On the surface, USAA looks like a prime example of how Apple is making new inroads into large enterprises. The financial services company has deployed more than 500 iPhones and 300 iPads, has about 200 Macintosh computers, and it's considering bringing in more Macs to displace some of its Windows desktops.
San Antonio-based USAA has also released a customer-facing app for iPhones and iPads, and it's considering developing others for internal use. "There seems to be a simmering demand for them, and some good business cases," says Mike Pansini, assistant vice president of IT infrastructure architecture at USAA.
But as is the case at many large companies, USAA's relationship with Apple is more measured than it might first appear.
The iPhones and iPads have been limited to the executive management group -- USAA has no plans at present to expand their use more broadly -- and its 200 Mac desktops and laptops, mostly used by developers, represent a small fraction of USAA's inventory of personal computers. The rest of its information workers -- some 23,000 people -- remain solidly on the Windows platform.
It's certainly true that Apple is making inroads into large enterprises. In a recent Computerworld survey of 367 IT managers, 73% of the respondents said they're providing or supporting Apple products in some way. But 25% still aren't supporting even one iPhone, Mac or iPad (and 2% didn't know if they were). The 143 largest enterprises in the survey -- those with more than 1,000 employees -- had the same ratio: 73% support an Apple product; 27% don't.
Although many enterprise IT organizations are accommodating user-owned or company-issued iPads and iPhones, they're providing carefully controlled access to a limited set of corporate IT resources, such as the Internet and corporate e-mail.
Apple is also making headway with corporate desktops and laptops: 55% of the survey respondents support at least one Mac, and 60% support MacBooks. But in most of those cases, the IT shops are supporting 100 or fewer Apple machines. And the Mac's penetration into large businesses is miniscule when compared with the number of Windows-based machines ordered each year.
Furthermore, IT managers say Apple isn't always supportive of their needs, and the Computerworld survey shows that many of the obstacles Macs have always faced in large organizations still exist, including the following:
• Mac versions of enterprise applications either don't exist or lag behind releases for Windows.
• There are few tools for managing Macs on a large scale and integrating them into a Windows-centric enterprise.
• The perception remains that Apple products are expensive.
• IT managers say that service and support options aren't up to enterprise standards.
• Apple doesn't provide a product road map to help IT managers make plans.
• Enterprises have limited opportunities to negotiate prices for Apple products.
At the same time, the survey and interviews with enterprise IT executives indicate that Apple's position has improved in some areas:
• More businesses are buying or building platform-agnostic applications that can accommodate Apple products.
• Enterprise-class management tools for Apple products continue to evolve.
• Apple's prices are becoming more competitive.
• The trend toward Web-based enterprise applications has made integrating Apple products easier.
• In the tablet market, competitors arguably have yet to offer a product that's a better value than the iPad.
Apple still doesn't play in the low end of the desktop and laptop markets, but it's much more competitive than it once was on the types of units enterprises tend to buy, says Laura DiDio, an analyst at market research firm Information Technology Intelligence Consulting (ITIC). Mac products, which once sold for a 30% premium over comparable PCs, have come down to earth. "Apple doesn't get a lot of credit for that," she says.
But IT executives tend to see Apple as a provider of consumer-oriented devices, not a full-on enterprise partner. "In the Windows space, we've got a full-time Microsoft support team that is very engaged in what we do. With Apple, they haven't matured into that yet," says USAA's Pansini.
On the desktop side of the business, an iPhone/iPad "halo effect" may have been partially responsible for a 255% increase in Mac desktop and MacBook sales to enterprises in 2010, as reported by IDC. But that figure is somewhat misleading. Shipments of Mac products to large businesses still represent less than 2% of the overall enterprise PC market in the U.S., according to IDC figures. "Apple's market share is absolutely insignificant," says IDC analyst David Daoud.
