purchase. But it costs 10 times that to operate a PC for five years, Gartner figures. That's counting all the ancillary services needed--things such as training, help desks to answer questions from users, installing extra memory, and electricity to run the machines. Multiply $40,000 by the 30,000 to 60,000 PCs typically found at major corporations, and "the hidden cost to a company can be immense," says Thomas Trainer, chief information officer of Eli Lilly & Co. "It can be a black hole, financially."
How deep? U.S. industry and government organizations waste an estimated $20 billion annually by mismanaging desktop-computing equipment, according to the Personal Computer Assets Management Institute. Greg Lewis, president of the Rochester (N.Y.) consulting firm, estimates that large companies squander $2 billion annually just by purchasing software and hardware when they have plenty of comparable technology available.
POLLING THE NETWORK. The solution? A raft of new services ranging from special database programs to track every PC to completely "outsourcing" PC support--taking over everything from training employees and running a help desk to getting rid of aging PCs when new ones are bought. Just keeping track of when to replace machines has become a tough job. "The frequency of change is much more dramatic than ever before," says Leon B. Billis, senior vice-president for Equitable Life Assurance.
How did Corporate America get in such a pickle? As companies decentralized over the past few years, more control went to business units and small departments. Frustrated by the bottleneck of getting corporate information-technology managers to develop applications, business managers simply bought their own machines and software--thousands of them. And even when management tries to regain control, "people sneak them in as office furniture," says CIO Trainer.
Now, downsizing is exposing the excesses--and corporations are calling in the asset-management services to fix things. What can they do? Tighten control over purchasing and install software that will tell companies how many PCs are out there and what they run--at least the PCs that are networked. "We have perfect information the day we buy them," says Boyd W. Hopkins, vice-president at Cigna Systems, the data-processing arm of the giant insurance company. "Then, it atrophies from there." Cigna is looking at software that will keep an eye on its 40,000 PCs.
Once companies get a handle on what they have, they will discover where they may be paying too much--for duplicative maintenance or software licensing fees, for example. Then, they can impose strict hardware and software standards to reduce the number of different products to support--further cutting costs. What's more, a help desk tied into a database listing information on each user will eliminate the first few minutes of each call wasted on gathering that data.
BACK TO LEASING. Meanwhile, collecting that information should get easier: Several computer companies have agreed to develop a standard way to poll computers on a network to learn what components and software they have. On Feb. 27, Compaq Computer Corp. plans to unveil such a system for its computers. Until now, concedes Andrew Watson, Compaq's director of desktop marketing, PC makers have done a poor job providing such asset-management tools. "It's one of the areas we have focused on the least as a group," he says.
For customers who find it all too confusing, the answer could be to avoid acquiring the assets in the first place. To furnish 6,000 PCs for its agents,
Equitable is returning to an old computer-industry practice: leasing. IBM Credit Corp., the computer giant's leasing subsidiary, will install all the machines and replace them every two years. Now, the risk of the technology becoming out of date is "transferred from the customer to the vendor," says John E. Callies, a general manager at IBM Credit.
Meanwhile, PC makers are rushing into asset management. "Strategically, it will be very important to help grow the PC business," says HP's Khera. On Feb. 1, IBM Credit bought Chrysler Systems, a unit of the auto maker's finance subsidiary that provides services such as asset management. Dell Computer Corp. is also adding asset-management services. "If customers view Dell as offering more value because we lower the cost of ownership, we're in a much better position not only to gain share within those customers but also more loyalty to Dell as a brand," says Rosendo G. Parra, group vice-president for major accounts. In an industry of never-ending price wars, it could even be a way to make a profit.By Ira Sager in New York, with Gary McWilliams in Houston