When Borders split from its US parent, IT boss Simon Thomas was charged with replacing every system the company had in just a year. He tells Joanna Perry how he managed it.
Relaxed and jovial aren’t words that spring to mind when describing many retailers right now. But it is certainly how Retail Week finds Borders chief information officer Simon Thomas when we nip down to Borders’ offices on Charing Cross Road.
It is not surprising given that he has successfully completed a project to replace all of the retailer’s systems in a year – due to the IT platforms provided by its previous US owner being withdrawn – and on a very tight budget.
Just a few months after these systems have gone live, Thomas no longer has to contend with the usual budget issues; “someone else is managing those challenges now”. The reason that all this has been achieved is that Thomas took a chance on a different way of delivering systems. He sought software as a service and chose Itim’s The Retail Suite – modular software designed to run an entire retail business from the ground up. Not only does Itim host The Retail Suite software, but it also charges Borders for using it on a monthly rental basis.
“As part of the exit from the US we had a 12-month transitional service arrangement and after that we would have no systems – and I mean no systems,” he says. “Everything was done back in the US and they just stretched the wires to the UK.”
With time of the essence, Thomas explains that Borders considered an outsourced model using industry-standard components. He rejected this option as it would have cost more than the company wanted to spend, so he had to come up with a more radical solution.
He explains: “We had already talked to Itim about EPoS and they said that they thought they could meet our challenge. But it was not a finished product.”
Itim was already hosting EPoS for several of its customers and had systems to support other parts of a retail operation that together would become The Retail Suite. Thomas explains: “All the elements were there – but they weren’t all glued together.”
So Borders has been able to influence the finished solution to some degree, although Thomas is clear that it is “only influence, as we are only renting it”. In fact, he says that this has also been the most challenging application delivery he has been involved with, as the system could not be too closely shaped to Borders’ needs. As the only customer it may seem like Borders’ system right now, but Thomas is aware that this feeling can’t continue as the long-term success of the software and the delivery model is based on Itim being able to sell it to other small- and medium-sized retailers.
The result is that Borders does not own any of the software it is using or the central hardware. Itim hosts the software from internet service provider Star’s hosting facilities and the applications are run over Star’s broadband network. The Toshiba EPoS units that have been rolled out to stores were also supplied by Itim as part of the single-managed services contract.Even the Microsoft infrastructure the retailer runs has been outsourced to another supplier, Concise IT.
Thomas says that this means Borders has reduced its fixed IT costs as low as they can go. But in addition to low capital expenditure, he claims that the systems replacement has been possible without IT operating expenditure going through the roof. “We feel that we have genuinely got something that is software as a service and not just moved cost,” he says.
A question of time
Borders had to be off the US-based systems by September 30 this year. To achieve the mammoth task of replacing its systems the project was broken down into three work streams: infrastructure and services, store systems and central systems.
Infrastructure and services came first. Most of this was outside of Borders’ direct control – for example, Itim’s central servers. On September 1 the central systems went live and over the next two and a half weeks the system was rolled out to stores. This meant some stores were switched off from a central system for a period before being linked to the new system. Stores carried extra stock to cover the time when head office was blind as to what had been sold.
In addition, Borders ran a pilot of the store system at its Brent Cross store. This was turned on before the central systems went live and then had functionality added layer by layer.
The store systems work stream required the replacement of all equipment and systems, plus changes to processes in 41 stores. But changes to the retailer’s central systems were even more of a challenge. “The central systems were the big change – everything from product and catalogue listings, the supply chain, our management information systems capability, invoice matching, etc,” Thomas says.
Because the changes to systems have been so substantial and the timeline so short, only limited data has been migrated from the legacy systems to The Retail Suite. “We have migrated a lot less than you traditionally would, partly because of the data incompatibility,” Thomas explains. “We have taken stock data, balances and a basic sales history, but we haven’t migrated detailed transaction history, for instance.”
He continues: “The challenge was that we could not deliver everything to match what users previously had in their central systems from the word go. When we went live they had everything they needed to trade, but not everything they needed to operate efficiently.”
Since then there have been further software releases to add to the functionality of the system over September, October and November. A final part of the initial software release is also due. In the longer term there are plans for additions to the first software release going up to the end of the first quarter of next year.
“We have ticked the first box and taken three months longer than we wanted to finish it, but done so on budget. We are very proud that we have managed a fixed-price project to conclusion.”
And while users have had to paddle a bit faster to cope with the new central systems’ functionality being delivered in phases, Thomas believes that users are happy. “We have had hugely positive feedback. Generally most people hate the system they have got. But we were on a legacy system that had been under-invested in for years, so there has been a huge positive response,” he says.
“We identified and bought on board core users from almost the point that we signed the contract, so that there were no surprises. As we do the formal programme wrap-up we will probably be critical of the programme communication, but I am not displeased with it.”
To complicate matters further, Borders needed to switch to a new payment engine by September 21, as the US company was making changes to become compliant with Payment Card Industry Data Security Standards (PCI DSS), which would have impacted Borders UK.
Instead, the company has chosen to buy compliancy, with YesPay working as a subcontractor to Itim, and make EPoS and payment separate to circumvent the issue. The Star network also has to be compliant and Thomas says that this has almost been achieved. However, he adds: “Now we have to make our people and processes compliant. We can’t do things like have credit card receipts on a spike in the shop. This is the hard part.”
Also a work in progress is the retailer’s multichannel strategy. Borders’ web site was relaunched earlier this year, but the web development was run separately with a steering group so there would be a chance for more multichannel integration at a later date.
Already customers can return web purchases to stores and staff can access an extended range to order products for customers. Thomas says there are plans for further integration next year, although he won’t be drawn on the details.
Connected to the systems replacement have been other major changes for the business. For instance, he explains: “We were running on the Borders US model with a central warehouse. This business didn’t have the critical mass for that – so we shut it down.”
This has meant that the retailer has not had to invest in a warehouse management system. So instead of managing deliveries into the business centrally Borders receives multiple direct deliveries to stores, although this does mean some extra work for store staff.
“This is the first time I have decentralised a supply chain. It didn’t bring enough efficiencies to justify the fixed costs,” says Thomas. The result has been a reduction in stock levels and the possibility of getting stock delivered in three days instead of three weeks.
“We are a little less flexible in some areas, but we have a faster replenishment model and results in stores are pleasing,” he adds.
Since the project started the IT ranks at Borders’ offices on Charing Cross Road have swelled with Itim staff. But Thomas says that by spring this will be wound back to the small team that he always envisaged. At this point he will also leave, saying that he came to Borders on a fixed-term only, but believes that he will leave the company in a good position. “It will be a manageable challenge. If I have done my job right then there is an infrastructure in place on which they can develop more,” he says.
They say the proof is in the pudding and the results of trading over this Christmas period will indicate whether Borders has got it right with the systems it has chosen to support its business.
For smaller retailers the potential benefits seem compelling, so don’t be surprised if before long Thomas pops up somewhere else within retail to turn IT on its head.