Nonetheless, Mac sales to the enterprise are up sharply, relatively speaking. More than a quarter (27%) of the Computerworld survey's enterprise IT respondents who support Apple products said support for iOS devices had either sparked interest in adopting Macs or had resulted in greater adoption of Macs. "I wouldn't say they're buying Macs in droves," says Gartner analyst Michael Silver. "But more Macs are being supported as part of bring-your-own-computer initiatives."
However, when it comes to media tablets, Apple's iPad owns the category, accounting for more than 90% of the 300,000 units shipped in the U.S. for commercial use in 2010. Increasingly, users are picking their own smartphones and tablets and are asking to use them for work. IDC expects the number of commercial shipments of media tablets to jump to 1.3 million this year. "It's become an unstoppable force," says Silver. "It's gotten harder to say no."
By the Numbers
Enterprise IT's Concerns About Apple
Which of the following are issues for you when it comes to Apple products in the enterprise?
* 46%: Limited ability to negotiate on Apple hardware and software pricing.
* 44%: Apple's mobile devices don't support Flash.
* 41%: Enterprise-class service and support offerings from Apple are not up to our requirements.
* 37%: Apple offers little or no road map as to its future product plans.
* 33%: Apple doesn't provide management and security tools for its products.
* 28%: Software for Macs lags behind Windows versions.
* 26%: Lack of a second source for computers and parts.
Base: 243 IT managers at U.S companies that support Apple products for business use; multiple responses allowed
Source: Computerworld survey, June 2011
While most large organizations aren't supporting large-scale deployments of Apple products, Genentech is an exception. The IT department at the South San Francisco-based biotech company supports more than 2,500 Macintosh computers -- about half of the desktop population -- and some 8,000 iPhones. And it has made the most of user interest in iPads and iPhones, developing apps for tasks ranging from CRM to purchase order approvals and expense reporting.
That's driven in part by the fact that Genentech allows users to choose their own desktop computers. Even so, Macs tend to be used in groups that are less dependent on Windows applications, such as sales, marketing and research. "It's more challenging to deploy the OS X platform in other areas," says enterprise architect David Lee, although Genentech does support some Macs that need access to Windows applications by using virtualization software such as Citrix XenDesktop or VMware Fusion. That software layer, however, adds complexity and cost.
"Our No. 1 recommendation is to look at the applications first," Silver says. "If users need access to Windows applications, they should be running a Windows machine."
Mike Reed, an Apple solutions practice manager at IT services provider Forsythe Solutions Group, sees it differently, arguing that having parallel applications isn't always necessary. For example, Microsoft Vizio files can be read by OmniGraffle on the Mac. "It's less about the app and more about interacting with the data," he says.
Whispering to the Enterprise
Faced with the need to respond to a steady uptake of its products by large businesses, Apple has quietly restructured its enterprise division, focusing more narrowly on "Fortune-level" companies and pushing more of its enterprise business through the reseller channel and its own online sales group, according to an executive at one of Apple's business partners, who spoke on the condition that he not be identified. "They don't have as large a sales force focused on the enterprise as they used to," he says.
Unlike the way other vendors approach the enterprise market, Apple's strategy is to pursue more of a "whisper" campaign. When contacted for this story, Apple declined to comment or even acknowledge the existence of its enterprise program, let alone explain the services it provides to its largest business customers.
Although Apple doesn't want to talk about it, enterprise customers and service providers say that the company does indeed have an organization that caters to the enterprise and that it typically assigns a dedicated account representative, sends an engineer to the customer site for an initial assessment and provides some integration services.
"Apple does a terrific job of tech support for its own devices in a corporate setting, but integration and interoperability with other platforms can be problematic," DiDio says. "They realized that they had to have an enterprise strategy." Last year, Apple created a new business partner certification, the Apple Authorized System Integrator, and anointed four companies -- Forsythe Solutions Group, Milestone Technologies, Agilex and Unisys -- to handle most of that integration and support work.
By the Numbers
Bring Your Own
Which Apple products do you support through a BYOC (bring-your-own-computer) program?
