A Scalable Approach to Thin Client Solutions

Tight margins and heightened competition continue to present challenges to SMB retailers of all types. Whether for the point of sale (POS), in the back room or at headquarters, merchants are seeking solutions that afford flexibility while simultaneously reducing operating expenditures, simplifying processes and maintaining market share.

For many forward-thinking retailers, the adoption of a server-based model built on standardized, efficient thin clients is the answer. In this lean model, all essential core applications and data backups run centrally on web servers. Such a lean infrastructure enables the same desktop to be accessed from stores, headquarters or even home offices, cutting costs in many areas and bolstering application availability to a degree that sharpens the competitive edge.

A Scalable Approach to Thin Client Solutions

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2 A RETAIL TOUCHPOINTS WHITE PAPER 2010

Thin client is gaining momentum throughout the retail sector. According to “The State of Customer-Centric Retailing,” a report by Aberdeen Group, 44% of “average” retailers have slated web and network-based POS applications like thin client as one of their top 10 customer-centric technology enablers over the next 24 months.

“We are definitely seeing more and more of a push to thin client, including at the SMB level,” said Jerry Sheldon, Analyst and VP of Technology at IHL Group. Sheldon noted that while two years ago the majority of SMB retailer transitions

to the thin client model were made by those in the specialty hard goods vertical — e.g., furniture stores and automotive repair shops — the scope of migration has since expanded. Operators in other markets, from soft goods to hospitality, are fast beginning to recognize the spate of benefits that can be reaped via a thin client architecture.

Moreover, although such advantages as enhanced flexibility and cost savings figure heavily into the migration to thin client, the fact that merchants need not go from “zero to 60” in making the change, but rather have the option of starting with a “thin register” setup and migrating to a “thin store” configuration only when and if needs and desires dictate, is also pushing the envelope. “With more than one approach to thin client, comes greater appeal,” Sheldon stated.

This white paper will explore in detail SMB retailers’ opportunity to lower operating costs and increase flexibility through a scalable approach to migrating store systems to thin client solutions. Retailers will learn about the benefits of thin client and the scalable thin strategy through real-world examples. Criteria to help determine which thin client path to follow will be covered as well.

“We are definitely seeing more and more of a push to thin client, including at the SMB level.”

—JerrySheldon,IHLGroup


Benefits of Thin Client vs. PC-Based

Considered alone, the lower total cost of ownership (TCO) afforded by thin client makes a strong case for conversion from the PC side. In its study “TCO Comparison of PCs with Server-Based Computing,” Gartner found that a thin client computing model offers a 79% lower downtime cost per user, 34% lower maintenance costs, and 19% lower operating costs than a PC-based computing model—as well as a capital cost savings of 16%. This adds up to a 48% lower total cost of ownership (TCO).

“From an energy savings standpoint, in particular, thin client is hard to beat,” Sheldon said. “Thin clients require about 10% the energy of standard thick clients, which is a true boon to return on investment.”

Indeed, numerous factors contribute to the lower TCO equation offered by thin client. Thin client architecture eliminates the cost and complexity of

traditional PC-based POS systems, operating systems, databases and applications, bringing in their place secure bandwidth and web browsers hosted by central servers situated at the store level (for “thin register”) or in a centralized location (for “thin store”). By virtue of this simplicity, thin client allows dramatically faster application deployment and easier access to data, yielding a significant leg up on the competition.

Meanwhile, maintenance, upgrades and new applications are administered centrally on the server in real time, saving retailers the time they would otherwise spend and the expense they would otherwise incur were they to initiate changes on a terminal-by-terminal basis. Moreover, as Sheldon observed, the less hardware components a system has, the greater its life span, and the fewer the data access points, the easier it is to manage the configuration.

Additionally, the price tag for thin client hardware, support and training falls well below what retailers would pay for the elements of a PC-based, or

“thick” configuration. The reduced functionality required from, and wear-and-tear on, thin client devices extends the life cycle of retailers’ legacy IT investments; hardware rarely becomes obsolete.

