H&R Block Shifts from PCs to Virtualized Thin Clients

H&R Block’s virtualization project—a CIO 100 Award winner this year—is putting thin clients in the tax preparer’s thousands of retail stores in an effort to simplify its operating environment and cut expenses. The change should also help it to better compete with chains such as Jackson Hewitt, as well as with independent tax preparers and software-only rivals such as TurboTax and Intuit.

“Typical of any mature company, the competitive landscape is tough. You’re continually looking at ways to optimize,” says Rich Agar, CIO at H&R Block. By cutting costs, the company can lower its prices and compete more effectively, he says.

The company has spent $15 million to $20 million a year on PCs with a lifecycle of three to four years. By simplifying the IT used in its retail stores, including shifting from PCs to virtualized thin clients, the company expects to save $10 million to $15 million in hardware expenses. Plus, virtualization makes it easier to provision temporary employees hired for tax season while keeping data more secure, Agar says.

“Organizations dealing with seasonality can use desktop virtualization to manage capacity and enable quick turnaround by just plugging in thin clients instead of PCs,” says Ian Song, a senior research analyst at IDC, a sister company of CIO magazine’s publisher. “There are several benefits rolled into one.”

Ultimately, Agar wants to double the useful life of H&R Block’s hardware. Thin clients from Wyse Technology have no disk drive and fewer moving parts, which means they last longer, he says. They also use less energy; Agar estimates that the thin clients are at least 75 percent more energy efficient than PCs. With no local storage on the Wyse machines, H&R Block’s operating system and applications are refreshed every day upon log-in to the corporate network.

Technology Lockdown

Two years into the project, which is expected to last four to five years, Agar says he wishes he could move faster. He has deployed 10,000 of an estimated 80,000 seats. But because H&R Block’s business is seasonal and time sensitive, the company limits changes during tax season. Nothing can be changed from December through April.

According to the company, there are 11,000 H&R Block stores, but only 4,400 are open year-round. During tax time, the number of employees balloons from 7,700 to 100,000, and the company takes in 80 percent of its annual revenue in the five weeks leading up to April 15, Agar says. He doesn’t want to roll out new technology during that time because that could threaten the company’s primary revenue stream and the personal financial information of millions of customers. These unusual conditions “inhibit our ability to move at a rapid pace,” he says.

Agar chose Wyse in part because it bundles software with hardware, which helps the company avoid interoperability issues. He adds that he also wanted to be able to influence the product plans of the vendor he signed on with. For example, H&R Block is working with Wyse to shrink the size of the operating system to reduce the time it takes to boot up each morning.

“I wanted to control my own destiny in terms of what we needed in rollout,” Agar says.