MicroAge Pursues Windows 2000 Upgrade Market

By Lisa Terry, Contributing Writer


With the official release of Microsoft's Windows 2000 operating system, MicroAge is gearing up its Microsoft Business Practice to help government and commercial clients assess, plan and implement rollout plans.

The company's bundled solution, created in collaboration with Redmond, Wash.-based software giant Microsoft Corp., includes planning, assessment, consulting, licensing, deployment and help-desk services.

Among the first major initiatives for the Tempe, Ariz.- based company's Microsoft Business Practice, which was launched in July 1999 and announced last September, is aiding clients with the decisions surrounding Windows 2000 implementations.

MicroAge officials said a proprietary methodology called FOCUS can cut operating system deployment time by 40 percent. That is accomplished by accurately identifying business requirements, environmental factors and technical limitations, MicroAge officials said.

"The penetration of Windows into government is substantial," said Doug Theurer, general manager of MicroAge's office in Gaithersburg, Md. "It's safe to say it's well over 70 percent to 80 percent. So this is an issue for them."

According to Dan Kusnetzky, director of operating environments research for the research firm International Data Corp. (IDC), in Framingham, Mass., the chain reaction Windows 2000 implementation sets off among existing systems, the complexity of the migration task, and the IT resources it requires "causes some people to seek outside services to help. These service offerings could shorten the time between management deciding there is a need and the time they're using it."

MicroAge, whose stock is traded on Nasdaq as MICA, reported systems integration revenue of $1.9 billion in fiscal 1999 and $5.4 billion in distribution revenue stemming from its Pinacor subsidiary.

The technology infrastructure services provider, which serves large and midsize organizations, expects to report a loss from continued operations in the first quarter due to soft product and service demand, and will incur one-time charges from facility closures and employee severance. The firm does about $100 million a year in government business.

State and local governments and schools have shown the most interest in the new operating system, said Theurer. This group tends to experience the highest ratio between the number of computers and the support personnel available to perform operations such as upgrades, he said, putting the difference at as much as 500 to one vs. 50 to one for the average business.

"We expect demand [for deployment services] to be pretty solid among large entities particularly looking to take advantage of the manageability aspects as well as in start-ups," said Joe Clabby, vice president for platforms and services at Aberdeen Group in Boston. "It's a big question how small and medium-sized businesses with established NT 4.0 sites will react."

While some factions of the analyst and user communities are advocating a wait-and-see approach to Windows 2000 upgrades, Dean Tyree, director of MicroAge's Microsoft Business Practice, cautions that even if the actual implementation is a year off, the time to start is now.

"It can take six to 12 months to get ready," he said, because of the breadth and complexity of the task. For example, he said: "When you're building an active directory, you've got to completely reassess everything you've got," including legacy systems and application software.

"Especially in government, where they tend to hold onto a computer much longer than the commercial environment," the mix of hardware, off-the-shelf and legacy software and variety of Windows versions demands careful assessment and planning, Theurer said.

"No matter when an agency decides to do it, you almost can't start early enough in deciding how to get there," he said.

MicroAge's Windows 2000 upgrade engagements began even before the operating system's Feb. 17 release date, fueled by heightened executive interest. "[Chief information officers] are saying they're already being pressured by CEOs to go to Windows 2000," Tyree said. "I've never seen anything like this with the massive release of a new product."

According to IDC, of the 5.4 million copies of new server operating environments shipped last year, 38 percent were Windows NT. Just 3 percent of those queried by IDC last summer about their Windows 2000 deployment plans intended to begin implementation immediately upon its release. Small organizations planned to wait six to 12 months, while medium-sized organizations said they would wait one to two years.

But 13 percent to 14 percent of large organizations planned immediate adoption, a trend Kusnetzky attributed to Microsoft's special handling of large customers with beta versions and technical assistance in an attempt to create reference accounts.