“The ‘cost-versus-performance’

In its study, “TCO Comparison of PCs with Server-Based Computing”, Gartner found that a thin client computing model offers a 79% lower downtime cost per user, 34% lower maintenance costs, and 19% lower operating costs than a PC-based computing model— as well as a capital cost savings of 16%.


curve continues to move in thin clients’ favor, especially when retailers also consider the flexibility they get with the platform independence that accompanies it,” stated Dan Grady, a principal of C-CORE Consulting Group. Grady, whose firm has handled a myriad of IT consulting engagements centered on thin client architecture. Grady pointed out that “with thin client, as long as you can run the browser, you can run the application.” ETailers see additional savings through a reduced need for software licenses and, accordingly, lower licensing costs and simpler license management. Instead of separate, locally used licenses for each unit, as with PCs, thin client systems can take advantage of economical terminal server licenses.

Beyond lower TCO and all of its sub-components, there are the benefits of enhanced security and outstanding system performance. In the thin client environment, all of retailers’ critical data is updated in real time and held in a secure repository, with all access rights defined in a centrally hosted application. Securing the enterprise merely necessitates securing headquarters rather than systems in multiple individual stores. System performance is dictated only by servers and network bandwidth, rather than a larger, and perhaps unwieldy, network of client terminals.

Building a Scalable Strategy: Evolution vs. Revolution

Some retailers, SMB merchants among them, have traditionally shied away from embracing thin client based on the belief that such a move would entail an all-encompassing equipment

“rip out-and-replace” endeavor. However, this is not necessarily the case. Depending on individual retailers’ needs and priorities, the migration from a PC-based retail IT configuration to a thin client-based configuration can be an evolution, rather than a revolution.

The evolution can start with “thin register”, wherein databases reside, and applications are run on, a central in-store server or servers. Store employees access

“The ‘cost-versus-performance’ curve continues to move in thin clients’ favor, especially when retailers also consider the flexibility they get with the platform independence that accompanies it.” —DanGrady,aprincipalofC-COREConsultingGroup.


data in the servers directly from the thin point of sale terminals. A subsequent and, if desired, gradual transition can then be made to a “thin store” mode, wherein there are no servers or databases at the store level. Applications run on a server at a central location, with updates to data (for example, price changes) executed at that location and accessed by individual stores via browser. Common “thin store” applications, Grady said, encompass, but are not limited to, labor scheduling, human resources, planning and promotion optimization.

The decision of whether and when to step up from “thin register” to “thin store” — or in other words, how thin to be — is indeed predicated entirely in line with retailers’ circumstances and requirements.

Several factors merit consideration when attempting to draw a

conclusion about how thin to be. The first such factor is IT budget and desired savings. A “thin register” offers significant cost savings based on reduced maintenance expenditures and other factors, but TCO really begins to decrease in a “thin store” environment. However, hardware implementation expenditures will be higher for “thin register” than for “thin store.”

An even more significant criterion is network stability. “Thin store” implementations rely on WAN connections, which, unlike the LAN connections utilized in “thin register” environments, may be operational only 95% of the time.

“Retailers need to determine the investment they are willing to make in the network to maximize its stability and bandwidth, as well as what contingency plans they can formulate for ‘thin stores’ when the network is down,” said Alan Hohler, Director of Software Development, UTC RETAIL. “For example, what tools and processes exist in the store to handle customers during ‘network-down’ conditions? How is server redundancy architected? How quickly can server failover be achieved?”

Recovery timing also merits consideration. “Tolerance for having a network — and hence, a point of sale system — that is ‘down’ varies from retailer to retailer,” Hohler observed. “Retailer A may be able to tolerate a ‘network-


down’ condition for two hours while IT redirects the store to a failover server. Retailer B may demand immediate offline register functionality, but be willing to operate in this offline scenario for up to 24 hours. Give-and-take between Store Operations and IT can result in a win-win for both groups.” These considerations notwithstanding, with such a standards-based, 100% Java, thin client store automation solution as POS-J from UTC RETAIL, retailers can invest in a “thin register” configuration without concern that they will need to scrap it later when an enhanced comfort zone, additional bandwidth, new IT priorities or other catalysts propels them into the “thin store” mindset. “Some retailers will never want the ‘bells and whistles’ of ‘thin store’; ‘thin register’ will continue to work for them,” said David Smith, UTC RETAIL’s Vice President and

General Manager of Professional Services. “Others will want to evolve at varying paces. The scalability and flexibility of POS-J mean that the limitations on ‘thinness’ will be imposed entirely by each retailer that implements it, rather than by its design and infrastructure.”

