IBM reworks desktop services

IBM is going to try to take some of the cost and irritation out of managing PCs.

The Armonk, N.Y.-based computing giant on Tuesday is expected to formally introduce a program called IBM WorkPlace, which it says will simplify how desktops and other office products are acquired and maintained. A corporation pays a predetermined monthly fee for each employee and IBM takes care of all of their technology problems, or at least problems with the types of equipment specified in the contract.

Outsourcing functions in this manner can cut technology management costs by up to 30 percent, said Dev Mukherjee, a vice president at IBM Global Services.

"This is utility computing for the desktop," he said. Generally, customers save money, because they can reduce staffing and because IBM can apply similar lessons in the past to these problems.

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While Big Blue and others have provided these types of services before, the streamlined billing is new, a company representative said. Other companies, such as Sun Microsystems, are touting similar buffet-style pricing plans for various products and services.

The fees start around $60 per month per employee, but fluctuate within a wide range depending on the services provided, an IBM representative said. Under WorkPlace, corporate customers can agree to have IBM control desktops, printers, fax machines, copiers and other equipment. To date, IBM has managed only PCs and servers.

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The program in many ways mirrors outsourcing deals IBM recently secured with Electrolux and TD Bank Financial Group. Under the Electrolux deal, the vacuum specialist turned over all its desktops to IBM. Electrolux can reduce or increase the number of PCs it needs without buying or eliminating equipment. Overall, IBM manages more than 4 million PCs and printers in support and services contracts, according to the company.

Many businesses are choosing to outsource information technology services, in part to stem the high costs of desktop maintenance, according to various analysts. IT research company Meta Group estimates that management costs can range from $2,000 to $5,000 a year per PC when done in-house. Research firm Gartner has often pointed out that hardware acquisition costs are only a fraction of the overall bill for owning a PC for several years.

Still, these figures are often difficult to quantify, because they often include estimates for opportunity costs--for instance, employees could be doing something more productive if they had better PCs. The also include staffing expenses that can be difficult to recapture in a real-world situation.

Increasingly, IBM is trying to gain more profit from services. Revenue from IBM's global services division grew to $10.3 billion in the third quarter, up 16.7 percent from the year before. The gross margin for the services business is lower than any other IBM division, but large service contracts often lead to hardware and software sales.

Like its competitors, Big Blue is trying to cut the cost of providing service by automating as many functions as possible. Desktops and notebooks, for instance, are pre-loaded with software that can make it easier to recover from a crash. Many of these technologies are emerging from IBM's autonomic computing initiative.