LOUISVILLE, Ky. – When Queen Elizabeth II lands here on May 5 to see the Kentucky Derby for the first time, one of the things shell be able to do is bet on her favorite steed from the comfort of the royal box, using a handheld betting device. There will be no need for Her Majesty, or for her attendants, to find a betting window where she can plunk down two bucks on a horse with a good chance to show.
The reason is that Churchill Downs Inc., the owner of the race track and the Kentucky Derby, has found new life for an old sport through a dramatic upgrade of its IT infrastructure. The person responsible, Vice President of Information Technology Jay Rollins, decided when he was hired three years ago that if CDI were to break out of its stagnant situation, he needed to start from square one. As a result of his rebuilding of the IT infrastructure, the company has reduced costs, improved revenue, upgraded the user experience and helped bring more fun into horse racing.
Rollins said that when he came to Churchill Downs in June of 2004, he found an IT disaster waiting to happen. “We had a data center in a room beneath a leaky water main,” he said. He told eWEEK that what passed for IT was mainly a help desk that had the job of reacting to problems when people had them. He also said that in the past, computers and applications were purchased without planning or coordination, that the wide area network was being run by the facilities department, and that there was no strategy for growth or improvement. Like this, he said, Churchill Downs resembled most other horse racing tracks.
“Most race tracks are cost bound and think short term,” Rollins said. “Most believe their vendors, but dont have any follow up,” he said, noting that most do not have qualified IT leadership. After he arrived at Churchill Downs the lack of leadership became obvious, he said. “They had multiple IT organizations, a lack of systems predictability, security, availability or standards,” he said.
“CRM was a separate organization,” Rollins said, “they had multiple vendors, they paid retail for everything, many vendors were industry-specific, and there were many single points of failure.” Rollins noted that industry-specific vendors are common in the horse racing industry because many applications were created by people within the industry to address a specific need, then never maintained or updated, and usually had no service or upgrade path.
Shaking the Foundations
The first thing Rollins did was initiate an IT audit. “We had to change the reputation of IT,” he said. “We had a real thing to overcome from the user community.” Rollins said that his next task was to get management on board. He said that when the results of the IT audit were in, “it was scary.” He said the need to comply with the requirements of Sarbanes–Oxley was what finally convinced the board that an IT overhaul was necessary.
The next step, according to Rollins was to take a close look at the IT departments as they existed at the time. “A lot of the technology was still in the 80s,” he said. In addition to looking at the infrastructure, such as it was, he looked at everything else, including the members of the department. “The next step was to look at the IT skill set,” he said. Then he set out to understand the financial drivers and how the business affected them. Rollins said he came from outside horse racing, and as a result, it was vital that he understand the money flow, the dynamics of the industry and of his company.
One of the key events that convinced him that change was necessary was when the financial system crashed six weeks after he arrived, and nobody complained. “They werent using it,” he said. Rollins said that hard disks on the server crashed, and when he returned from vacation to find this, he also found that the backup system the previous IT department was using wasnt compatible with the financial system, so that there were no backups.
Then, he took action. “I fired everyone,” he said. Rollins pointed out that most of the IT staff lacked even the basic skill sets necessary to help run a professional IT department, and most of the vendors werent delivering what he needed. At the same time he developed his IT strategy. “I did a lot of root-cause analysis,” he said. He looked at information capture as well, then he selected a new vendor to help implement the IT structure at Churchill Downs, and new equipment vendors.
“I wanted one vendor for PCs and laptops, and one vendor for the network equipment,” he said. He also chose a systems integrator. Once that was done, he started implementing basic IT functions that were lacking when he got there. Rollins noted that there had never been a trouble or repair ticket system, so there was no means of tracking or following up on problems.
Rollins said that he wanted a network infrastructure that was well known and well supported in the Louisville area, and that also had the capabilities he needed. Because of this, he chose Cisco for the network, and Boice.net for the systems integration. Boice.net is based in Paoli, Ind., but has major offices in Louisville. He said that he chose Dell for the PCs and laptops.
Once he had a strategy and a systems integrator, he started work. “We built out the first year,” he said, “we replaced any computer more than three years old.” One of the goals hed had when he started the process was to add wireless access for use by the fans watching the races. “The board said they wanted people to be able to check stock prices while they watched the races,” Rollins said.
But Rollins decided to go a lot farther.
The Wireless Solution
The Wireless Solution
One of the details Rollins had noticed while he was studying operations at Churchill Downs was the lines attendees had to stand in to place bets were enormous during major events such as the Kentucky Derby. “People had to get in line two or three races ahead of time to place a bet on a specific race,” he said. Rollins said that the ultimate cause of these lines was that the track simply didnt have enough betting windows to serve all of its customers. “We had a queuing problem,” he said.