* 87%: iPhone
* 80%: iPad
* 47%: MacBook
* 28%: Macintosh
Base: 185 IT managers at U.S companies that support Apple products for business use; multiple responses allowed
Source: Computerworld survey, June 2011
For technical support, however, corporate IT shops still need an AppleCare Preferred or Alliance agreement. "They'll fly an engineer out to our business to get the lay of the land. But they're not stopping on your doorstep any time you have a problem," says Ben Greisler, principal at Kadimac Corp., an Apple professional services provider. Some enterprise customers work with Apple's telesales group or Apple's retail stores.
"We're seeing an expansion of business-related services across all touch points, whether it's service or sales or retail," says Reed. Taken together, he says, "it's the 'enterprization' of Apple."
Perhaps. But Apple's enterprise strategy is still immature, IT executives say. "They're most interested in selling product and not in adapting how they do business to meet the needs of the enterprise," says a vice president of IT at a Fortune 100 company that uses both Apple mobile and desktop products, who declined to be identified.
Mum's the Word
Apple's legendary secrecy -- its unwillingness to share its product road map, even under nondisclosure agreements -- makes Andy Wang's job harder. Wang is an enterprise architect at Genentech. "Part of my job is to plan 12 to 36 months out. When you don't get anything from Apple, that makes for challenging planning," he says. IT executives regularly receive such briefings from vendors like Microsoft and Hewlett-Packard.
"With HP, we know what's coming out six to 12 months from now. With Apple, you don't have a clue," says Michael Kamer, manager of technology integration services at St. Luke's Health System, a healthcare provider in the Kansas City, Mo., area that's testing a system that would let doctors access clinical apps from their own iPads.
"We're guessing which capabilities will be available when," adds Greg Schwartz, senior vice president and CIO at USAA. After the iPad 2 was released, USAA began work on a new version of an online banking app that lets iPad 2 users photograph and submit checks for deposit using the built-in camera. "We didn't know when the iPad 2 was going to be released. Otherwise, we would have had it ready," he says.
Apple's consumer-focused approach to product licensing and support also creates headaches. Although Genentech has developed its own iPhone apps and delivers them through an internal app store, it still must renew its certification for those applications with Apple every year. "That's very tedious," says enterprise architect David Lee. "We have a cordial and collaborative relationship, but enterprises are treated more like consumers."
Apple also lacks a corporate account model that enterprise customers can use to centrally manage the acquisition of software from its App Store. Instead, each purchase is tied to an iTunes account, which in turn is tied to an individual and that person's email address, rather than to a role or physical device.
"The enterprise has fundamental issues here. You don't want to have an individual account per device for the licensing and management of apps," says Mark White, CTO of Deloitte Consulting's technology practice.
But for now, that's exactly what many businesses do.
Other businesses have negotiated directly with software vendors, bypassing the iTunes store. "It's not a generally solved problem yet," says White -- for any of the mobile vendors.
Enterprise-class security is another concern. At St. Luke's, protecting data on iOS devices is a big issue. Kamer says the iPad doesn't natively support the FIPS 140-2 encryption standard, so he has to work around that. "That's one reason why we don't allow them on our internal network," he says.
Management Tools: A Big Obstacle
Unlike Microsoft, Apple doesn't offer a suite of management tools for its products, relying instead on third-party vendors and integrators to pull together a framework for securing and managing Apple devices at the enterprise level.
"Many of the Mac-based tools are built by small or lesser-known third-party ISVs, and many of those are smaller, point-type solutions, which may not scale in an enterprise setting," says ITIC analyst DiDio.
DiDio calls the management tools issue "the biggest impediment to deploying Macs en masse in the enterprise."
And she's not the only one who thinks so. "The tools for managing a large population of Macs are hard to come by. That's the truth," says a Fortune 100 IT executive who declined to be named but says he has examined the options.
