Hindsight, as they say, is always 20/20.
Less than five months after going public with plans to immediately start replacing its Windows-based PCs with Macs, Auto Warehousing Co. was forced to push back the project by more than a month. That was last December. The reason was not a lack of money, manpower or executive support. Rather, what stymied the project were protests from workers and objections from customers who perceived the technology switch as unnecessarily costly.
“I didn’t see this coming at all,” says Dale Frantz, CIO of the Tacoma, Wash.-based company. “We never before had any of the workforce question our technological initiatives.” But with the Mac project, “there was a perception that the equipment was much more expensive than traditional Windows PCs and that we were purchasing Lamborghini-level equipment with the company’s profits,” he says.
AWC’s customers had similar concerns, raising questions about whether the technology migration might trigger increases in service rates.
In fact, Frantz says, within hours after a July 16, 2007, Computerworld story about AWC’s technology migration plans was published, both he and CEO Stephen Seher received a flood of phone calls and e-mails with questions, positive and negative comments, and even an anonymous death threat.
“Because of the breadth and scope of the project, our customers, workforce and financial institutions had a lot of questions,” Frantz says.
Employees wanted to know whether money that could go toward salary increases or other benefits was being diverted to what they perceived as a pricey high-tech project. Customers worried that the cost of the project would be passed on to them. AWC’s bankers wanted more details to determine whether switching to a new technology made sound business sense.
Customers’ and suppliers’ reactions didn’t really surprise AWC Chief Financial Officer Dennis Matteo. His biggest surprise had come earlier, when Frantz first expressed a serious interest in switching to Apple technology.
“Dale is a very savvy CIO [and] was a committed Microsoft advocate. So when [he] started to look at Apple in a very serious way, it implied he had seen some fundamental changes in the business services direction of Microsoft and Apple,” Matteo says. “Obviously, he likes the direction Apple is moving.”
On all fronts, the concern was widespread enough that AWC executives decided to push back the rollout of the client computers and instead build support for the project.
Full Disclosure
As Frantz saw it, fully disclosing costs was the best way to do that. He spent the next month explaining to everyone who would be affected the many reasons for the technology swap. Among those is the more than US$1.82 million the company calculates it will save over the next three years. That’s what it would cost to upgrade software licenses if the company remained on PCs; in contrast, the total cost of switching to Macintoshes is $335,000. The real kicker, though, is that AWC would continue to do business on the upgraded software in the same way had always done business with the software already in place.
Frantz set up “town meetings” with about 450 workers on all three shifts and laid out the licensing math. “I talked about the fact that Microsoft requires up to five client licenses for just one PC, just so we have the legitimate right to attach to the network. With Apple, that’s all included,” Frantz notes. “Yes, it looks like the equipment is more expensive — until you stack on all the client licenses to run Microsoft [software].”
According to Frantz, AWC workers are aware that 2008 is going to be a very tough year in the auto industry, given the housing crisis and a looming recession. Disclosing the licensing details to workers helped them understand that “we weren’t [spending] millions of dollars on new computers when we could have instead put the money into employee benefits or their payroll,” he says.
Frantz also brought a Mac to the shop floor and demonstrated AWC’s main Vehicle Inventory Processing System (VIPS) on its 20-in. screen — which was noticeably larger than the existing 16- and 17-in. PC screens. And he demonstrated the iChat feature in the Mac OS X operating system. Using iChat, an AWC tech-support staffer took remote control of the Mac on the shop floor to show how computer problems there could be quickly fixed by an IT person located remotely. “That was a real ‘wow’ factor,” Frantz says.
But not everyone was sold.
“We knew we were going down an entirely new road,” Frantz says, “but we didn’t anticipate the huge emotional response that we got back.”
“People are passionate on both sides of the aisle,” he says. “There’s a lot of talk about the cult of Macs, but there’s just as strongly a cult of Microsoft. It’s just not as widely publicized.”
A few key people were very anti-Apple, though they couldn’t articulate why. “They just didn’t want to switch,” Frantz says.
Executives and IT staffers worked with the dissenters to win them over.
On the customer front, Frantz met one on one with various port managers and manufacturers’ representatives in Tacoma and Detroit, again explaining the licensing math. “Customers just wanted to know how this was going to affect their rates,” he says. He showed them that switching to Macs would result in lowering AWC’s costs, which over time would result in lower rates.
Frantz says AWC had calculated “significant savings” associated with migrating to Apple software during the proof-of-concept testing last summer. “We knew we would have sufficient ROI for the change based on some broad generalizations, and the savings were enough to green-light the project,” he says. But the real focus of the early testing was to make sure VIPS could continue to run on Microsoft SQL Server on the back end with Macs on the client side. “The SQL server runs well; it’s a solid product. There’s no business case to change that,” Frantz says.
