| Case Study: Theater chain selects Windows XP Embedded over Linux, significantly reduces TCO |
by Microsoft Corp. (Feb. 4, 2005)
Foreword: Two years after deploying Linux to several thousand point-of-service devices, Regal Entertainment Group found that it lacked the vendor support and remote management tools necessary to support the company's strategic plans. Upon examining the cost to acquire those items separately, Regal selected Microsoft Windows XP Embedded because it offered a lower total cost of ownership. In addition, Windows XP Embedded will allow Regal to support point-of-service terminals remotely using its existing IT skill set, improve security, and reduce the risk of intellectual property infringement claims. The move to Windows XP Embedded follows the company's recent migration of its corporate IT infrastructure to Microsoft Windows Server System from Novell. When deployment is complete, Regal will have an integrated Windows-based infrastructure that extends from the data center to the point of service.
Situation
Regal Entertainment Group is one of the largest motion picture exhibitors in the world, with a 41-state presence that includes 6,251 screens in 560 locations in the United States. The company has 25,000 employees, serves 46 of the top 50 U.S. markets, sells 270 million tickets per year, and generates U.S.$2.5 billion in annual revenues -- more than 20 percent of all domestic box office receipts.
Regal traditionally has relied on two separate point-of-service systems to support theater operations. Its box office system, which was deployed several years ago, runs on desktop PCs that connect to a server computer in the theater's office. Food and beverage sales, supported by a different system, were migrated from electronic cash registers to computerized point-of-service terminals in 2002. Regal deployed Red Hat Linux as the operating system for its point-of-service systems and developed its own Java-based point-of-service application. To minimize costs, Regal did not purchase support for the free Linux kernel, instead choosing to maintain it internally.
Two years later, in 2004, Regal embarked on a major overhaul of its theater systems, including the development of a common point-of-service application that could support both box office and food and beverage sales, as well as new customer self-service kiosks. Currently in development, the solution will integrate all three of those systems, streamline reporting, and improve the ability of the company to centrally manage theater operations from headquarters. It also will include support for gift cards and a customer loyalty program. Through those new capabilities, the solution is projected to deliver U.S.$10 million in cost savings over the next five years.
As part of the project, Regal decided to evaluate whether Linux was the best operating system for its new point-of-service solution. Along with its increasing reliance on technology to drive revenue growth and improve operational efficiency, Regal had to ensure that its point-of-service platform could deliver everything required to build an integrated retail enterprise. Linux, as currently deployed, was missing a few things that the company knew it would need.
For example, without additional software and services, Linux did not provide any way to remotely update the Linux kernel after a point-of-service device was deployed, leaving the company with thousands of deployed point-of-service devices running two-year-old versions of the operating system, complete with all security issues. In addition, without acquiring additional tools, the company's centralized IT staff would have no way to remotely access and troubleshoot the devices, forcing theaters to ship them to headquarters and wait for replacements to arrive when a problem arose. In the meantime, profitable food and beverage operations would run at less than full capacity.
Regal had come to realize that all the extras it would need -- in fact, everything but the Linux kernel itself -- came at a cost. "When we chose to use Linux for our home-built point-of-service application, a relatively small project, our decision was based on the perception that it was free," says J. E. Henry, Chief Information Officer at Regal. "However, with our new plans to drive revenues and profitability through the use of technology, there comes the need to minimize any associated risks. If issues are preventing us from reaching our business goals, we need to know that the tools and assistance needed to resolve the problem will be there. For us, that requires a remotely manageable, vendor-supported platform."
In addition, Regal determined that its long-term strategy would require greater flexibility and manageability from its corporate IT infrastructure, which ran Novell NetWare and GroupWise. For example, when Regal attempted to implement a mobile e-mail solution, the third-party software that the company had chosen required the installation of Microsoft Exchange Server and a gateway server to connect with GroupWise. In addition, many of the applications being deployed by the company required Microsoft Windows-based authentication, which required Regal to implement both Novell eDirectory and the Active Directory service in the Windows Server operating system.
