Real time solutions justifying the cost

A commonly heard complaint when real time IT implementations are being considered is the apparently prohibitive cost – that the return on investment is too small to justify the hefty up-front expense. But for two companies, this perception turned out to be untrue.

Mark’s Work Wearhouse Ltd., Hewlett-Packard Co. and Pratt & Whitney Canada have installed real time solutions that saved both time and money, according to the companies. “My message to you is that real time can actually save you money,” said Robin Lynas, CIO with Calgary-based clothing retailer Mark’s Work Wearhouse. HP has calculated its savings at US$37 million over five years.

This is being achieved by creating a real time integration hub, said Greg Battas, director, Real Time Architecure, NonStop Enterprise Division with Palo Alto, Calif.-based HP. “We discovered the ROI was going to be bigger than we thought it would be.”

At BMO Financial Group, the move to a real time solution was driven less by ROI than by an enterprise-wide customer relationship management (CRM) software initiative, said Frank Erschen, a BMO vice-president. Erschen is the vice-president of Technology and Solutions, Enterprise IT Strategy and Development Services with BMO Financial Group in Toronto. The speakers were at a Conference Board of Canada series on building a real time enterprise held in Toronto last month.

For Mark’s, which has grown from 140 stores in 1994 to a projected 450 by 2006, the need to cut costs and streamline processes while centralizing data was paramount to sustaining its growth. The 320 stores each had their own server, which batch connected to a central server at the end of the day. “It killed us at the back end,” Lynas said, referring to the once-a-day logjam of large batches of information being sent over the network. By moving to a real time solution, two things occurred: on the cost savings side, Mark’s has been able to remove the 320 store-based servers and replace them with seven central servers, while on the network side, by sending point of sale information in real time to the central server, there is no logjam at the end of the day.

Mark’s built the application, middleware and front-end systems entirely with Java running on Linux, Lynas said. The result is a reduction of maintenance costs by 50 per cent, he said. “I haven’t had a Linux problem.” Additional benefits have included a reduction in help desk calls (systems are more intuitive to use) and training cycles reduced from two days to half a day, Lynas said. The project took about five months to roll out, from February to June this year. HP’s drive to real time supply chain management was, in part, forced on the company because of its sheer size. The company had about 200 instances of SAP running worldwide, Battas said. The result was that supply-chain batch information gathered at 8 a.m. became less and less accurate (and valuable) as the day went on. A decision was made to create a global view of the entire supply chain. At the solution’s core is an integration middleware hub through which all data passes.

Pratt & Whitney Canada installed cell phone technology directly into some aircraft engines so real time data could be forwarded to engineers. Not long after, a pilot noticed a warning light flashing as he was taxi-ing for takeoff. “Prior to that, he would have been required to shut the engine down…and lose a flight leg,” said Eric Reed, manager of Pratt & Whitney’s e-business strategy. The engine phoned home, an engineer found the problem (false alarm) and the plane was cleared for takeoff.

At BMO, the desire to create a real time CRM solution was driven by the need to have a better and more responsive customer view, in everything from capturing and analyzing customer data to generating business leads. Prior to the solution’s implementation, information was often held in silos. If a customer contacted the call centre with a specific request, only the call centre would know about it. Now this information is sent to all the parties that could potentially be affected by the interaction, Erschen said.

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Jim Love, Chief Content Officer, IT World Canada

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