Thin-Client Computing: Competitive Edge for Retail and Banking Sectors

Thin Client

A National Semiconductor White Paper

Thin-Client Computing: Competitive Edge for Retail and Banking Sectors

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Table of ContentsCompetitive Edge for Retail and Banking Sectors

2

Executive Summary 3

Connect Before the Competition Does 4

The New Thin Client 6

Benefits for the Bottom Line 8

Conclusion 10


Executive Summary

3

What are the three most important factors for

success in the new economy? Connection,

connection, and connection: connection to

customers, connection to suppliers, and con-

nection between employees. The information-

intensive economy demands flexibility and

reliability in business practices and a technical

infrastructure to match. A smooth flow of

information in an easy to use format is both

mission critical and a potential competitive

advantage in the retail and finance industries.

In the old computing paradigm, IT departments provided a mix ofloosely managed PCs that users could configure for themselves or lockeddown mainframe terminals with little flexibility. The new diversity ofhardware options—from handheld devices to thin clients to laptops to desktops—enables IT departments to give each set of users the maximum computing power they need and to centralize software andsupport on secure, reliable servers. PC users no longer have to configureand troubleshoot their own machines, and mainframe users have access to current productivity applications. An integrated server-basedcomputing environment might include streamlined thin clients, low-endPCs, and high-end, graphic-intensive PCs.

The term “thin client” refers to a growing class of devices that requireminimal amount of local computing power and little, if any, local storageor local configuration. They connect over typical TCP/IP networks toapplication servers for functionality. Depending on application needs,servers may offer Windows NT®, Unix®, Linux™, or any number of termi-nal emulator environments for the desktop clients. Using load-balancingtools on the servers, IT staff can leverage memory and processingresources to support all desktops at a lower network bandwidth andserver overhead than traditional environments.

This approach enables retail and banking businesses to connect theiroperations into a seamless web. Because applications are centralized onservers, IT staff can rapidly deploy new applications as well as competi-tive function updates. Robust emulators and software options make awide range of applications available from a single thin-client device,improving interoperability between users. Thin clients can cost less upfront than traditional desktop computers and lower the Total Cost ofOwnership (TCO) by reducing maintenance and support, as well asdecreasing data and equipment security risks. In banking, this translatesinto real-time customer information available to tellers, platform officers,and call centers enabling better service and faster response. For retailoperations, the right tools on the right desktops increase flexibility withsoftware solutions, improved usability for employees in high-turnoverpositions, and controlled technology expenses.

An Integrated Computing

Solution


Connect Before the Competition Does

Forrester Research, Cambridge, Massachusetts, estimates that one in 10 U.S. households nowshops, banks or invests online, and estimatesthat online retail revenue will jump from $8billion in 1998 to more than $327 billion by2002. Coordinating and combining old andnew data systems presents IT staff with a formidable challenge. They often need to provide access to legacy data and applications,while moving employees to the latest desktopproductivity software. When new applicationsor revisions can improve customer relations, a fast rollout to all clients can mean the difference between days and months of sales opportunities.

“The solution has dramatically enhanced theway employees communicate with each otherand with customers,” says Ken Pink, CIO ofHarmons Supermarkets, a nine-chain grocerychain headquartered in Salt Lake City, Utah.Their computing solution includes thin clientsand PCs connected to an intranet-based appli-cation server. “The intranet enables managers

4

1) From IBM brochure, nofootnote.

and supervisors to route tasks to appropriateemployees, and lets all employees send e-mailquickly and easily.” The thin-client applicationalso allows the store headquarters to automati-cally deliver online forms and to develop,deliver and update store manuals containingpolicies and procedures, operational processesand other information.

Thin-client computing arose to simplify thecomplexity of enterprise networks, and a moredirect information flow results in a morestreamlined workflow. The concept is similar tomainframe or timeshare computing: centralizecomputing power, storage, applications, anddata on servers, and provide users with aninexpensive client device that is easy to installand requires no hands-on maintenance. Thinclients connect to the server to process applica-tions, access files, print, and perform servicesavailable on traditional desktop computers.Depending on the configuration selected, theycan access a full range of applications in multi-ple platforms or a few targeted applications.

In the information economy, competition may come from down the street or around the globe; a

successful company will enable customers’ access to services when and where they choose with a

consistent level of service and response. Whether connecting to customers, suppliers or employees,

server-based solutions enable companies to quickly deploy multi-channel selling, improve work-

flow, control costs, and increase productivity.


1) GartnerGroup, GartnerAdvisory DataPro, March2000.

2) GartnerGroup, GartnerAdvisory DataPro, 1999.

5

A thin-client solution can help automateprocesses, synchronize data sets, and set-upelectronic checkpoints.

