Case Study: A trio of integrators deploys Microsoft tools to improve Virgin Megastores' systems.
Making good music is seldom a solo effort. And making complex, sophisticated IT solutions hum harmoniously often calls for individuals with a diverse set of skills.
In the case of Virgin Entertainment Group, reinventing and integrating the 23-store chains business intelligence, POS (point of sale) and data warehousing solutions required a team of experts from three integrators.
Working together for the first time, the team helped the entertainment retailer earn at least an extra $8 million in 18 weeks, courtesy of a Microsoft-based solution. The project, in fact, was one of the first corporate deployments of Microsofts Windows Vista operating system.
"We paid back our first-phase investment in 15 weeks," said Robert Fort, director of IT at Los Angeles-based Virgin Entertainment Group, North America, the subsidiary of Virgin Group that operates Virgin Megastores. "It was probably the best ROI [return on investment] Id ever had in my life. It was amazing."
The first paybackbased on customer trackinggenerated user demand for a far more complex solution based on the integration of POS, BI and warehouse management capabilities.
With each phase, solution providers Xavor and Analysis Team played off each others strengths to resolve Virgin Megastores data access and interpretation problem. The two providersalong with a third, JMG Consulting, which specializes in and supported IBMs AS/400 already in place at the retailermade the partnership work, thanks to their dedication to the customers needs, Fort said.
"We worked very closely as a team," said Ammara Masood, senior vice president of Xavor, which has offices in Irvine, Calif., and an offshore development hub in Lahore, Pakistan. "When Robert came to Virgin, we were already in there as a consulting partner. He wanted to see how we could bring our respective skill sets together. It was actually a very good experience. Here were two companies that had not worked together beforeand who created something seamless. We were both very focused on bringing value to the customer."
Each Virgin Megastore stocks about 255,000 items, including CDs, DVDs, books, magazines and fashion accessories. The retailer carries more than 400,000 active SKUs and processes more than 7 million retail transactions each year. Tracking and managing inventory was a logistical nightmare, Fort said. The company had purchasedbut not yet installeda JDA Software Group solution designed to integrate management, purchasing and receiving tasks. But after further scrutiny, Fort determined it would not meet users needs.
Within a month of being at Virgin Entertainment, Fort offered the board of directors two alternatives: Hyperion Solutions Essbase and Microsofts SQL Server 2005. On paper, it appeared the Hyperion software was superior, but Fort wanted users to put each product through its paces in real-world tests. After employees tested both products, the choice was obvious.
"The needle just flung to Microsoft," Fort said. "It really proved to me the value of doing a hands-on test. I came in knowing Microsoft was playing the game, but I was skeptical."
Realizing Virgin Mega-stores was losing market share and facing lower customer conversion rates, average dollars per sale and total revenue, the company needed to move quickly. But it needed a more permanent fix, so Fort involved members of multiple business unitsincluding finance, store operations, merchandising and ITand discussed what information they needed to optimize their departments.
Just as a singer may turn to a familiar producer for a track, Fort turned to long-time IT partner Analysis Team to provide data warehousing and BI know-how and implementation. In addition to working with the Virgin Megastores group, Analysis Team partnered with Xavor, which had already begun developing portals for the retail chain. The project, called Crescendo, was put in motion.
"I decided to divide and conquer [the project]," Fort said. "Both companies were absolutely phenomenal. They hit it off immediately. They had equal passion and attention to detail. They were committed to working together on-site for a while."
The two integrators were able to quickly and cost-effectively develop the solution Virgin Megastores needed, he said. Xavors offshore development team reduced programming costs and helped speed development, Fort said. Analysis Team carefully transferred knowledge to Virgin Megastores 12-person IT department to make them self-sufficient and self-supportive, for the most part, said Dave Stark, president of San Francisco-based Analysis Team.
Introducing both integrators early in the process was key to the implementations success, Fort said, in that each could carve its own niche within the same long- and short-term vision. "We had a very abbreviated timeline," he said. "We designed for the big picture, but we bit off only a little piece at a time."