Firm reduces costs with calculated risks

Every choice a CIO makes in today’s painfully cost-constrained business environment is high risk. Rather than compromise a strategic IT project schedule because of a need to reduce costs, here’s one firm that instead got creative and aggressive.

Harry E. Roberts, senior vice president and CIO at Boscov’s Department Stores LLC in Reading, Pa., was charged with cutting his budget significantly in 2003. But after thoroughly reviewing the US$1.1 billion retailer’s IT project roster, Roberts concluded that if the company wanted to meet its strategic business objectives, “the major things we needed to do, we still needed to do.”

Roberts and his team turned their full attention to Boscov’s telecommunications contracts. Roberts dumped the company’s two big-name vendors – Verizon Communications and MCI – and signed an enterprise deal with a little-known regional carrier, D&E Telephone Co. in Ephrata, Pa. Although trading some security that comes with a national vendor, Boscov’s also saved $1 million and cut its long-term communication costs.

In yet another gutsy move, Roberts shifted certain retailing applications from a Windows NT Server environment to a Linux-based IBM mainframe. In the process, he virtually eliminated client/server computing costs that had been spiralling out of control.

“We made the decision that we could no longer expand the server farm that was growing at a rapid rate. We kept having to hire [a full-time IT employee] for every 10 to 12 servers we brought online,” Roberts recalls. “The risk was in making the transition from one vendor’s software to another without missing a lot of time for training.”

With help that Roberts negotiated from Boscov’s three primary IT vendors, lost time was minimal and the retailer saved “at least six to seven man-years that we would have had to pay for with client/server,” he says.

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