Solution
After in-depth evaluation of an approach based on Red Hat Linux and one based on Microsoft software, Regal Entertainment Group decided to migrate its more than 7,000 point-of-service terminals to the Microsoft Windows XP Embedded operating system. The new solution based on Windows XP Embedded will enable Regal to innovate beyond its current Linux solution to deliver a common point-of-service environment that includes box office point-of-service terminals, as well as those that support food and beverage sales.
In choosing between Red Hat Linux and Windows XP Embedded, Regal closely examined the total device life cycle costs for both options, including software licensing fees, vendor support, update management, and the tools required for maintenance and support. Although the Linux kernel was free, the cost of everything else that Regal would need to support the open source approach quickly outweighed any savings on software licensing fees.
"When we calculated the total cost of ownership for Red Hat Linux using a 10-year Net Present Value model, we were very surprised at how expensive it was," says Henry. "Given our situation, Windows XP Embedded was significantly more cost-effective than Linux, coming in at a double-digit savings in TCO. We put a good deal of effort into ensuring that it was a fair comparison, examining multiple device update technologies and support vendors for Linux. But the maintenance-related expenses for Linux were far greater than those for Windows."
Regal also saw the long-term road map for Windows XP Embedded as an advantage over Linux. The company's point-of-service devices have a projected 10-year life, so the platform on which they run must remain viable for that same period. The commitments that Microsoft has made to the embedded market, including one of the industry's largest research and development budgets and an extended support life cycle, gave Regal a level of comfort that Linux could not provide.
"We needed a platform that would be supported and enhanced for the next 10 years, and didn't see a long-term road map for embedded Linux," says Cliff DeYoung, Chief Technology Officer at Regal. "In contrast, Microsoft has made a long-term commitment to the embedded market and is investing heavily in that space."
Features for Point-of-Service Systems
After selecting Windows XP Embedded, Regal worked with Microsoft to implement a short proof of concept. The results verified that Windows could meet all technical requirements: remote installation of software updates, remote management and support, a minimal operating system installation, support for the company's existing point-of-service hardware, and the ability to run the point-of-service application that Regal will use. Some of the features of Windows XP Embedded that Regal plans to use include: - Remote management and support. Terminal Services, a feature of Windows XP Embedded, will allow the company's centralized IT team to remotely access and troubleshoot point-of-service devices.
- Remote updates. Device Update Agent, a Windows-based service that runs on the embedded device, provides a way for Regal to quickly and easily keep point-of-service systems updated without having to physically touch each device.
- Component-based architecture. Because Windows XP Embedded is component based, Regal can build an operating system image that includes only the functionality required for its specific solution.
- Driver availability. Windows XP Embedded is based on the same binaries as Windows XP Professional, which will help ensure the availability and compatibility of device drivers for new point-of-service system peripherals that Regal may want to use.
Rollout of Windows XP Embedded is scheduled to be completed in time for the 2005 summer movie season. In parallel, Regal will upgrade the single server in each theater from Microsoft Windows NT Server operating system version 4.0 to the Microsoft Windows Server 2003 operating system, the foundation of Microsoft Windows Server System integrated server software.
Integration with Corporate IT Infrastructure
The move to Windows XP Embedded and Windows Server 2003 in the company's 560 theaters follows the recent migration of its corporate IT infrastructure to Windows Server System, in which Regal replaced NetWare and GroupWise with Windows Server 2003 and Exchange Server 2003. "NetWare and GroupWise could not meet our needs in the long term, whereas Windows Server System can," says Henry. "We're now able to take advantage of the broad range of Microsoft and third-party solutions for Windows Server System, such as the one we're now implementing for connectivity between Exchange Server and our mobile devices."
When deployment of Windows XP Embedded to theaters is completed, the company's use of the Windows platform will extend from the data center to the point-of-service devices that are used to service its 270 million annual customers. The new infrastructure will help reduce system administration costs and, through that improved manageability, help the company keep its systems updated to minimize potential security risks -- in turn leaving the Regal IT team with more time to deliver new value for its internal and external customers.
