Client: Fujitsu Transaction Solutions
Writer: Stuart Froman, stuart@sfroman.com

Infrastructure Management 

A Comprehensive Approach to Reducing 
Total Cost of Ownership for Retail IT Infrastructures

Introduction
According to research, most retail IT departments waste between 15 and 40 percent of their information technology (IT) budgets, this at a time when budgets are under pressure from an unsettled economy, and lowering costs and increasing returns on investment (ROIs) are of increasing importance. The most effective way to eliminate this waste is by implementing a comprehensive program to lower IT infrastructure total cost of ownership (TCO) by outsourcing infrastructure management (IM) to Fujitsu Transaction Solutions.

This white paper lays out the requirements for a TCO program, defines IM, and shows why Fujitsu Transaction Solutions is uniquely capable of delivering a TCO program to the retail market. The goal of this paper is to help readers understand the basic principles and language of a TCO program, and is not intended as an exhaustive research study.

The Retail Challenge
While the "tech wreck" may have slowed the growth of Internet-based retailers, consumers have shown an increasing level of acceptance of this new retailing model, signaling a critical shift within the retail industry. In response, most successful brick-and-mortar retailers are themselves exploring the "Internet channel" even while they dissect their existing channels looking for ways to increase productivity and reduce costs. Emphasizing the return on investment (ROI) of the systems used to support their businesses, retailers now expect their point of service (POS) systems to go beyond merely collecting payments and managing stock. Today's POS systems should be capable of playing an important role in marketing, functioning as kiosks and multimedia ad displays that can be controlled from a single location. They should be "Internet-ready" to facilitate the delivery of customized information and integration with other marketing programs. And they should facilitate the sale of higher margin services, such as service and ISP contracts.

All this powerful new information technology (IT) is expensive, however, as are the resources required to deploy and maintain it. Unfortunately, most IT departments waste somewhere between 15 and 40 percent of their budgets due to widespread inefficiencies, such as:

  • Not having precise knowledge of exactly what IT assets the company owns and how and where they are deployed. Because of this IT departments face a variety of risks, including lost equipment, duplicate purchases, and fines for software license violations.
  • Not properly maintaining equipment and not correlating actual use with mean-time-between-failure ratings. This leaves many IT departments unprepared when a server or terminal crashes, which can result in lost sales, idle employees, and high "emergency response" maintenance costs.
  • Only hiring fulltime IT staff. In this case, IT departments may be paying individuals when they are idle or working outside of their skill sets. By outsourcing some IT tasks, IT departments could save money while ensuring that the proper expertise is applied to every task.

Lowering Total Cost of Ownership
The key to eliminating this waste is a focus on systematically lowering the total cost of ownership (TCO) of the IT infrastructure. Attempting to define and lower TCO is not new. Many European companies, including retailers such as Marks & Spencer and WHSmith, have embraced this approach over the last several years as a result of Europe's own economic imperatives. Now, several North American analysts, such as Gartner, Inc., are actively promoting its benefits.

A TCO program requires the following phases:

  • Fully documenting IT infrastructure assets and where they are deployed
  • Establishing and documenting the processes by which the infrastructure should be managed
  • Optimizing the operation of the infrastructure by removing waste
  • Building TCO management into all future decision-making related to the infrastructure

By working through these phases, a retailer will be able to:

  • Make informed purchasing, leasing, and outsourcing decisions based on the true cost of assets
  • React more quickly and efficiently to changing business needs
  • Continue to create new processes and deploy new technologies to further eliminate waste and optimize the performance and availability of the IT assets

Implementing a Successful TCO Program
Implementing a TCO program requires fundamental operational and organizational changes that enable retailers to focus on their core business activity - selling - while outsourcing the management of their IT infrastructure to a company that can deliver a level of efficiency - and ultimately cost savings - that in-house operations never can.

Relying on another organization to manage a mission-critical IT infrastructure, however, initially causes consternation for many organizations. To instill confidence and create the optimal environment in which companies can achieve their specific goals, a TCO program must have the following components:

  • A set of best practices for managing the entire lifecycle of IT assets
  • The technology to enable these processes
  • A business partner able to combine best practices and technology to deliver increased ROI and lower TCO

These requirements are examined in more detail below.