To solve this problem, and as a result to improve revenue, Rollins found ways to improve the access to wagering. Those ways include self-service betting terminals (they resemble ATMs or airline check-in terminals), electronic wagering consoles that fans can use from their seats, and wireless betting. All of these methods let fans place bets without having to stand in line; this in turn allowed more wagers to be placed for any given race, which improved revenue.
The self-service terminals are located throughout the stands and service areas of the structures at Churchill Downs, including inside tents for major events. The consoles need wired infrastructure, so the mounting bases and wiring are located in areas of the stands where they are most likely to be widely used, including in the luxury suite and private box areas during major races such as the Kentucky Derby.
Adding wireless betting was the biggest challenge, according to Rollins. This required the development of applications to support the wagering process, the implementation of wireless security and a means of controlling access.
The security problem is being addressed by an intrusion prevention system (Rollins, understandably would not provide much detail here) as well as managed switches and a means of detecting and neutralizing rogue wireless devices. Rollins said that access for the wireless wagering, as well as for other forms of betting came with the development of a new customer loyalty card, known as the Twin Spires Club. This card not only accumulates points for betting just as other loyalty cards do, but they can be loaded with money to use in betting.
Then, to complete the process, Rollins acquired handheld computers that the track would lend to its best customers to make betting more convenient. The handhelds, Dell Axia PDAs, run a Web-based wagering application and require users to enter their Twin Spires information before they can use them.
The Big Picture
Of course, Rollins did a lot more than just improve operations and add wireless betting. He also implemented a new IT organization, took over the CRM operations, obtained service-level goals and agreements from vendors, and built a data center in downtown Louisville—far away from the leaky water main.
When Rollins describes his challenges, he makes it sound easy, but it was anything but easy, according to Alan Cohen, vice president of mobility solutions at Cisco. “Theres high flex on the infrastructure.” Cohen said, noting that on most days the network is lightly loaded and only a couple of thousand people actually use it. But then it changes. “When you hit the Kentucky Derby theres a quarter million people. Thats a lot of people, its not the graceful traffic modeling you normally see.” Cohen said.
“In this environment failover tends to be a very big piece of it,” Cohen said. “A lot has to do with the newer range of devices on the network. Normally the great growth is in laptops or bar code scanners. But now you have wagering kiosks, you have tablets and PDAs and you have the physical environment outdoors as well as indoors.”
“Theres a sudden influx of a lot of people, speed and lots of new devices, its a pretty potent stew for Jay Rollins and his team putting it all together,” Cohen said. “Its fast. The races are fast. What were really focused on is the experience people are having, the experience youre supporting for people. The big change is the transition from traditional computing devices to new devices,” he said.
“What happened at Churchill downs is like what John Chambers has in mind at Cisco Field—to take the experience and bring it to the Internet,” Cohen said. “Sports is really about community,” he said. “We want to really blend the experiences to where technology really touches the act of horse racing with the physical experience thats very intense and competitive. The thing thats most interesting for Churchill Downs and Cisco is that were now floating into a generation of people who are incredibly adept at mobile devices,” Cohen explained, saying that the new availability of the mobile experience in sports and entertainment is “like what the iPod did for music.”
Cohen said that helping Churchill Downs implement their new IT infrastructure presented a number of challenges. First, it had to be fast regardless of the number of people using it at any one time. “If your network goes down in wagering, theres no way to get that back,” Cohen explained. “If Im trying to get a wager in before post time and it goes off then I cant wager,” he said, pointing out that once missed, such an opportunity is completely lost.
He said that adding to the complexity was the historic nature of the race track itself. The building is 125 years old. “It has to remain intact,” Cohen noted, adding that he had to make sure the aesthetics were maintained. But he said he also had to make sure that the network would work in other places, including tents.
“Were hoping we can provide a better customer experience,” Rollins said. He noted that Churchill Downs is starting to offer new capabilities to the new electronic infrastructure. Those include the ability to order food deliveries to your seat, the ability to redeem Twin Spires points and even the ability to cruise the Internet from the stands. One limit, though—you cant go to competing betting sites from the Churchill Downs network.
Theres still work to do. With the support of a new management team, Rollins wants to set up a customer database so he can better respond to customer preferences. He wants to enhance compliance to privacy rules with the vendors that work with Churchill Downs; he wants to use customer data to add upselling opportunities; and he wants to use customer betting patterns to provide more incentives, such as free food or amenities where it might benefit the customer experience. The only thing he cant do is provide free drinks to customers, because state law in Kentucky prevents it.
There is one problem, though. “Were hitting our ceiling,” Rollins said. While he is still looking for a few very good IT people, he said it will have to go beyond that. “Well have to do more outsourcing,” he said.
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