By connecting clients together, companies cancontrol their IT costs and improve productivityof users. According to the GartnerGroup studies of Total Cost of Ownership, the cost ofend users to support themselves can top eventhe capital costs of the hardware over time. As operating systems and applications becomemore complex and users reconfigure theirmachines, these costs will continue to rise and even double in the next five years. A thin-client solution running primarily office applications can lower the cost of ownershipby approximately 20 percent through lockeddown desktops and centralized applicationdeployment. However, Gartner shows that byemploying “best practices” for managing amixed thin-client and PC environment, businesses can leverage resources and supportto achieve a 35 percent savings per client.1

One organization deploying thin clients reported an 80 percent reduction in supportcosts.2 Retail companies and financial institutions, which choose to untangle thecomplexity of technology ownership costs,can lower their bottom line costs and competemore effectively.

Thin clients are especially effective for task-oriented users such as bank tellers, call-centeroperators, and point-of-sale clerks. In highturnover industries, the more quicklyemployees can effectively use software, themore productive they will be. The benefits ofthin clients for users include:

• Remote updates keep applicationscurrent and support standardizeddesktop configurations.

• Centralized processing provides securetransactions and backup of critical data.

• Emulators enable access to mainframesoftware and remote displayprotocols allow use of personalproductivity software.

• Remote management and plug and playsetup require little or no localconfiguration and troubleshooting.

• The small size fits in limited workspaces.• The graphical user interface is

easy to learn.• No reboot is necessary for system or

application failures.

Former mainframe users benefit from accessto Web browsers and productivity softwarewithout security risks and additional mainte-nance. PC users benefit from faster applicationdeployment, multi-platform access to applica-tions, and simplified maintenance.


The New Thin Client

6

3) ”IDC Survey Finds ThinClients Are ReplacingPCs at SomeCompanies,“ PR Newswire, August 4,2000.

Increasingly, companies are turning to thinclients as a solution to the high cost of looselymanaged PCs and mainframe systems. In 1999,shipments of thin clients increased 90 percentaccording to IDC. They also report that 75 percent of survey respondents described thinclients as an acceptable alternative for somePC users and more than 50 percent of respon-dents have replaced PCs with thin clients.3 Thissurge of interest comes from the availability of more software solutions over thin-clienthardware and the high cost of implementingWindows® 2000 on individual PCs.

A thin-client computing environment consistsof an application server, a network and thin-client devices. The workhorse of the setup isthe application server, a computer withenough processing power and memory toserve all clients and their application needs.Windows-based terminals require eitherMicrosoft Windows NT 4.0, Terminal ServerEdition, and Citrix® MetaFrame™ to run thethin-client protocol based on IndependentComputing Architecture (ICA®) or MicrosoftWindows 2000, Terminal Server Edition, tosupport Remote Display Protocol (RDP).AS/400 customers require 5250 emulators onthe server. If remote servers are used throughcorporate headquarters or an application service provider (ASP), a local PC can beinstalled for booting up the thin clients and as backup DHCP services.

Handheld POS Terminal

Cash RegistersApplication Server• Branch Applications• Middleware• Applications Development Tools

Other Applicationsand InventorySystems

DataRepositories

TCP/IP Enterprise Internetusing Web-based TechnologiesIntranet


The network infrastructure is the pipelinebetween the server and the client. Thin clientsgenerally use standard Ethernet or telephonenetworks. Wireless models are increasinglyavailable as well. Most organizations hire asystems integrator, consultant, or Value AddedReseller (VAR) with experience in designingand implementing thin-client networks for theinitial set up and to provide training. TheWAN bandwidth needs will vary dependingon the applications, number of concurrentusers, and the thin-client devices selected.Thin clients may use less bandwidth than traditional PCs because they transfer onlymouse clicks and keystrokes to and screenimages from the server. Network reliability iskey to enable rapid screen refresh. Some thinclients come with local boot options and limited native applications to make them lessnetwork dependent.

Thin-client devices represent a growing classof devices optimized for server-based comput-ing. Smaller than typical desktop computers(about the size of a textbook), the “thinnest”thin clients have no moving parts. They containa microprocessor capable of processing graphics, network interface capability, a videosubsystem, and enough memory (at least 16MB) to run system software to connect to theserver. They do not need a hard drive, floppydrive, or CD-ROM drive. Most thin clientshave a sealed case design without open slotsfor additional security. Some thin clients haveintegrated display devices, reducing necessarydesk space and acquisition cost. Thin clientslast longer, use less energy, and upgrades canbe downloaded from the manufacturer’s website. They have a locked down desktop toease management, and still offer a full rangeof productivity, web browsing, and specializedmainframe software. Depending on userneeds, they come with different processing,memory, and application options.

An alternative to purchasing and supportingthe server and applications is to employ theservices of an “Application ServiceProvider” (ASP). For an annual fee per user,a business can subscribe to a variety of software applications. The ASP owns, tests,upgrades, and maintains software applicationsand server equipment. Applications are managedby the service provider and delivered oversecure Internet connections to the organizationand its remote users. Costs are predictable and lower than more traditional computingenvironments, and there is less initial investment.

