InformationWeek
Defining The Business Value Of Technology
November 17, 1997
Thin On The Inside
Citrix Systems' software helps users overcome network limitsBy Alan S. Horowitz
One vendor, Citrix Systems Inc., is even betting its future on it. The Fort Lauderdale, Fla., company makes WinFrame software, which lets enterprises distribute Windows applications through networks. So far, the company's finances make the bet look like a good one. For the first nine months of this year, revenue hit $81 million, an increase of 180% over the comparable year-earlier period. Citrix's customers now include Nestlé S.A., the world's largest food company. Microsoft is a major investor.
Citrix was founded in 1989 by Edward Iacobucci, a former IBM executive who is now Citrix's chairman and chief technical officer. Today, the company largely counts on users who want Win
dows on their desktop machines powered entirely by a network. This makes the choice of processor, whether a lowly 486 or a bleeding-edge Intel Pentium II, almost irrelevant.
But the Citrix picture, while promising, is something of a mixed bag. For one, not every IS manager is a thin-client proponent. In a recent survey by InternetWeek, a newspaper for communications managers published by CMP Media, which also publishes
InformationWeek
, more than 85% of respondents said they're not considering thin clients over PCs for Internet or intranet access.
One of the problems with thin-client machines: They don't give users more capabilities than PCs do-and with functional PCs now selling for less than $1,000, the supposed cost advantage of thin clients is open to question. Kimball Brown, an analyst at Dataquest in San Jose, Calif., estimates the market for thin-client computers is "really small," only 4 million to 5 million units a year. "The press is much more impressed with this than customers are,"
he adds.
But Audrey Apfel, a research director at Gartner Group Inc. in Stamford, Conn., is more upbeat about Citrix. "People are faced with network and desktop constraints," she says. "They can't upgrade PCs fast enough, bandwidth is too low. This fits the Citrix model well." Citrix clients are 25% to 30% less expensive to own than standard PCs on a LAN, according to a Gartner study cited by Apfel. "Centralization and standardization does help lower the cost of ownership," she says.
One new partner of Citrix is Unisys Corp. The Blue Bell, Pa., computer vendor began marketing a WinFrame thin-client-server system in August. "We think it's a perfect solution for the thin-client guy who's looking for a lower cost of ownership," says Sam Sarbello, director of WinPath Solutions for Unisys global customer services.
Then there's Microsoft. The company looms over nearly all software markets nowadays, and Citrix's turf is no exception. But the Microsoft-Citrix connection has an unusual twist: Microsoft h
as had a representative on Citrix's board of directors since 1992. This past spring, Microsoft paid Citrix $75 million to license its technology for use in Windows NT. Microsoft will also pay Citrix as much as $100 million more, based on royalties for future deliveries of server systems.
What has Microsoft really gained in the deal? Brian Murphy, an analyst at the Yankee Group Inc. in Boston, describes the arrangement as a "purchase [of Citrix] disguised as a licensing agreement." Microsoft now has WinFrame, Citrix's "heart and soul," he adds.
Not surprisingly, Iacobucci disagrees. He says Citrix has plenty left to develop and use for growth with its Independent Computing Architecture technology. "The connectivity, management, application deployment, universality of clients, and communications subsystems are all features that we're going to build upon over time," says Iacobucci. "And that's clearly not subject to the agreement with Microsoft."
In the past, Nestlé's tax returns were prepared at each remote site; updates were then shipped to Stamford for consolidation and review. In explaining why he went to the thin-client model using WinFrame, Davis says: "Every time software needed to be updated or we needed to transfer information to review or submit to the Internal Revenue Service, we had to back up onto diskettes, Iomega Zip drives
, or CDs-and that took time. And when you did receive the data, it wasn't final. It wasn't what the tax professional who sent it was looking at, because they've continued to work after forwarding that information to you. By the time someone would transfer something to me, it was old news."
Though the Nestlé installation is not large, Iacobucci reports that the Citrix solution has considerable scalability. Bell Mobility, a Canadian wireless service provider that is another Citrix customer, has 1,400 concurrent users, he reports, with other WinFrame installations having as many as 5,400 concurrent users.
Nestlé implemented its system last February. Its primary tax software package is Arthur Andersen Corporate Tax Solutions. The hardware includes three servers, all located in Stamford. Nestlé has a 15-person Citrix license, and the system is used at any given time by up to 12 or 13 tax professionals who work largely from tax templates Nestlé has developed. These cover such to
pics as leased autos and depreciation. According to Davis, 10 to 25 tax templates in all are used by each of Nestlé's American companies, which include Carnation, Stouffer's, and Perrier.
Davis also says the power of real- time, collaborative work arrangements attracted him to WinFrame. By having the tax software and tax data housed in the same common database, his tax professionals can work together and limit time wasted on mechanical chores. "I can have my professionals spend time preparing, researching, and working on paying the lowest legally allowable tax, vs. doing manual labor by moving numbers from one place to the other," Davis says. "Citrix gives me that capability because nowhere else that I know can I house all their work papers and give them access from anywhere, any place, any time."
Thin Wallet
The system also enhances software performance. Davis reports that recalculating reports, which took about 90 seconds under the old system, takes only about 30 seconds with Citrix. "Even with our people in Stamford who don't need access to software remotely, we still run in the Citrix environment because it's that much faster," he says. "Inside the shop, we run Citrix because it produces a better, faster tax return." Davis also notes that when several people access the database at the same time, he doesn't see any erosion in performance.
Davis is a fan of the Citrix system's management capabilities. "You have Citrix management tools as well as Windows NT tools," he says. "You can give rights and give contro
ls; you have security and administrative access. You can also control each individual regarding what that person has access to." His department also frequently uses WinFrame's shadowing feature, which lets several people work simultaneously on one application.
Davis says the Citrix system helps him retain employees-an important benefit given the shortage of qualified IT workers. "It's contributing to us maintaining our high-quality people," he says. "That's because we don't have them doing unnecessary, tedious, or mundane tasks that really should be done by a computerized system."
ust as there's a proverbial thin person inside every fat one, proponents of thin-client computing would have you believe there's a desirable thin PC inside every fat PC-if only you'd look beyond the surface.
One of Citrix's best-known users is Nestlé, which has its international headquarters in Vevey, Switzerland. The food processor's U.S. tax department in Stamford, Conn., relies on Citrix WinFrame. The software was implemented to improve the department's business practices and reduce cost of ownership, says Michael Davis, director of taxes for Nestlé. The tax office is wired to the company's U.S. headquarters in Glendale, Calif., and to offices in San Francisco; St. Louis; Solon, Ohio; and Greenwich, Conn.
The thin-client model has provided Nestlé with other advantages, too. For instance, Davis is putting more of his capital budget into upgrading his server and less into
buying new PCs. As a result, he estimates he'll extend the useful life of a PC from four years to six or even seven. This should reduce his capital budget by about 25%, he says, and boost his users' productivity. "Everyone benefits by having the fastest processor sitting on the server," Davis adds.
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