Article

EMS CIO outsources the mundane to focus on rebranding

Zach Church, News Writer
Eastern Mountain Sports Inc. has had a tricky few years. At mid-decade the popular outdoor sports retailer had become a softer version of itself. Tents and climbing equipment? Sure. But it seemed fleece and casual apparel had taken over.

President and CEO William Manzer didn't care for that.

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In 2004 he bought the Peterborough, N.H., company from its owner, American Retail Group, and began to realign the brand back to the outdoor athlete for which it was built.

It was a case of slimming down to move forward. And the northeastern retail chain's IT department had to do the same. EMS's leaders expect the IT department to do more than keep the lights on, CIO Jeffrey Neville said. They want innovation and projects that add to the business. And that takes staff time.

"It had veered from the original visions that the founders had brought," Neville said. "We've spent the last couple of years bringing the company back to its roots and coming back to servicing the outdoor athlete."

These days, the chain is growing, Neville said. The exact number of stores -- EMS also operates a retail website -- is a "moving target" that's pushing toward 80 at the moment, he said.

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The IT staff won't get much bigger, though. Neville keeps his department at around 20 people. Faced with the retail challenge of managing so many different locations, he has outsourced what he considers the "utility" of network management. Keeping the network up and running, he said, is too mundane a task not to give up.

"I have a company that does that," said Neville, who joined EMS nearly three years ago. "I don't want to do that."

The deal for Neville is that he doesn't have to watch and fix network downtime that can paralyze a retail operation. He pays InteQ Corp., based in Bedford, Mass., to do that. A monthly fee, determined by a contract that scales up as EMS opens new stores, gets Neville oversight and maintenance of his store networks. He also gets regular reviews covering uptime numbers, as well as what problems have been encountered, how they were fixed and what proactive work is recommended.

The whole deal, Neville said, has freed up his staff resources for "activities and competencies" that are about realigning the business to meet the CEO's new -- well, old -- vision. That means building an in-store business intelligence dashboard that lets store managers drill down to leverage the success of individual employees into more sales. It means opening a hiking, biking and kayaking trail database that uses Web 2.0 tools to let athletes review and comment on trails across the country. It means an IT team dedicated to improving the company's point-of-sale systems. It means a team dedicated to the ems.com website.

The strategy, Neville said, is "anything I can do to funnel my team toward those activities, like having IT understand the business, the business needs and the business pain points, having them manage our application portfolio." Just like keeping the lights on and the power running, network management has become a "utility," just another bill to pay.

In selecting a managed service provider to handle the network oversight, Neville looked for a partner that offered a direct relationship and was within driving distance of EMS headquarters, he said.

InteQ CEO and co-founder Santhana Krishnan moved his company's emphasis from consulting to managed services in 2000 after recognizing there was a market for that type of service, he said. By providing a mix of network monitoring services and consulting, he said, InteQ is courting midmarket companies within the $200,000 to $2 billion revenue mark. Forrester Research Inc. last year found nearly 85% of small and medium-sized businesses contract for some type of managed service.

I have a company that does [network management].
I don't want
to do that.

Jeffrey Neville
CIOEastern Mountain Sports Inc.
Krishnan said CIOs aren't loathed to give up oversight of their network administration. Like Neville, many see it as a chore, Krishnan said.

"If you look at any IT operations, 70% of their budget is in operation, you know, keeping things up and running," he said.

Neville said there is ROI in the deal. He reasons that reducing downtime means smoother store operations, which lead to more cash in the company's pocket. An InteQ audit of its work for EMS found a 67% reduction in downtime after comparing the third quarter of 2006 with the first quarter of this year.

"If a store can't take credit cards or has to manually authorize credit cards, that's lost business and disappointed customers," he said. "And we were able to measure that because we could see what would happen based on going to a store manager and saying, 'When your network is down, what happens?'

"So we knew that this was a revenue savings, a revenue-generating -- it was an opportunity-cost ROI. It wasn't just cost-cutting," he said.

And when that work is handled from the outside, it reduces the complexity of IT work at EMS and allows Neville to leverage specialists, he said.

"Those are in place to allow us to focus internally on what we consider drivers of excellence," he said. "We have growing expectations of the business. As we become a more mature business and come out of a turnaround and really accelerate into growth mode, the expectations become greater. My peers on the executive team have greater expectations of what technology brings to the table."

Let us know what you think about the story; email: Zach Church, News Writer


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