7


Benefits for the Bottom Line

8

• Centralized storage of data and applicationsreduces the cost of maintenance, backups,and provides additional security. Mark’sWork Wearhouse, a Canadian clothing chain,has saved 20 percent in IT maintenancecosts through a thin-client deployment byreducing software installation and upgradecosts, and eliminating the need for backupand recovery at the desktop.

• The latest thin-client designs connect toserver applications in various platforms,making it possible to use the same desktopdevice to access legacy equipment andbrowse the Internet. Bombardier CapitalMortgage in Jacksonville, Florida, investedin Network Station thin clients withemulators and Remote Display Protocol(RDP). The thin clients enable access froma single device to both the company’sAS/400 as well as Internet browsers andpersonal productivity software. “Thebiggest advantage we have is our service,”says Ron Peace, Vice President andGeneral Manager of Bombardier CapitalMortgage, “and the Network Station helpsus deliver better service to our customerswhile reducing costs.”

Companies, which have integrated thin clients into their computing solu-

tions, find real benefits through cost savings, faster deployment, and ease

of use. The thin-client solution with centralized computing power and

optimized device design translates into competitive advantages for retail

and finance companies.

• Centralized applications also enable rapid application deployment of newcompetitive functions and simplifysoftware updates. National Semiconductoradopted a thin-client architecture in 1996at manufacturing sites worldwide and nowprovides 7,400 employees with access toapplications using thin clients. Prior to theconversion, software updates took fourmonths, they had to “touch” every desktopto ensure the desktop PC hardware hadenough resources to run the new program.In the thin-client computing environment,updates take just four hours, reducing thetime-to-market by improving productivitywith no change required for the desktophardware. National reduced their TCO by50 percent.

• Because settings and software reside onthe central server, users can’t changesettings, load software, or otherwise tinkerwith the devices. The machines requirelittle on-site support to fix softwareconflicts and other problems introduced by users. The standardized setups aretailored to each group’s needs, increasinginteroperability, real-time data sharing, anddecreasing the need for specialized training.

• Some thin-client devices contain nomoving parts to break down; the meanfailure rate is about twice as long astraditional PCs. A 1999 Mercer Consultingstudy found that the longer life cycles andlower maintenance costs for thin clients vs.a typical PC environment reduce total costof ownership by 26 percent. To increasecomputing power or memory, IT staff canupgrade the server, making the devices farmore scaleable and longer lasting.


• Organizations can improve their return on investment in technology with bettersoftware license management, legacyequipment, data, and software access, andmore efficient network bandwidth use. InGardner, Kansas, the Operations Officer ofa local bank spends about 10 percent ofhis time managing the 30 thin clients usedby tellers and other bank employees. Theyswitched to thin clients from mainframeterminals when the software becameavailable and have found the devices easyto use, reliable, and secure. When theyopen a second branch of the bank, theirintegrator will install thin clients there as well.

• Servers storing data and applications canbe easily backed up and secured. Becauseall user data must reside on a file server,this removes the risk of data loss orcorruption from equipment theft, desktophard disk crashes, or floppy diskintroduced viruses. Restricted users cannotremove data from thin clients withoutremovable media.

$10,171

LooselyManaged

PC

Thin-ClientOffice

Applications

$8,137

Thin-ClientLimited

Applications

$6,611

35% Cost Savings for Optimized Thin Client over PCs

9

Source: Gartner Group Gartner Advisory DataPro, March 2000


Conclusion

10

The thin-client market has taken off with com-mitments from leading high-tech companiesincluding IBM, National Semiconductor,Microsoft, Compaq, Wyse, Citrix, and Dell. In1999, IDC estimated that the enterprise thin-client market would reach 6 million units by2003 with 43 percent of shipments to locationsoutside the U.S.4 As the Web proliferates, moreand more business functions require both inte-gration and specialization. From the customerto the supplier, a seamless flow of informationcan make the difference between a successstory and a history lesson. Thin clients providemainframe users the productivity tools theyneed without losing access to existing soft-ware applications, and they offer PC users asimpler, more secure, and up-to-date desktop.When effectively integrated into a completesolution, information appliances enable com-panies to control costs without sacrificingaccess or security.

4) “Review and Forecast ofthe WorldwideEnterprise Thin-ClientMarket, 1999-2003,”Eileen G. O’Brien,International DataCorporation, 1999, pp. 1, 14.



© National Semiconductor Corporation November, 2000. National Semiconductor and are registered trademarks of National Semiconductor Corporation. All other brand or product names are trademarks or registered trademarks of their respective holders.

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For more information on National’s thin-client technology, visit us at:

www.national.com/thinclient


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Thin-Client Computing: Competitive Edge for Retail and Banking Sectors