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Reducing IT Operating Expenses

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When the economy was booming, retailers turned to powerful, robust technology to create more personal relationships with shoppers. But in recent months, as chains became more concerned with cutting costs to weather the economic downturn, some of the same technology is being blamed for hiking up operating expenses. The impact is being felt in a myriad of ways: from increased power consumption to increased labor for remote and on-site reactive support.

Industry experts say retailers can reduce IT operating expenses by focusing on three critical areas: deployment, management and monitoring; green technologies; and virtualization. These options were discussed during a webinar sponsored by Chain Store Age and Microsoft entitled, “Retail Heroes: Delivering Green IT Solutions.”

Girish Nazhiyath, retail industry market development manager, Microsoft, Redmond, Wash., noted the challenge facing retailers.

“Retail stores have incorporated customer displays, multimedia, and other technologies that allow associates to be more productive and help shoppers connect with the retailer,” he explained during the webinar. “The challenge is that technologies have a huge impact on retailers’ IT and operations costs.”

Systems supporting the shopper experience can be expensive when the cost is multiplied by the many locations using them, and many solutions run 24-hours-a-day, seven-days-a-week, further increasing power consumption and energy bills.

In another challenge, many chains are “reactive” when maintaining these systems, Nazhiyath noted, meaning they respond to ailing IT when there is an issue to resolve—a process that can be costly if a chain waits too long.

Rather than wait until a problem arises, chains should be mindful of the power and benefits of proactive maintenance. The ability to proactively monitor and observe systems can enable significant savings in terms of faster repair/replacement time and significant savings in terms of renegotiated SLAs.

“Any time in-store technology interferes with operations, chains are jeopardizing productivity and operation costs,” Nazhiyath added.

The webinar also explored green IT as a way to save on operating expenses.

“Going green can save companies money,” Nazhiyath said. “While there is no silver bullet, there are options that can suit all retailers.”

It was noted that green hardware and green operating policies can result in significant power savings; reduced use of paper (by leveraging collaboration, such as reports on the intranet); and reduced travel (using LiveMeeting, Unified Communications, etc.).

The deployment of monitoring management systems that remotely monitor IT health and alert users to conduct proactive maintenance can help chains increase energy efficiency.

Monitoring proved the perfect solution for Potomac, Md.-based Total Wine & More, a privately held retailer with 59 stores in 11 states. The chain operates with a commitment to deliver the lowest prices with the highest level of customer service. “We hire associates who become experts on wine; maintaining IT is not their job,” said Todd Slan, director of technology, Total Wine & More, during the webinar. “This drove us to technology that could help us uphold our customer service and still cap operating costs.”

The chain wanted to go beyond alerting IT staff when store systems were experiencing issues. Rather, it wanted a solution that would allow more proactive management of critical store functions. Consequently, Total Wine worked with Microsoft to develop a custom add-on to Microsoft’s System Center Operations Manager 2007 solution that could monitor front-end services, ensure continuous operation and perform automatic restarts if needed.

Additionally, the solution allows Total Wine & More to monitor all servers and applications at the store and often corrects or repairs issues before store staff are even aware of a problem.

Since adding the platform in 2006, the chain has reduced its help desk calls, and stores are operating more efficiently.

Virtualization: Many retailers are also reducing operating costs—and power consumption—by moving toward virtualization. A common practice in the data center, virtualization is now making its way down to store level.

“By consolidating hardware and software, retailers can save space, reduce support costs, improve redundancy and disaster recovery, and reduce their carbon footprints,” Nazhiyath said.

By virtualizing its family of servers, Total Wine & More manages its stores “with the same server count we used when we operated 30 stores, and we have not compromised our level of service,” Slan said.

Besides reducing capital expenditures, virtualization has helped the chain reduce power consumption. The retailer also now uses up to 80% of its servers.

“In the past, only 20% of server capacity was used,” he said.

© 2014