The Coming Desktop Revolution?

Companies as varied as Nortel, Nationwide, and Bechtel are experimenting with virtual desktops that are likely to improve security—but will they reduce costs?

By Rachael King

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Nortel Networks Chief Information Officer Steve Bandrowczak has already taken a whack out of the high cost of managing and operating his company's thousands of desktop computers. He estimates that it costs Nortel about $100 per month to operate a PC, including everything from the purchase price to software, maintenance, and support expenses. That's compared with upwards of $150 per machine at other companies.

Bandrowczak isn't done yet. "It's still not good enough," he says of the cost-saving efforts to date. The executive's ultimate goal is to cut monthly costs to $50 per PC. Spread across the 27,000 computer users at the phone equipment maker, the 50% cost reduction could translate to $1 million in monthly savings.

Lenovo's Secure Managed Client

To reach Bandrowczak's lofty goal, Nortel is experimenting with tools that could make it easier and cheaper for IT staff to manage the company's fleet of computers. In a lab setting, Nortel (NT) is testing a new Lenovo ThinkCentre desktop PC called a Secure Managed Client, which comes without a hard drive. Instead, the computer stores data and software applications centrally in a corporate data center where Bandrowczak's staff can more efficiently handle backups, update software, and fix problems. Lenovo says that in some cases the computer can help customers reduce desktop costs to about $70 per PC per month from an estimated corporate average of $120 per month.

Bandrowczak, previously chief information officer at Lenovo, sees virtual desktops as a good fit for about 70% of Nortel's users. Nortel is now trying to determine whether and how much virtual desktops can help the company save money. Depending on the findings, Nortel may equip a couple thousand employees with virtual desktops in 2009.

At a time when slowing demand is forcing corporations to slash costs by any means, nearly one in four companies is experimenting with virtual desktops in some capacity, according to consulting firm Nemertes Research. Among them are Nortel, Nationwide Insurance, and Bechtel. "It is probably one of the real game changers from an infrastructure standpoint in the next year or two," says Bechtel CIO Geir Ramleth. This month, Bechtel will increase testing to about 100 employees from about two dozen.

Enhanced Security

While many CIOs are intrigued by the technology, most aren't yet deploying it on a large scale. The biggest challenge, says Ramleth, is deciding what flavor of virtual desktop to use. "We're looking across the board at many types of virtualization," says Robert Burkhart, head of new technology innovation at Nationwide. Burkhart is testing virtual desktop software from VMware (VMW) and Citrix Systems (CTXS) as well as the Lenovo Secure Managed Client. There may be room for all three at Nationwide, he says. Right now, the insurer has a few hundred employees using virtual desktops. "We think we're going to aggressively grow that," says Burkhart, adding that in 2009 the goal might be for 10,000 or more employees to use virtual desktops.

Besides helping companies reduce expenses, virtual desktops can also help IT departments better handle PC security. With virtual desktops, the storage and processing of data typically occurs in another place, such as a remote server or storage device.