Moving Ahead
Once the interoperability issue was resolved, Frantz’s team began integrating Apple servers into AWC’s Windows-based network. As of Feb. 1, of a total of 40 non-SQL servers that will ultimately be converted to Mac servers, 14 had been changed over. The remainder will be swapped out according to AWC’s three-year equipment-refresh schedule.
AWC has also finished migrating from Microsoft’s Active Directory to Apple’s Open Directory for controlling the network. This is especially significant, Frantz says, because the controlling operating system architecture determines licensing costs.
“By getting off of Microsoft Active Directory and onto Open Directory, each individual server becomes separate and Microsoft can no longer view [and charge for] a broad enterprise network. This was a very significant change,” Frantz says.
AWC has completed migrating to a Mac OS X mail server and is currently migrating users from Exchange to Mac OS X’s Mail application. “This requires a little bit more [time and effort], because we have to convert each user’s mailbox, one at a time, making sure that all folders and calendar items import properly,” he explains. The project is about 50% completed.
AWC’s in-house IT team has been working alongside five consultants from Apple’s professional services unit to work through networking, security and other engineering issues, Frantz says.
Running two different mail systems in parallel is especially complicated. “We didn’t want to do a wholesale swap in a weekend, because that would require getting IT people to every facility to help assist users with the migration, and that wasn’t possible,” Frantz explains.
Working with the Apple consultants, Frantz says, AWC’s network administrator devised an “elegant solution” to continue using a single mail domain, even though the users are temporarily on two different mail platforms.
On the client side, AWC has so far installed 25 of 28 Macs to run its mainstay VIPS application on the shop floor at its Tacoma facility. The other three clients remain on PCs because the Macs don’t fit into the weatherproof cabinets on AWC’s outdoor lots — “a little pain point” that’s being resolved, Frantz says.
By December of this year, all VIPS client software will have been rewritten from PowerBuilder to Java 6.0 so it can run at the front end on Macs. The rewriting project is about 10% complete at this point, Frantz says.
Over the next year, “we’ll upgrade to Macs on a shop-by-shop basis, because it doesn’t make sense to sunset brand-new PCs,” Frantz says. He estimates that by 2010, all 28 of AWC’s facilities will be completely switched over to Apple technology. By then, all remaining PCs will be fully depreciated and will be able to be cost-effectively replaced with Macs.
Sidebar: Microsoft vs. Apple: You do the math
Microsoft’s licensing scheme is anything but all-inclusive. That was the lesson AWC CIO Dale Frantz needed to get across to customers, suppliers and employees.
Using a Microsoft e-mail system as an example, Frantz explained that the user company first has to buy server hardware, then it must pay for Windows Server software and Exchange Server software. “And that just gives you your central Exchange e-mail server. That doesn’t give you the right to attach to it,” he notes.
For each e-mail user, you must also pay for a client access license, he says. If you have a user with cell-phone-enabled e-mail as well, you have to pay for two client- access licenses. “It doesn’t take very much to see how your costs are huge just around a Microsoft e-mail system,” he says.
The same applies to virtually all Microsoft products, Frantz says. “You buy a server, then you layer on SQL Server or Exchange Server, then you add on client access licenses, the numbers get huge very quickly,” he says.
In contrast, with Macs, when you buy the hardware, the software is included. “With Apple, the e-mail client is included on all Macs and on the iPhone, with no additional licensing of any kind,” Frantz says.
This appeals to him because it makes costs more predictable and it makes software license management simpler and less expensive.
“Apple includes their full server suite of software in the price of every Xserve that you buy. Whether it’s a file server, a wiki server or something else, you get their full server software suites included in the price of the Xserve. There’s no additional software cost,” Frantz notes.
Microsoft Vice President Margo Day says that what customers are paying for is the “seamlessness” of Microsoft’s products. “Licensing costs are just one part of the equation,” Day says. “As we look at how we engineer our products and how seamlessly they work together, we actually defray the cost that customers used to have to bear to get lots of software to work together or to work on different form factors. I would point to the cost avoidance you get in not having to integrate lots of systems together.”
“There’s no doubt that Apple’s approach resonates with enterprise IT in that you buy it once and deploy it everywhere without getting into lots of individual additional license fees,” says Michael Gartenberg, an analyst at JupiterResearch and a Computerworld columnist. In addition, Apple’s simpler licensing scheme “comes at a time when Apple is very focused on being standards-based, and its clients are Intel-based. What that means is they can always run Windows,” he says.
The bottom line, says Gartenberg: “We’ll see a greater emphasis on Apple focusing on the enterprise in 2008.”
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