Information Processing

Finally, Software that Slays Giants

'Client-server' programs let PCs do mainframe work

Evan I. Schwartz in New York, with bureau reports
Business Week

March 15, 1993

In August, 1991, the Turner Corp. said good-bye to its IBM 4341 mainframe computer. One of the nation's largest construction companies, Turner was then moving to a new headquarters in Lower Manhattan and began running its 30-city, 3,000-employee business entirely on a network of personal computers. In making the move, Turner's chief information officer, Richard A. Schell, looked forward to cutting the company's annual computer budget in half -- to $ 2.5 million. Still, he was apprehensive. "We were taking a leap of faith," Schell says.

The reason? While Turner and a growing list of big corporations saw in the late 1980s that they could downsize their computing jobs from monolithic mainframes to flexible and less expensive computer networks, they soon realized that a lot of the software needed for the effort didn't exist. The new "client-server" networks required software to run on both powerful hub computers, or servers, as well as on desktop clients. Unlike existing PC software, client-server packages need to work for groups as well as for individuals. And unlike existing mainframe software, they must have the graphics and easy-to-use features that people expect from PC programs.

That's a tall order, which is why software long remained the missing link in client-server computing. Making the effort tougher is the fact that companies don't just want to do the same old things for less money. They want client-server setups to do things that weren't possible with older systems -- things such as bringing decision-making down lower in the organization by giving more workers access to vital information and analytical programs. Microsoft Corp. Chairman William H. Gates III says that this requirement is driving PC software makers in new directions. "It really takes you beyond doing word processing," Gates says. "This is what takes you into a financial institution that wants to keep track of its customers, or a manufacturer that wants to monitor its manufacturing process." Microsoft's vehicle is a forthcoming operating system, Windows NT, designed for client-server setups.

The demand for new types of software for the burgeoning networks is also pulling suppliers of mainframe and minicomputer packages into the market. The opportunity, after all, is huge. Sales of client-server software and related services will hit $ 4.7 billion this year, up from $ 2.5 billion in 1992, according to Forrester Research Inc. in Cambridge, Mass. While that's less than 8% of all worldwide software sales, it's the fastest-growing part, having tripled since 1991. And by 1996, Forrester forecasts, client-server software and services will account for 20% of a $ 100 billion international software industry.

Leading the charge are sellers of data-base software and related programming tools. Accounting for 43% of the client-server software market, these programs come in two parts: One portion organizes corporate data on servers, and the other runs on PCs, letting programmers customize their software and letting workers ask questions of the data base. After a long gestation, the idea is now paying off big. "The opportunity upon which the company was founded in 1980 has finally arrived," says Phillip E. White, CEO of Informix Software Inc. Informix revenues grew by 78%, to $ 215 million, in the year ended in December. Its rivals Oracle, Sybase, Progress Software, and the Ingres Div. of the ASK Group each grew by 25% or more in the past four quarters.

A big chunk of the the market -- about 16% -- still belongs to companies such as Novell Inc. and Banyan Systems Inc. that sell the basic building blocks for client-server networks. Their software runs on servers, managing the movement of electronic documents and doling out applications programs to clients.


Applications programs -- accounting packages and the like -- are the latest growth area. Representing 21% of all client-server software, these packages automate payroll, budgets, customer service, and other jobs critical to a company such as Turner. To get these programs developed for the client-server world, big customers have spent years telling applications software makers what they need. Turner's Schell, for instance, worked closely with a few little-known companies, including PeopleSoft Inc. and IMRS Inc., which were developing human-resources and financial-reporting software, respectively. "We acted as a partner with these companies," Schell says. In the process, he also acted as a guinea pig, helping untangle glitches. Now, some of those startups are soaring (page 98).

The reason: Influential customers are beginning to report successes. Motorola Inc. is a case in point. "The mainframe is an anachronism," says Ken J. Johnson, a Motorola vice-president and corporate controller. Since 1987, he has been shifting work off two of those monsters, cutting millions of dollars per year from the amount the corporation charges his unit for computing. Within two years, he says, he'll do without them entirely, bringing bigger savings.

There's more to be gained than simply cutting costs. From his corporate finance department, Johnson oversees 3,000 workers around the world who report Motorola's financial results. That job used to take six days out of every month when done on a mainframe. And because many of those employees were located far away from the mainframe, the data from their units had to be mailed to headquarters and typed into the computer by keypunchers -- who were making 10,000 errors for every 750,000 pieces of data entered.

That all changed in 1990 when the work was switched to a network of PCs. Since the PCs are distributed all over the world and linked to a server running financial software from IMRS, all employees can enter their numbers directly. They can also analyze their own budgets. As a result, the financial-reporting process has been cut to two days, freeing up four workdays for everyone involved. As the keypunching was eliminated, the quality improved to fewer than 1,000 errors per 2.7 million pieces of data entered. Johnson's next goal is to get Motorola's general ledger system off the mainframe and onto his new network using software from Oracle.


While independent software makers have much to gain in client-server computing, IBM has much to lose. Servers can be mainframes, but usually they're not. "There clearly is an exodus from the mainframe," says Jeff W. Mason, an assistant general manager of IBM's newly created Client/Server Computing unit in Purchase, N.Y. Instead of using mainframes as servers, customers are buying souped-up PCs, or workstations and minicomputers that run the Unix operating system.

Big Blue created the 900-employee client-server unit last November shortly after it surveyed mainframe customers and found that one-third are actively moving to client-server. The group plans to sell client-server software and provide assistance to customers who are moving to client-server setups -- no matter what form of server they prefer. Some client-server converts are within IBM itself. Two IBM plants in Texas have set up client-server networks based on IBM's RS/6000 workstations and using manufacturing programs from Tuscon's Avalon Software Inc.

IBM is likely to find no shortage of customers needing assistance in setting up client-server systems. The transition can take years, with plenty of stumbles and dead ends along the way. Turner's programmers, for instance, tried to build an eight-quarter forecasting system using Lotus 1-2-3. "We hit a brick wall with that one," says Schell. Eventually, they achieved their goal with a client-server data-base system from Revelation Technologies Inc. in Stamford, Conn.

People can be the biggest obstacle, as Schell discovered. "There was a tremendous resistance to PC technology," he says. The mainframe jocks had good reason: By the time the mainframe was phased out, 60% of that staff was let go-a big factor in achieving Schell's goal of cutting his $ 5 million budget in half.

Another pitfall in moving to the new setups comes in replicating the reliability and security features of mainframes. Like the million-dollar machines, a server may hold critical corporate data, making any system failure a potential disaster. That's why servers need mainframe-like programs to automatically back up data, keep hackers out, and prevent system crashes. People who manage client-server networks "are still worried about getting that 3 a.m. phone call," says Alan Paller, a director of open systems at Computer Associates International Inc., which now sells systems-management software for Unix-based servers.

The most important battle in client-server computing may unfold this summer when Microsoft says it will ship Windows NT. Already, the software giant says that more than 50,000 software developers are readying applications for the system. So chances are lots more companies will soon become clients for the client-server software business. 

GRAPHIC: Photograph, Turner's Schell, PCs took "a leap of faith"

Copyright 1993 McGraw-Hill, Inc.