"The bottom line is that, for our IT organization to be successful, we need to provide exceptional customer service," says Henry. "And for us, a customer is anyone who touches a computer at any time, including the employees who use point-of-service terminals and moviegoers who use one of our new kiosks or purchase tickets online. We must focus on the delivery of effective business solutions instead of IT infrastructure. Given our desire for a secure, integrated, and easily managed infrastructure on which to deliver those solutions, the best way to achieve that goal is to bring our point-of-service environment onto the same platform as our corporate IT systems."
Henry cites the company's recent experience with the Microsoft organization as another reason that Regal is increasing its use of Windows. "Microsoft has become a good deal more in tune with its customers over the last few years," he says. "Within my organization, people who used to have negative perceptions about Microsoft and Windows have since done an about-face and are now some of the company's strongest advocates. We're doing a lot more with Windows, and Microsoft is helping us deliver good results. Our migration from Novell software to Windows Server System went very well, in part due to the assistance that we received from our local Microsoft account team. With Microsoft, we know who to call when issues arise -- and that they'll take ownership of any problems and marshal whatever resources are required to help us keep the business running smoothly."
Benefits
By selecting Microsoft Windows XP Embedded over Red Hat Linux for its point-of service systems, Regal Entertainment Group is meeting its need for a remotely managed, vendor-supported point-of-service solution at the lowest total cost of ownership. Moreover, the company's decision to use Windows will help Regal make better use of limited IT resources, improve security, and reduce legal risk.
"We're not the right kind of company for Linux to work well," says DeYoung. "We run a lean IT shop for a $2.5 billion company, with 50 people supporting our corporate headquarters and 560 remote locations. We're big enough that we need a connected, easily managed environment, yet are too small to build the entire required infrastructure by hand. With Linux, we would have had to commit additional resources to make it work. With Windows, we get an integrated, easily managed platform that can extend from the data center to our point-of-service devices -- all supported by one vendor."
Adds Henry, "Our selection of Windows XP Embedded over Red Hat Linux was more than just a tactical decision on which operating system to run on our point-of-service devices. It was part of a strategic decision to have an enterprise architecture that provides maximum flexibility and manageability at a lowest total cost of ownership. We want our corporate and point-of-service solutions to converge, and Windows XP Embedded will help us realize that goal. I'm not saying that we won't consider Linux again at some point in the future. Microsoft offered the best option for us today and will need to continue to do so if it wants to keep our business."
Significantly Lower Total Cost of Ownership
Based on the research done by Regal, Windows XP Embedded is projected to cost considerably less than Red Hat Linux over the 10-year life of its point-of-service systems, even with a Windows XP Embedded operating system upgrade factored in during the seventh year. The company's analysis focused on initial licensing cost outlays and ongoing license maintenance costs. The analysis also considered the company's existing investment in Microsoft software and existing software skills already on staff.
"We required the ability to distribute software and to manage our environment remotely," says Henry. "The Red Hat support model required that we renew our agreement each year -- a very different approach than the Microsoft licensing model. Over time, the costs to run Linux became progressively more expensive than the cost to run Microsoft software. The results of our analysis clearly identified significant advantages in the selection of Microsoft software, making Windows our platform of choice. Our initial analysis was so conclusive that no further study was needed."
Improved Manageability
With both point-of-service and corporate IT systems running Windows, Regal can manage and support its entire IT infrastructure with a single tool set and skill set, both of which the company already has in-house. The remote support and management features provided by Windows XP Embedded will allow the company to easily extend the reach of its centralized IT team to support theater point-of-service systems. Windows Server 2003 will enable the Regal IT team to use the same techniques and tools to remotely access and support servers, including the 560 systems in its theaters and numerous systems in its data center.