IT Asset Lifecycle Management Best Practice Processes
Implementing and maintaining a high-quality, highly reliable IT infrastructure requires careful planning and management. Infrastructure management processes must be put in place and fully documented to ensure that all of the complex issues have been - and will continue to be - properly addressed. In the context of a TCO program, these processes must support managing the entire lifecycle, both financial and physical, of every asset, both hardware and software, that a company owns, purchases, leases, borrows or acquires in support of the IT infrastructure. Documenting these processes becomes even more critical when an company decides to outsource IT management.

Many organizations and companies have developed "best practice processes" for IT services; however, the United Kingdom's Central Computer & Telecommunications Agency (CCTA - now part of the Office of Government Commerce), the agency that supports the British government in managing information, created the Information Technology Infrastructure Library (ITIL), which is quickly becoming the global "best practices" standard for managing IT infrastructure. The ITIL processes have also gained the acceptance of the ISO (International Organization for Standardization).

The ITIL is a set of documents used to aid the implementation of a best practice framework for IT Service Management (ITSM) and covers all aspects of IT service provision and management. The ITIL is currently the best foundation for a TCO program.

The Technology to Implement Best Practices
While in-store systems are increasingly based on PC technology, the differences between store and corporate environments are still significant. Most existing IT management solutions have been designed to work in large corporate environments, not in highly distributed retail environments that include many low-bandwidth links to a variety of peripherals. These solutions also include little of the functionality necessary for a best practice TCO program.

A number of point solutions are also available to address specific elements of infrastructure management, such as asset discovery or service management. However, they are limited tools, and creating a TCO program based on them would be difficult and costly.

The answer is a fully integrated infrastructure management system capable of supporting the ITIL process methodology. Peregrine Systems, Fujitsu's strategic partner, is the acknowledged market leader in this area.

Peregrine's Infrastructure Resource Management (IRM) tools address the full lifecycle of assets from procurement to disposal, and in conjunction with Peregrine Systems, Fujitsu has developed PeregrineRetail™. PeregrineRetail functions well in low-bandwidth networks. Using SNMP-based polling, PeregrineRetail monitors from a central point the current state of every device in a store, and then report on detailed lifecycle information. For example, the system can monitor the number of lines printed by a specific printer and automatically issue alerts that the ribbon needs changing or that the printer is reaching its mean-time-between-failure rating. In response to these alerts, the store can take the necessary actions to ensure the optimal operation and maximum availability of the device.

A Business Partner That Can Do It All
A number of consultants, including the Big 5, offer general TCO services; however their experience is predominantly in corporate environments and they lack the ability to execute an on-going TCO program in the retail industry. Several solution providers also offer TCO-based programs, but few have the ability to address a retailer's complete lifecycle.

Fujitsu is uniquely qualified to implement retail-specific TCO programs for the following reasons:

  • Fujitsu offers true Infrastructure Lifecycle Solutions, comprising a complete package of hardware, software and infrastructure management services.
  • Only Fujitsu has the experience to deliver TCO-based solutions to the retail industry.
  • Only Fujitsu, in concert with its strategic partner Peregrine Systems, can offer a world-class Infrastructure Management Center Framework that has been specifically designed to proactively reduce TCO in ways that analysts, such as Gartner, are now advocating.

Fujitsu's Retail Solutions provide a highly flexible and upgradeable platform that increases productivity today while adapting to new requirements as a business evolves. All TeamPos products have been designed to rigorous quality standards to reduce the cost of their ongoing support. Linked to our Infrastructure Management and Support Services, this gives Fujitsu the ability to offer complete Infrastructure Lifecycle Solutions to the retail sector through TCO-based contracts.

For retailers looking to implement a TCO program, only Fujitsu is capable of implementing all the required processes:

  • Procuring, developing and integrate solutions to support a retail business
  • Staging and installing those systems
  • Training a customer's employees in their use
  • Proactively supporting and maintaining those systems
  • Refreshing those solutions when the ROI justifies

And Fujitsu is different one other critical way. In addition to having the experience to deliver lower TCO, Fujitsu will actually guarantee it.

End

Copyright © 2002, Fujitsu Transaction Solutions, All rights reserved.

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