The Real World: Thin Register

For some retailers, “thin register” is indeed the most practical and/or desirable starting point along the “thin client” continuum. Dunn-Edwards Paints, one of the nation’s largest independent, employee-owned manufacturers and retail distributors of architectural paints and painting supplies, ranks among these operations. Dunn-Edwards Paints operates 103 stores, each with five to seven cash registers. Each store runs an Oracle database on an Apache Tomcat Web server and uses a Windows IE7 browser.

Three years ago, the retailer identified a need to extend the capabilities of its POS systems beyond ringing up transactions, as well as to better monitor store activities, according to Ken Anderson, POS Manager. Beginning in 2007 and concluding the following year, Dunn-Edwards implemented a “thin register” configuration built on POS-J.

“In addition to cost savings, with ‘thin register’ in place, we


can leverage the Internet to take advantage of a variety of applications,” Anderson said. “For example, we have a custom module that integrates with POS-J to create a more efficient, accurate paint-tinting operation and paint checkout process by allowing custom color orders taken at the point of sale to be electronically transmitted to the tinting machines,” he explained.

“Through simple web browser navigation, we have complete insight into orders from any cash register, as well as from the tinting stations.”

Similarly, through the ‘thin register’

architecture and the Internet, the retailer can easily check the status of orders and deliveries for its commercial customers.

The thin, web-based architecture also enables Dunn-Edwards to easily integrate other applications, such as credit card transaction authorization and processing, with the point of sale system, augmenting its functionality. It facilitates the propagation of data to the stores and the deployment of new applications.

“The web application is our ‘eye’ at the stores,” Anderson added. “We can see, from anywhere, what’s going on. The thin client lets us view reports at corporate and in stores from the web, versus shipping them through the mail. Our store personnel rely very heavily on reports, and this alone has made thin client a win-win situation for us.”

While “thin register” is currently sufficient to meet Dunn-Edwards’ needs, Anderson doesn’t discount a possible switch to “thin store” down the road. “It’s good to know that with a scalable system, it is an option,” he said.

“In addition to cost savings, with ‘thin register’ in place, we can leverage the Internet to take advantage of a variety of applications.” —KenAnderson,Dunn-Edwards


The Real World: ‘Thin Store’

For other retailers, “thin store” is the way to go. A broadband service and equipment provider with more than 100 stores and plans to expand its retail operations in a myriad of markets opted to follow such a direction recently, using POS-J as a base.

“Our decision to go ‘thin client’ was based on a desire to enjoy the lower total cost of ownership it would allow,” a spokesperson said. “As far as ‘thin store’ versus ‘thin register’, it was apparent to us that not maintaining data and applications on every register and on in-store servers would better

support our growth.”

The retailer benefits “significantly, both time- and financial-wise,” from maintaining and updating data on corporate servers situated at headquarters, the spokesperson stated. He added that its network has the necessary redundancy and bandwidth to operate in such a fashion.

“With our current capacity, we have the capability to add new applications as we grow,” the spokesperson concluded.

Conclusion: The Future is Now

Whether large or in the SMB category, retailers can no longer afford to remain on a PC-based computing course simply because this is the model they have always followed. Rather, they need to explore new means of leveraging technology to achieve their business objectives. Flexible, scalable thin client solutions that match current business needs and offer sufficient flexibility to adapt to these requirements as change dictates can be key to navigating the waters. “Thin register” or “thin store,” the future is now.


About UTC

UTC RETAIL is a leader in providing seamlessly integrated retail management solutions for small to mid-size specialty retailers. In addition to best-in-class software solutions, UTC provides a complete set of branded hardware solutions and comprehensive professional service offerings, providing retailers a single point of contact and accountability. For more

information visit www.utcretail.com

About Retail TouchPoints

Retail TouchPoints is an online publishing network for retail executives, with content focused on optimizing the customer experience across all channels. Tapping into the power of the Web 2.0 environment, the Retail TouchPoints network is made up of a weekly e-newsletter, category-specific blogs, twice-monthly Special Reports, Web seminars, benchmark research, virtual events, and a content-rich Web site at www.retailtouchpoints.com.

A Scalable Approach to Thin Client Solutions

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