"Consolidation onto a single platform will make our centralized support model more efficient, as will the remote support and management tools in Windows XP Embedded," says DeYoung. "In addition, it will be far easier to augment our existing IT organization with outside resources when additional help is needed. Skilled IT resources are scarce in Knoxville, Tennessee, and there are a lot more resources available for the Windows platform than there are for Linux."
In the past, with the servers in theaters running Windows NT Server and those in the Regal data center running NetWare, the company had to maintain two IT skill sets and system management processes for its server systems alone. The Linux-based point-of-service systems required a third set of processes, tools, and skills. Moving forward, the company can manage all its systems with a single set of tools, skills, and processes, providing a level of consistency and economy of scale that will help Regal to maximize the stability and security of its connected infrastructure and help control IT costs as the company's use of technology continues to grow.
"Moving forward, we'll be able to look to a single vendor for software updates and support, which will reduce the work required to proactively manage our systems and improve response times if issues do arise," says Henry. "Furthermore, the time spent on vendor management will decrease because we'll no longer need to maintain as many support relationships or licensing agreements. All those changes will help reduce the time and effort it takes to support our IT infrastructure, leaving more resources to deliver new solutions and service our customers. Even with the new capabilities we'll have, I expect consolidation on the Windows platform to reduce the time spent on day-to-day system administration."
Increased Security
Through its component-based architecture, Windows XP Embedded will help Regal reduce security risks. The company can include only the operating system functionality that it deems necessary, thus minimizing the potential attack surface for viruses, worms, and other software-based threats. "The component-based nature of Windows XP Embedded was a key factor in our decision to switch from Linux," says DeYoung. "With Linux, we had to install the entire package. With Windows XP Embedded and the advanced tools that Microsoft provides for sizing and building a system image, we can significantly reduce the operating system footprint and decrease the number of potential security issues for our point-of-service systems."
In addition, after an initial system image is created and deployed, the remote management and update features of Windows XP Embedded will help Regal increase the security of its systems by facilitating the installation of new security updates. To further reduce the cost of maintaining a secure environment, Regal is evaluating the use of Microsoft Systems Management Server as a way to push software updates to the theater level from a centralized location.
The company's move to Windows Server 2003 will help improve security for its corporate IT infrastructure, as well as for the servers in its theaters. The granular role-based security model provided by the Active Directory service in Windows Server 2003 will allow Regal to provide each user with only those administrative privileges required to do their jobs -- and to assign those permissions to people based on their job roles.
"Windows Server System delivers a wealth of security-related enhancements and innovations that will help us improve security," says DeYoung. "In addition, the tools provided for managing those security features will help us keep our systems more secure over time."
Reduced Legal Risk
The selection of Windows over Linux will help Regal reduce its exposure to financial risk. Unlike many Linux vendors, Microsoft provides customers with strong indemnification against patent, copyright, trade secret, and trademark infringement claims without a monetary limit. Furthermore, the company is committed to ensuring that licensing issues and questions of intellectual property do not present problems for its customers—and makes it a priority to manage third-party intellectual property in its products so that customers can stay focused on running their businesses.
"Reduced risk was a decision factor in selecting Windows over Linux," says Henry. "We needed to minimize our exposure to the distraction of potential intellectual property infringement claims. With the way that Microsoft stands behind its products, it's one less thing that I have to worry about."
Smarter Retailing
The Regal deployment of Windows XP Embedded is a solid example of the Microsoft Smarter Retailing Initiative at work. The initiative was launched in part to help the retail industry respond to consumer demands for convenience and information on their own terms and across multiple channels, business demands for streamlined operations, and store demands for associate efficiency and customer service capabilities. Designed to optimize business processes, Smarter Retailing helps retailers reduce costs, run more efficiently, gain greater business visibility, and make better and faster business decisions.
For further information
- Information about Microsoft Windows Server System is available here.
- For more information about Regal Entertainment Group products and services, visit the company's Web site.
Copyright © 2004 Microsoft Corp. All rights reserved. This article was initially published on Microsoft's MSDN website. Reproduced by WindowsForDevices.com with permission.
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