Such sentiments are what convinced Mac software vendors to form the Enterprise Desktop Alliance a few years ago. "There are good tools available for integrating Macs into enterprises standardized on Windows," argues EDA President Reid Lewis. The challenge is to educate IT managers on what's available, he says.
Deloitte's White says it isn't a question of whether you can integrate Macs but how much work it takes to get the job done: "In a large enterprise, at scale, can you get the job done? Yes. Can I do it without a lot of additional skills, capabilities and tools? No." Expect more integration work with Macs, he says.
When it comes to interoperability with existing tools for managing Windows environments, the options are even more limited. The tools are enterprise-class, says Charles Edge, lead engineer at 318 Inc., an Apple-authorized reseller and professional services provider. But he acknowledges that "they're not as well integrated with tools for other platforms as they could be."
Many of the same issues come up when trying to manage enterprise apps, enterprise app stores and mobile data on iPhones and iPads, says White. "Those are workable today but not a slam dunk. It requires significant integration work and control frameworks."
A Matter of Focus
From Apple's perspective, the enterprise is a niche market, and a very small one at that. Shipments of Macs to enterprise customers, for example, amounted to just 3% of all Mac sales in the U.S. last year, according to IDC.
The company's discontinuation of its Xserve server line last year further underscores the point that Apple's focus remains on its bread and butter -- the consumer -- and that there are limits as to how far it's willing to go to satisfy the demands of enterprise customers.
"Apple doesn't want to change its business to accommodate enterprises," says Silver. "They want to sell to the enterprise with their current business model. And to some extent, that's working."
For now, at least, it's the enterprise, not Apple, that has to bend. Demand from users of iPads and iPhones, and a push to allow users to bring their own computers to work, requires some level of accommodation by IT. "The reality is that most companies are not going to have a choice. They're going to have to work with that business model," says USAA's Schwartz.
But accommodation has its limits. To Kamer at St. Luke's, Apple isn't an enterprise partner the way that companies like Microsoft and HP are. "Apple is changing the game on how we deal with them as a vendor due to the popularity of their devices." But, he adds, "this is why we do not plan on purchasing their devices for the enterprise. Bring-your-own-computer is the only way we can see them being integrated. But even this has many challenges from a management and security standpoint."
By the Numbers
Apple in the Enterprise: Big Growth, Small Numbers
Apple saw 255% growth in unit shipments of Mac desktops and laptops to the enterprise last year, according to IDC. While that sounds like a major uptick, the percentage is misleading because Apple's shipments to enterprises suffered a steep decline in 2009 during the recession (even though Apple's total Mac business grew by 8% that year).
And while the 167,000 units shipped to U.S. enterprises last year represent a record for Apple, that's just 2% of the more than 9 million personal computers of all types that were shipped to enterprises in 2010.
During the recession, Apple's reputation as a premium brand -- and the fact that it doesn't offer a low-end product line -- may have worked against it with enterprise customers. From 2006 to 2009, shipments of Macs to the enterprise took a nosedive, dropping from 105,000 to 47,000 units. In contrast, overall Mac sales grew by double digits during that period. "The Mac was too expensive while the economy was trying to get back on track," says IDC analyst David Daoud.
Annual Growth Rates of Mac Shipments (U.S.)
Year Total Mac Shipments (U.S.) Enterprise* shipments (U.S.)
2007 34% -29%
2008 24% -1%
2009 8% -36%
2010 18% 255%
Annual Mac Shipments to Enterprises* (U.S.)
* 2006: 105,000
* 2007: 75,000
* 2008: 74,000
* 2009: 47,000
* 2010: 167,000
Mac Market Share in the Enterprise* (U.S.)
Mac shipments to enterprise as a percentage of total enterprise PC shipments (U.S.)
* 2006: 1%
* 2007: 1%
* 2008: 1%
* 2009: 1%
* 2010: 2%
*Note: IDC defines enterprises as organizations that have more than 500 employees.