Client/Server
References Case
May 19, 1993
Computer downsizing can often be an uphill effort.
The much-touted process - switching corporate data banks from mainframe computers to networks of personal computers - is the hottest thing in computing today. But despite the hype about its benefits, much of it disseminated by companies peddling networking hardware or software, the transition for many companies is proving painful.
The Dallas office of accountants KPMG Peat Marwick, for instance, estimates that 70% of its clients attempting downsizing programs have run into unexpected problems, and a doubling of anticipated costs isn't at all unusual.
Others concur. The top technology manager at Sara Lee Corp., which has managed to complete a relatively painless downsizing project, estimates that nearly two-thirds of the companies now undertaking such programs will have to scrap them because the problems will become so severe.
"People have gone overboard on the concept," says William Zachmann, an industry watcher and columnist widely credited with coining the phrase "downsizing" in the late 1970s. "It's like people upon first hearing about electricity, stuck their finger in the light socket to check it out. It's become a mindless fad."
The concept of downsizing has considerable allure. With current PC models providing a sharp jump in desktop computing firepower at a sliver of the cost of mainframes, corporate computer directors are able to push the power of information further into the guts of the company, cutting their workload and playing into the employee "empowerment" kick now under way at many American companies. Indeed, the idea has so entranced people that the seers at Gartner Group, a Stamford, Conn., research and consulting firm, estimate that more than half of all the users of mainframes today are considering projects that include downsizing.
These companies, though, would do well to look at the early pioneers on this frontier. Even companies that are supposed to have expertise in the area are struggling. 3Com Corp., a maker of networking products, says it is committed to downsizing. Yet a review of the Santa Clara, Calif., company's computer needs led to the installation of a new mainframe~ last June. The company says it could be another 2% years before it removes billing and customer-invoice operations from the mainframe.
Indeed, boardroom disillusionment about the pace of downsizing has prompted some analysts to think what last year would have been unthinkable: that demand for mainframe computers could surge as companies realize that the downhill shuffle isn't all it was cracked up to be. Which isn't to say that mainframes will regain their former luster or that networked PCs aren't the wave of the future. Instead, these analysts are saying that the downsizing hoopla has promised too much too soon and that companies ought to scale back their expectations.
At Control Data Corp., a onetime mainframe vendor now in the business of telling companies how to run their computer operations, officials admit their own internal downsizing timetable has slipped to two years from one. Among other things, the company had to find ways to convert its payroll system so the right information would appear on everyone's check stub. "It becomes a real planning nightmare," says James Ousley, the company's chief executive officer. While no one has sought to quantify the scope or cause of downsizing problems, experts say snags generally fall into two categories: technical and political.
On the technical side, the woes usually concern software. Though hundreds of programs have been written over the years to help companies run critical functions on mainframe machines, relatively little help is available for companies that want to run those same applications on lower-powered machines. The software that exists, say the experts, is often filled with bugs, costing companies millions of dollars in lost time or disappearing data.
Executives at the Rogers Group, a construction and mining concern based in Nashville, Tenn., put a downsizing program on hold for six months. The stumbling block: Engineers had to figure out ways to unravel a flawed communications program that was supposed to link all of the company's PCs. Rogers officials say that the time spent tinkering with the software, which had to be fixed before the system could be hooked up, delayed about $100,000 in savings that could have resulted from the new system.
Says Mark Stahlman, president of New Media Associates and a noted mainframe watcher: "The learning curve in the PC business isn't even at square one in trying to solve these problems."
Users have also had problems with security and data backup on their new networks. Most networks still aren't hackerproof, and many are more susceptible than mainframes to viruses, power surges and accidentally erased diskettes. While companies are reluctant to talk about security problems, Winn Schwartau is living proof that they are a major issue. Mr. Schwartau, a Seminole, Fla., computer-security consultant, says he is busier than he has been in nine years. "Now, everybody in the world wants me," he says.
Downsizing has caused even bigger political headaches at companies. Seeing the trend as a threat to their jobs, turf-conscious information managers frequently fight it, causing more delay and jacking up costs. At Rogers Group, the ill will got so bad that five top technology managers quit soon after the computing conversion began; and the company's current information manager, Thomas Gmitter, says he expects to depart next April, having essentially worked himself out of a job. "I'm a victim of my own downsizing," he says.
The employee turnover has created training problems, since most companies aren't overrun with networking experts. Sara Lee estimates that it will spend the equivalent of about 25% of its information department salary budget on retraining. Electronic Data Systems Corp., meanwhile, sees an opportunity. The computer service company is beefing up its staff and setting up advisory teams to help clients alleviate their downsizing woes.
As in most things, the solution to downsizing distress lies in moderation, analysts say. They encourage companies to transfer only some of their data from mainframes to networked PCs, leaving the mission-critical number crunching to the mainframe standbys. Once companies figure this out, Messrs. Zachmann and Stahlman predict, delayed mainframe purchases will find their way back into the budget.
James Poyner, a computer-industry analyst at Rauscher Pierce Refsnes in Dallas, looks at it this way: It is as if mainframe computers are banks of data, workstations are briefcases, and PCs are wallets. "You're just not going to carry all the money you own in the world in your wallet," he says. Finally, Mr. Zachmann advises, be patient. "We are going through a transition," he says. "But we're not going through it in the next 48 hours."