In Washington Business on June 25, the president of Dyncorp was misidentified. His name is Dan Bannister.(Published 7/20/90)

After years of believing that bigger was better when it came to computers, executives at Dyncorp came to an unsettling conclusion: Maybe they were wrong.

The revelation left the Reston-based commercial aviation and government services company with two choices: stay with its large mainframe computer-based system, into which it had sunk millions of dollars with costs still heading out of sight, or find a new method of sharing information among its 18,000 employees.

In the end, it was no contest. Dyncorp decided to abandon its IBM mainframe -- only months after installing it -- in favor of a personal computer-based system that the company believes will enable it to save $1.5 million to $2.5 million a year. Dyncorp, a privately owned company that last year had $700 million in revenue, also expects the new system to be faster and more flexible.

"This was by far the largest and most complex deal we've ever done," said Eugene Blanchard, senior vice president and chief financial officer of Dyncorp. "There are very complex human resources and employee benefit issues to deal with. We've had to confront significant cost-accounting, financial and security issues as well.

"There was more to it than cost, but that was the No. 1 reason. By saving money, we can submit lower cost contracts and therefore win more contracts. We were also dissatisfied with the service we were getting from our mainframes. We thought we would have more timely information if it was done through individual users rather than through the mainframe."

Dyncorp is probably one of the larger companies following a philosophy the industry calls downsizing, but it's certainly not the only one. As more companies, particularly smaller ones, seek to cut costs, mainframe-based information systems are becoming prime targets. Chris Herron, president of Larkspur, Calif.-based Synon Inc., a software supplier for IBM computers, said little companies are "doing it {downsizing} like crazy."

"Maintenance of those {mainframe} systems is a cost killer," said William Blustein, an analyst with Cambridge, Mass.-based Forrester Research. "The cost of switching over to a PC-based local area network {a method of tying several computers together over a small area} can be roughly the same as one year of maintenance costs for a mainframe."

Besides costing less, PC-based systems offer flexibility and functions usually unobtainable with mainframe-based systems. Personal computers are far easier to use, can be purchased with color screens and have menus that guide users through what sometimes can be a maze of incomprehensible instructions.

They also avoid the corporate bureaucracy that often develops around a centralized, mainframe-based system. With personal computers, employees don't have to fight for time for their projects. They can do what they want when they want.

Blustein cited a major company that was running a manufacturing software program on its mainframe to help it control inventory at its plants. The program often was delayed due to problems with other programs using the mainframe. When the company went to a PC-based system, the program ran daily with no trouble -- enabling the company to double the number of commodities it bought on a just-in-time basis.

"That's a big payoff," Blustein said.

It doesn't always happen, though. There are risks as well as rewards in downsizing, and security may be foremost among them.

In a mainframe-based system, information is usually protected by the corporate information management staff. That group usually keeps a tight rein on the data entering and exiting the mainframe, and only a few people have broad access to the data. In a PC-based system, that central control does not exist -- more people have wider access to the information.

Another downside to downsizing are the political struggles that sometimes erupt between information management staffs that want to maintain the status quo and those who want to abandon the mainframe system.

People who manage the mainframe often exercise almost absolute power over their company's information, and are almost always reluctant to give it up. With that power, however, the information management staff creates a disciplined environment around the mainframe-based system. Such discipline is lacking in a PC-based system, which may make it more chaotic.

Dyncorp considered all those factors in 1987 when it ordered the larger mainframe. Its government services group, convinced that the mainframe-based system was hurting Dyncorp's bottom line, received upper management's permission to experiment with the PC-based system.

When the group's analysis of the PC system projected annual savings of $1.5 million to $2.5 million, Dyncorp's management was, in Blanchard's words, "receptive but skeptical." To verify the projection, the company brought in a consultant to analyze the entire information system. Last November, only nine months after installing its mainframe, Dyncorp reversed course.

The first part of the company's new, 150-terminal system, which will run both financial and human resources software programs, is scheduled to become operational July 1. The entire network will be ready to run by Dec. 31. Both mainframes are scheduled to be deactivated next January.

"It wasn't difficult to gain {president and chief executive officer} Dan Benning's approval for the experiment," Blanchard said. "We could see the potential cost savings immediately.

"But it was much more difficult to take the leap to abandon the mainframes. There was much more risk. If the experiment didn't work, we could always go back to the mainframe. But if the company-wide system didn't work after we had moved everything off the mainframe, we had nothing to go back to."

And then came the political struggles. According to John Saunders, vice president and controller of the government services group, the information management staff was worried that the PC system was not the right approach and concerned that it would lose control of the information system process.

That staff also would be hardest hit by the personnel reductions accompanying the switch. When the new system becomes operational, the number of employees in the information management staff will have been reduced to eight from 45.

Dyncorp's management responded to the employees' fears by establishing retraining programs and trying to soothe any potential ill feelings through such company activities as picnics, sports events and parties.

"The very first time I heard it, I was scared, worried and confused," said production control supervisor In-Ae Marshall, who has spent 17 years at Dyncorp. "But they've been very fair to me, and now I'm learning the new technology. I'm not even sure if I'll have a job in the new system. But I'm not scared. I'd prefer to stay here. But if I have to work somewhere else, I will."